The Albanese government will tip Australia’s total debt over $1 trillion for the first time on Thursday morning, bouncing around the new mark for the next few weeks just as the independent fiscal scorekeeper warns that government interest expenses will chew up an increasing share of revenue.

Jim Chalmers forecast in the May budget that total debt on issue would hit $1.051 trillion this financial year or about 34 per cent of GDP, the highest in history ­outside the pandemic, and expected to rise to 35.8 per cent of GDP in 2029 as government strains under the rising cost of health and ­hospitals, child care, housing and defence.

Last Friday the government’s debt manager – the Australian ­Office of Financial Management (AOFM) – recorded a total debt ­issued of $983.7bn.

It then added $13bn through a syndication this week and will on Thursday issue another $4bn, tipping the total figure to $1,000,800,000,000, before dipping below that level on Friday as $6bn in notes mature.

Treasury is forecasting the annual interest bill to hit $29.5bn this year, rising to $42.2bn before the end of the decade. On Wednesday the Parliamentary Budget Office said in its ­annual fiscal monitor of federal and state governments that interest bills on debt were on the rise.

“The interest costs of paying off debt are forecast to take up a larger share of government revenue, ­rising from 4.1 per cent in 2024-25 to 6.2 per cent in 2029‑30,” the PBO said.

It forecast total federal and state debt to “increase steadily” and noted that the federal government’s net debt per capita, was surpassed only by those of the Northern Territory, ACT and ­Victoria.

The PBO said that while long-term fiscal scenarios were likely to remain sustainable, the increased share of interest payments as a percentage of revenue, “may ­reduce fiscal flexibility by ­increasing the proportion of ­revenue committed to unavoidable interest costs”.

Andrew Lilley, the chief interest rate strategist at Barrenjoey, which helps the government sell debt, verified that the federal debt level would exceed $1 trillion on Thursday for the first time in Australian history.

“We will be over $1 trillion for only 24 hours, as there’s a debt repayment on Friday, but after September we’ll spend the next few years above $1 trillion,” Mr Lilley told The Australian.

“It hasn’t so much broken $1 trillion as it has just touched the wall and done a tumble-turn.

“It’s a higher debt level than Australia is used to, but at around a third of GDP that’s a much lower level than international investors are used to.

“That being said, there’s a bit of concern about global debt demands – and that’s been pushing longer-term interest rates higher over the past two months.”

This year there have been three domestic 0.25-percentage-point interest rate hikes, while financial markets put the chance of another hike before the end of the year at about 60 per cent.

In parliament on Wednesday Dr Chalmers said the country’s credit rating had been secured ­because of Labor’s debt management following the pandemic fiscal blow out.

“Moody’s, the second global ratings agency in the course of the last couple of weeks, reaffirmed Australia’s AAA credit rating and they did that because of the responsible way we have gone about managing a Budget, getting gross debt down $200bn lower than we inherited and the trajectory that those opposite left us when we came to office,” the Treasurer said.

The Australian sought ­comment from the AOFM but did not receive a reply. A spokesman for Dr Chalmers did not deny the nation would hit the $1 trillion figure, instead saying Labor’s record on debt was stronger than the Coalition.

“If the Coalition had been in power today gross debt this year would already be approaching $1.2 trillion,” the spokesman said.

Angus Taylor said hitting $1 trillion was due to the Albanese government’s spending, which is forecast by Treasury to hit 26.8 per cent of GDP this ­financial year, the highest in 40 years outside the pandemic.

“A trillion dollars of Labor debt is a grim milestone for Australia,” Mr Taylor said. “It is what happens when you have a Labor government that cannot control its spending or the budget. Labor is spending at levels we have not seen outside a recession in around 40 years, yet Australians are being told to pay more tax and accept higher prices.”

Polling from Newspoll indicates 70 per cent of voters are at least somewhat worried about debt levels, including 31 per cent who are “very worried”. Labor voters are the least worried and Coalition and One Nation voters are the most worried.

S&P reaffirmed Australia’s AAA credit rating this month saying new taxes would help bolster government coffers, but also warned that if per-capita economic growth slowed it could downgrade that rating.

“Australia’s planned property tax increases and savings measures should help mitigate rising structural spending pressures,” S&P Global said.

Treasury has forecast that Dr Chalmers will become Australia’s highest income-taxing ­treasurer since records were kept, driven by personal collections. Total income tax as a share of GDP will hit 18.6 per cent in 2026-27.