Victoria’s big-money building program could be steering the state towards fiscal strife, according to a sharp warning by a leading financial ratings agency on spending and borrowing.

The states are committed to splashing a combined total of $231 billion, mostly on infrastructure, in the next four years, with the spending almost entirely funded by debt.

Ratings agency Moody's says spending is rising as governments invest big on roads and rail to keep expensive election promises.

The agency says that states have mostly blown the cash reserves built up from selling off assets that were once publicly owned, while being starved of fresh funds by the collapse of stamp duty revenue, which is estimated to have cost the states a combined $5.5 billion this year alone.