{"id":76312,"date":"2026-08-20T05:45:28","date_gmt":"2026-08-20T05:45:28","guid":{"rendered":"https:\/\/www.europesays.com\/australia\/76312\/"},"modified":"2026-08-20T05:45:28","modified_gmt":"2026-08-20T05:45:28","slug":"australias-debt-hits-historic-1-trillion-milestone-and-its-only-getting-worse","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/australia\/76312\/","title":{"rendered":"Australia\u2019s debt hits historic $1 trillion milestone \u2013 and it\u2019s only getting worse"},"content":{"rendered":"

The Albanese government will tip Australia\u2019s total debt<\/a> 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. <\/p>\n

Jim Chalmers forecast in the May budget that total debt<\/a> on issue would hit $1.051 trillion this financial year or about 34 per cent of GDP, the highest in history \u00adoutside the pandemic<\/a>, and expected to rise to 35.8 per cent of GDP in 2029 as government strains under the rising cost of health and \u00adhospitals, child care, housing and defence. <\/p>\n

Last Friday the government\u2019s debt manager \u2013 the Australian \u00adOffice of Financial Management (AOFM) \u2013 recorded a total debt \u00adissued of $983.7bn. <\/p>\n

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.<\/p>\n

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 \u00adannual fiscal monitor of federal and state governments that interest bills on debt were on the rise. <\/p>\n

\u201cThe interest costs of paying off debt are forecast to take up a larger share of government revenue, \u00adrising from 4.1 per cent in 2024-25 to 6.2 per cent in 2029\u201130,\u201d the PBO said. <\/p>\n

It forecast total federal and state debt to \u201cincrease steadily\u201d and noted that the federal government\u2019s net debt per capita, was surpassed only by those of the Northern Territory, ACT and \u00adVictoria.<\/p>\n

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, \u201cmay \u00adreduce fiscal flexibility by \u00adincreasing the proportion of \u00adrevenue committed to unavoidable interest costs\u201d.<\/p>\n

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. <\/p>\n

\u201cWe will be over $1 trillion for only 24 hours, as there\u2019s a debt repayment on Friday, but after September we\u2019ll spend the next few years above $1 trillion,\u201d Mr Lilley told The Australian. <\/p>\n

\u201cIt hasn\u2019t so much broken $1\u00a0trillion as it has just touched the wall and done a tumble-turn.<\/p>\n

\u201cIt\u2019s a higher debt level than Australia is used to, but at around a third of GDP that\u2019s a much lower level than international investors are used to. <\/p>\n

\u201cThat being said, there\u2019s a bit of concern about global debt demands \u2013 and that\u2019s been pushing longer-term interest rates higher over the past two months.\u201d<\/p>\n

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.<\/p>\n

In parliament on Wednesday Dr Chalmers said the country\u2019s credit rating had been secured \u00adbecause of Labor\u2019s debt management following the pandemic fiscal blow out. <\/p>\n

\u201cMoody\u2019s, the second global ratings agency in the course of the last couple of weeks, reaffirmed Australia\u2019s 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,\u201d the Treasurer said.<\/p>\n

The Australian sought \u00adcomment from the AOFM but did not receive a\u00a0reply. A spokesman for Dr Chalmers did not deny the nation would hit the $1 trillion figure, instead saying Labor\u2019s record on debt was stronger than the Coalition.<\/p>\n

\u201cIf the Coalition had been in power today gross debt this year would already be approaching $1.2 trillion,\u201d the spokesman said.<\/p>\n

Angus Taylor said hitting $1\u00a0trillion was due to the Albanese government\u2019s spending, which is forecast by Treasury to hit 26.8 per cent of GDP this \u00adfinancial year, the highest in 40\u00a0years outside the pandemic. <\/p>\n

\u201cA trillion dollars of Labor debt is a grim milestone for Australia,\u201d Mr Taylor said. \u201cIt 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.\u201d<\/p>\n

Polling from Newspoll indicates 70 per cent of voters are at least somewhat worried about debt levels, including 31 per cent who are \u201cvery worried\u201d. Labor voters are the least worried and Coalition and One Nation voters are the most worried.<\/p>\n

S&P reaffirmed Australia\u2019s 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. <\/p>\n

\u201cAustralia\u2019s planned property tax increases and savings measures should help mitigate rising structural spending pressures,\u201d S&P Global said.<\/p>\n

Treasury has forecast that Dr Chalmers will become Australia\u2019s highest income-taxing \u00adtreasurer 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.<\/p>\n","protected":false},"excerpt":{"rendered":"The Albanese government will tip Australia\u2019s total debt over $1 trillion for the first time on Thursday 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