Victoria’s latest COVID-19 lockdowns are set to plunge public finances billions of dollars further into deficit this year and force the government to ramp up its already all-time-high debt.

The shutdowns are set to cost the state more than $1.1 billion in taxes, fees and charges that would have been paid by businesses forced to shut their doors, according to analysis by RMIT economist David Hayward, while the state government says its direct spending to prop up the economy since June is more than $4.2 billion.

The figures indicate a budget deficit in 2022 of up to $16 billion and debt out to $107 billion, big increases on the $11.4 billion and $102 billion, respectively projected in May when Treasurer Tim Pallas brought down his budget, based on the hope that future lockdowns would be “short term” and “localised”.

But the latest shutdown has ruined the September quarter reporting period, slashing expectations of payroll tax, gambling tax and other tax and levy receipts.

The prolonged lockdown of the nation’s two biggest cities, and the subsequent slump in non-food retailing, is likely to hit the Commonwealth’s GST take, making life harder still for Victorian and NSW treasurers next year when they will have a share of a smaller national GST pie to bolster their books.

Professor Hayward told The Age that the $49 billion stimulus packages announced by Mr Pallas in the previous, COVID-delayed, budget in November 2020 and underpinned by an unprecedented borrowing program, had been derailed by the latest shutdowns of the economy.

“The stimulus stuff hasn’t been wasted, but it hasn’t had the impact on growth, you might have hoped it to have.

“They’re going to have to reload the gun again for the next budget to get the economy going in the way they had hoped it might have done now,” he said.