If you live in Victoria and you feel like the walls are crumbling in on you, it’s no wonder. Victorian corporate insolvencies are rising dramatically.

Bankruptcies and corporate collapses are on the rise and the increase in insolvencies can be directly attributed to the Australian Taxation Office and its efforts to recover billions of dollars owed by small businesses across the country.

What’s Behind the Surge in Victorian Corporate Insolvencies?

The Federal Labor’s ballooning debt which is expected to hit $940 billion by June 2025 and an alarming $1,161 billion by June 2028 is the highest level of debt (relative to GDP) on issue by the Australian Government since the 1950s, 

But the local Victorian Government is also drowning in an ever-increasing debt cycle. As with just about every one of Dan Andrews projects, the Commonwealth Games which was planned to eject tourists and capital into the State, was scrapped because the estimated $2.6 billion event blew-out to $7 billion. All of this while under the watchful eye of the now Victorian Premier, Jacinta Allan, who replaced Dan Andrews as premier in 2023, following his resignation. Another blow-out is Dan Andrews pet project, the Metro Tunnel rail project, which is now $837 million over budget and growing, increasing the total expected cost to $13.48 billion. 

Then there is the $642 million, which the Victorian tax payers have had to fork out so that Dan Andrews’ could keep his election promise to the CFMEU and rip up the contract to build the East West Connect which allowed the contractor to exclude CFMEU members from the project. 

During the first year of COVID [2020], Queensland welcomed 30,000 new residents while Victoria lost 12,700 and New South Wales lost 18,800, mainly to the State of Queensland who’s economy has grown. 

Jacinta Allan’s party released the 2024–2025 Victorian Budget Update which estimates the Victorian debt will increase from $133.2 billion as at 30 June 2024 increasing to a whopping $187.3 billion by 30 June 2028, a $54 billion debt increase. 

Federal Labour and the Victorian State Labor Governments are now taxing investors and small businesses into oblivion as they try and rake in money to pay their ever-increasing debts.

Victorian Corporate Insolvencies Ballooning Out

Nationally, we have seen the greatest increase in insolvencies over the past eight months since 30 June 2024. According to the latest data from the Australian Securities & Investments Commission, nationally, there have been a total of 8,789 corporate insolvencies between the period 1 July 2024 to 16 February 2025.

Victorias insolvencies hit 2,560, a 63 per cent increase based on the same time a year ago. By comparison, Queensland was up 44 per cent to 1,643 e NSW rose 30 per cent to 3,395.

The ATO is seeking to recover more than $35bn in debt from small businesses. 

• Victoria represented 27 per cent of company insolvencies in the 2022 financial year, 

• NSW represented 39 per cent and 

• Queensland 19 per cent.

And the woes in Victoria just keep getting get worse. 

Investors have been slugged with a cash grab by the Victorian Government who last year lowered the tax-free threshold for land tax from $300,000 to $50,000 commencing 1 January 2024. The tax targets investors who are of course the people that supply the residential property markets. In response, landlords have increased rents to cover the costs putting more pressure on renters. Currently, the average rent in Victoria is now $570.00 per week, an increase of 8% from the previous year. Victoria has rolled out 32 new speed and redlight cameras under the guise of road safety and is considering lowering road speeds in suburban streets to a snail’s crawl of just 30 kms an hour. But one cannot help but feel sinical of the real reason behind these measures, which is to top up the coffers in an attempt to pay off Labors debt. 

Garnishee and Director Penalty Notices

Federally, the ATO are issuing garnishee which create a statutory charge over a company bank accounts for the unpaid tax debts. The ATO are also issuing director penalty notices in an effort to make directors personally liable with their insolvent company. A kind of hedging their bets, so they can liquidate companies and bankrupt directors. 

In just the month of January 2025, the ATO has filed over 100 winding-up applications against small businesses. This is double that of the previous year, January 2024. 

Fudged Job Statistics 

In January 2025, the Australian Bureau of Statistics released its job data. It revealed that there are now approximately 365,400 employees in the Commonwealth government, 1,939,100 in State governments, and 213,500 in Local governments. This represented a significant portion of public sector employment in Australia. 

Since COVID, the private sector has been experiencing difficulties in finding employees to fill skilled roles, What is now evident is that those working in the private sector have taken up jobs in the private Government funded roles which now account for an alarming 5 out of every 6 jobs created, representing 85% of the 473,000 jobs created in Australia has gone to the government funded private sector which are public sector and private industries specialising in health, education and public administration. These industries which survive off Government subsidies and funding, have seen employment surge by 17% and 43% respectively since 2019 while the private sector has added only 9% more jobs in the same period. 

Interest Rates Sky High

Just about every homeowner who has a mortgage has been struggling to make ends meet. Interested rates have doubled since COVID. And one of the main contributing factor of inflation has been government spending and jobs growth which as can be seen from the graph above, has been artificially created by the Federal Government employing more people in the Public Sector. That fact, coupled with just about every State Government having its spending out of control, has increased inflation. The RBA has then punished mums and dads for effectively voting in Labor, by increasing interest rates and squeezing the life out of mortgage payers and investors who are heavily committed to property. The graph below explains how interests rates have performed over the past 35 years, starting with Paul Keatings, “the recession we had to have” when interest rates climbed to a crazy 18% for home loans. 

Migration

Another factor in this mess is the floodgates that were opened by the Labor Government for mass migration. As the son of migrants, I am a big advocate for growing our population and bringing skilled migrants into the country from all around the world is the way forward. However, the increase must be sustainable and in the present market, there is no incentive for developers to take the gamble and build more homes when interest rates and building costs are so high. This has added to the pressure on the local economies and infrastructure which is not keeping up with the growth. 

Conclusion

As can be seen from this very small micro analysing of the driving factors in the economy, the whole system is broken beyond belief and is unsustainable. Something is going to give and that has to be backbone of this country, the small business that are slowly dying off, with their directors bankrupted for their troubles, by the ATO. 

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Final Thought: The bravest love isn’t blind – it sees the risks, plans for them, and chooses joy anyway.