Australian Federal Government Gross Debt Nears $1 Trillion

The federal government's gross debt is expected to reach $1 trillion within the next few months. The figure has drawn political attention, including a dedicated online debt clock established by the Coalition. Government debt has increased across many countries since the pandemic.

Australia's gross debt stands at 34 per cent of GDP, lower than the United States where debt exceeds 120 per cent of GDP.

9 per cent of GDP for the coming financial year and is projected to rise toward 22 per cent later this decade. The recent federal budget included forecasts of improvement in the structural budget position. S. 10-year government bond yields has narrowed since the budget, indicating the structural reforms were well received by markets.

Interest payments on the debt are projected to grow faster than spending on hospitals, defence, childcare subsidies, and aged care over the medium term. Independent economist Chris Richardson stated that younger generations should focus more on the debt issue given the budget's emphasis on intergenerational fairness.

AMP chief economist Shane Oliver noted that higher debt levels leave less capacity for fiscal responses during future economic shocks compared with the period before the 2008 global financial crisis.