The Australian Office of Financial Management has updated the data on gross government debt level. Today, it hit a new record at $493.8 billion. See aofm.gov.au
Having inherited $273 billion from the Labor government in September 2013, the Coalition’s policies have added a rib-cracking $220 billion in just 3 years and 8 months, and all of this in a climate of decent global economic growth, a lower Aussie dollar and record low interest rates.
Having watched the dust settle from the recent budget, it is clear that the levels of government debt will keep rising, probably at a more rapid rate than Treasurer Scott Morrison projected simply because wages growth is so weak, company profits are fragile and the commodity price outlook has become more fragile on the back of extra global output and huge inventories.
Morrison’s budget strategy was to let government debt rise to a numbing $725 billion by 2026-27, even on the back of his rosy forecasts which propelled the budget to surplus in 2020-21. He’s dreaming.
Either way, Australia is just a few weeks away from having a half a trillion dollar government debt party.
I wonder if Scott Morrison will be holding a press conference when this momentous event happens?
I know I will.
NOTE: Government debt will drop $13.9 billion on 21 July when that government bond matures which means the level of debt will bounce around $500 billion for the next few months before resuming its upward path.