Victoria will have its first new treasurer in a decade as Tim Pallas steps down and quits politics, leaving a mountain of state debt in his wake.
Mr Pallas announced he would resign from cabinet and retire as the member for Werribee after 18 years in politics at a snap press conference on Monday.
The 64-year-old has spent 10 years in charge of the state's books and described it as the greatest honour and privilege of his life.
"It is time for me to hand over the reins," he said.
Mr Pallas is Victoria's longest-serving standalone treasurer and the third longest overall, behind dual premier and treasurers Henry Bolte and Albert Dunstan.
He was assistant secretary of the Australian Council of Trade Unions and chief of staff to former premier Steve Bracks before entering parliament in 2006.
His resignation comes days after a mid-year budget update unveiled a $1.4 billion projected rise to the forecast state deficit of $3.6 billion in 2024/25.
The budget update showed net debt was expected to hit $155.2 billion by July and grow to $187.3 billion by mid-2028, after an $837 million blowout on the Melbourne Metro Tunnel and a $1.5 billion lifeline for the state's hospitals.
"We're not going to sugarcoat this and pretend that everything is perfect," Mr Pallas said.
He handed down his 10th budget in May, which revealed the Allan government was delaying more than 100 announced projects including a plan to build a new Royal Melbourne Hospital and Royal Women's Hospital.
When asked if he had any regrets on his time as treasurer, Mr Pallas said there were too few to mention.
"My greatest regret is that financial capacity is a limitation on our ambition," he said.
Flanked by Premier Jacinta Allan, Mr Pallas conceded there had increasingly been conjecture in cabinet over budget repair.
"Some of you may have noticed that there is a bit of tension between the premier and myself as we were landing these things," he said.
"That's what a good treasurer does, you've got to have creative tension, or you don't create anything."
Ms Allan thanked Mr Pallas for his 25 years of service, particularly through the COVID-19 pandemic.
"It was an economic crisis as well," she said.
Federal Treasurer Jim Chalmers said while he sometimes butted heads with Mr Pallas, he had earned the right to put his feet up.
"He's made an enormous contribution to the state that he loves," Dr Chalmers said.
Victorian Chamber of Commerce and Industry chief executive Paul Guerra said Mr Pallas had been an integral partner in fostering economic growth.
"His belief in empowering Victorian businesses has had a profound and lasting impact on the sector," he said.
Opposition Leader John Pesutto said Mr Pallas had left a legacy of "enormous debt" for current and future Victorian generations and suggested he was "abandoning ship".
Ms Allan plans to announce a replacement for Mr Pallas as treasurer in the coming days.
Mr Pesutto questioned whether it would change the Labor government's approach to managing the state's finances and took aim at Assistant Treasurer Danny Pearson's credentials.
Mr Pallas will officially retire at the end of the week, triggering a by-election.
