Australia remains on track to rack up $1 trillion in IOUs for the first time, as it pays more in interest rates and shoulders the ongoing bill for the COVID-19 pandemic.
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Gross debt is estimated to rise to $927 billion in this financial year before hitting the historic $1 trillion mark in 2023/24, according to the federal budget papers.
It will then peak at $1.16 trillion in 2025/26, broadly in line with the former government's March forecast of $1.17 trillion.
Still, Treasury predicts a forecast cumulative improvement in the budget deficit over the next four years will deliver better numbers for gross debt as a share of the economy.
"Our responsible decisions mean gross debt-to-GDP will be 37.3 per cent in 2022/23 and remain lower over the forward estimates compared to the pre-election forecasts," Treasurer Jim Chalmers said on Tuesday in his budget speech.
But Dr Chalmers still has a big fiscal repair task ahead because, despite the forecast improvement, gross-debt-to-GDP will still be around 40 per cent for some years.
"The increase in gross debt ... can be accounted for by higher borrowing costs due to higher interest rates ... and an upward revision in the estimated costs of delivering the National Disability Insurance Scheme," the budget papers said.
Net debt, which takes into account the positive financial impact of certain government assets, will peak at $766.79 billion in 2025/26, up from $634.07 billion this financial year.
While the net debt number looks better than gross debt, Australia's total interest bill continues to climb toward the $20 billion region and beyond.
The government expects to pay close to $22.41 billion this year in interest, before it rises by about another $10 billion to $32.63 billion in 2025/26.
Australian Associated Press
