Victorian Treasurer Tim Pallas is out spruiking the state budget handed down yesterday, boasting that Victoria has the nation’s strongest economy despite last year’s COVID-19 lockdowns.

Treasury has forecast Victorian economy will grow by 6.5 per cent this financial year.

But tax revenue will increase by 13.2 per cent, and state debt will reach 156 billion by 2025.

In a heated in studio interview, Neil Mitchell told Mr Pallas state government “set the house on fire and then took a bow for putting it out and now we’re paying the price”.

Mr Pallas said tax is up because the state government spent $49 billion which it borrowed to help Victoria through the pandemic.

But he revealed some of borrowed money is helping to bankroll the state’s major projects.

NEIL MITCHELL: “You spent the whole $49 billion?”

TIM PALLAS: “Of course. We spent it on massive new infrastructure.”

NEIL MITCHELL: “Ah, that wasn’t to do with COVID, that’s infrastructure.”

TIM PALLAS: “It’s called countercyclical investment, Neil. You spend when the community is in need in order to generate economic activity.”

The Treasurer said the spending on infrastructure creates jobs to drive economic recovery.

“It’s called countercyclical investment … You spend when the community is in need in order to generate economic activity,” he told Neil Mitchell.

Press PLAY below to watch the heated in studio interview

Press PLAY below to listen to the full interview