It’s a record the Albanese Government would prefer not to have with Australia’s total debt now topping one trillion dollars for the first time. But the important question is, who’s to blame?
Another related question is just how significant is this debt milestone?
An interesting revelation about the nature of federal government debt is that the actual dollar value of public debt can bounce around.
The Australian reveals that today the debt ticks over to $1,000,800,000,000, but on Friday it drops below a trillion dollars because the Government pays $6 billion back as bonds issued mature. But we’ll soon be back over the trillion-dollar mark!
Big debt numbers can be both positivity-generating and scary-looking but they really should be evaluated in more comparable terms. So, let’s give an objective assessment of this biggest ever federal government debt level.
For the debt purists, in 2025 the combined public debt of the federal, state and territorial governments was $1.62 trillion, and you can bet this is a lot higher given the ‘drunken sailor’ spending habits of state premiers, especially in Victoria!
But let’s just focus on the Albanese Government’s debt because it is the biggie. So, what do you need to know about this trillion dollar ‘Albo-tross’ around our neck? Here goes:
- The annual interest bill taxpayers have to cover is $29.5 billion this financial year.
- By 2030 it will be $42.2 billion.
- Last year the interest cost was 4.1% of what the government collected in revenue but will grow to 6.2% by the end of this decade.
- Persistent high inflation, which leads to higher interest rates makes reducing this debt interest cost very difficult.
- The debt explosion is a consequence of over-spending and low national productivity, which reduces the income generated and the tax collected, which means more debt is needed to run government.
- As a percentage of GDP, the debt is about 34% of GDP, “the highest in history outside the pandemic, and expected to rise to 35.8%,” The Australian reports.
But it’s not all bad news. If you take an international view of our debt. According to statisticsoftheworld.com, our public debt as a percentage of GDP is 50.6% but how do we compare to similar countries/economies?
Here’s a small table to check out.
| Country | Debt % GDP |
|---|---|
| Netherlands | 44.1% |
| Norway | 42.9% |
| Sweden | 36.7% |
| New Zealand | 56.7% |
| Germany | 64.6% |
| United Kingdom | 103.6% |
| China | 106.9% |
| France | 118.4% |
| USA | 125.8% |
| Japan | 204.4% |
Clearly, we are a low public debt-to-GDP country, but our numbers are helped by the contribution of sectors like miners, exporters and other internationally successful businesses, which it is fair to say, the Albanese Government doesn’t go out of its way to help.
A more pro-business approach and a greater commitment to raising productivity from the Federal Government could reduce budget deficits via greater tax collections off a bigger GDP number.
But that’s an argument for another day.
On whether this debt is going to take away our triple-A debt rating, The Australian reported the following from the debt rating agency S&P Global: “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.”
It’s nice to know that Treasurer Chalmers’ singling out of property investors for new taxes will help him and the country out of our debt pickle created by the ‘Albo-tross’ policies largely created by the Treasurer and his colleagues.
This is ridiculous. Most families can balance their budget so why cant our Federal Government.
Mmmmm?
The burdensome debt will be even a larger issue for the future generations of this country
Imagine what we could achieve in this great land of ours if we had pollies that created policies not just to win votes, but also thought of the future health and prosperity of our country?
Imagine also if greats like Gina Rinehart shifted their domiciles offshore and we lost billions in tax revenues from our valuable miners?
If chalmers et al not losing sleep over these issues, well they certainly should be because this will haunt them for years to come.
You can bet it’s going to get worse and I have no confidence that they will reign in the hemorrhaging NDIS!!!
Thanks Peter, your analysis is always appreciated. We are headed in the wrong direction. Our government is bloated and no longer fit for purpose. There are too many people getting paid too high salaries across all three layers of government & they don’t add 1 cents worth of productivity to the nation. They are pen pushers & paper shufflers and spend most of their time trying to figure out how to levy more taxes & how to spend them. The country needs a shake up & I believe we are in the process of getting one. The property ponzi that underpinned our services economy is collapsing and this Labor Federal government will be gone in the next election. We need to tackle the debt, but they’re doing the opposite while feathering their own nests. Anyone with any sense is selling the Aussie dollar.