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Any extra cash in government coffers will be spent on hospitals, roads and schools rather than tax cuts, Victorian Treasurer John Lenders says.
He released a budget update on Thursday showing the forecast surplus for this financial year has been revised up from the $165 million estimate in May, to $262 million.
Unemployment is tipped to be 6.5 per cent by the end of June next year, which is 0.5 per cent lower than predicted in May.
The jobless rate is expected to peak at 6.75 per cent in 2010-11 and to remain at that level until at least the end of June 2013.
Net debt is forecast to be 3.5 per cent of gross state product by the end of this financial year, which is 0.2 per cent lower than the May budget forecast.
Mr Lenders said the increased surplus forecast did not mean the government would indulge in a cash splash leading up to the election next November.
'I think anyone who believes there is a war chest or large surpluses ought have a very close look at these budget papers,' he told reporters in Melbourne.
'This is a lean budget, it is one that is focused on the things that matter into the future for Victoria and we have, during the global financial crisis, targeted every available resource that we prudently could to growing jobs.'
When asked if there was room for tax cuts in next year's budget, Mr Lenders said any extra cash would go towards building infrastructure.
'Every cent of surplus that this government has that has not been used on day-to-day programs will go into building tomorrow's schools, hospitals and other infrastructure,' he said.
'Any budget surplus in this state gets invested back into infrastructure.
