Victoria has dragged the nation’s economy down as the Andrews and Allan governments have “exaggerated” troubles that have made it one of the nation’s poorest states.
Victoria’s unemployment rate sits well above the national average of 4.4 per cent at 5.1 per cent, Thursday’s Australian Bureau of Statistics figures showed.
All other major states’ unemployment rates sit below the national average.
Independent economist Saul Eslake said Victoria’s economic crash over the past two decades had been worsened by about 12 years of the state Labor government.
“Over the last 20 years – predating the ascension of the Andrews government, but certainly exaggerated and continued by the Andrews and Allan governments – Victoria has slipped from being one of Australia’s richest states to being either the second or third poorest state, depending on which measure you use,” Mr Eslake told Sky News.
“I think most Victorians would be astonished to learn … that household disposable income per head of population in Victoria is now lower than Tasmania’s and ahead only of South Australia’s.”
He also noted that Victoria has become the type of state it once criticised amid higher unemployment and poor productivity.
“Victoria has become what Western Australians like to call a mendicant state. That is, they’re getting a bigger share of revenue from the GST now than they would get if it was distributed on an equal per capita basis,” Mr Eslake said.
“(This) is the way Victoria used to argue it should be distributed when they were one of the richest states in Australia.”
Meanwhile, Victoria’s labour productivity has fallen by 5.6 per cent compared to the national average since 1999-2000, according to Mr Eslake.
“Victoria’s productivity performance has been very poor,” he said.
“It has chased economic growth in intrinsically low productivity forms of economic activity, and that’s increasingly showing up in figures like investment and employment or unemployment, where Victoria’s unemployment rate has for some time been well above the national average.”
EQ Economics managing director Warren Hogan said Victoria’s unemployment rate increase was a sign of economic troubles in the state.
“For the last two years, you’ve seen Victorian unemployment rise by almost two percentage points from around 3.25 per cent to now being over five per cent,” Mr Hogan told Business Now.
“The rest of the country has gone from around 3.5 per cent to just over four per cent.
“If we look at Victoria, it’s got a whole lot of economic problems as we know. But the rest of the country, this number signals economic strength.”
Mr Hogan also said that Victoria continues to be the “most interest rate” sensitive because that’s where some of the country’s largest mortgages are.
“Victoria’s obviously already got a soft economy and it’s got a massively expanding government having an influence on everything from construction through to the workforce,” he said.
“So, Victoria is going to get hit hard if we do have to see multiple rate hikes.”
Rates have been lifted three times since the beginning of 2026 and the RBA said another lift may be needed if inflation continues to remain elevated.
Trimmed mean inflation – the middle 70 per cent of price changes – continues to sit outside the RBA’s 2-3 per cent target band at 3.6 per cent.