Government spending is set to hit the highest level in almost four decades outside of Covid as debt climbs above $1trillion for the first time ever.
Treasurer Jim Chalmers used the word ‘responsible’ six times in his Budget speech.
He even suggested Labor had delivered ‘responsible economic management’ despite forecasts of Budget deficits for the foreseeable future.
But under Labor, government payments as a proportion of the economy is set to hit 27 per cent of gross domestic product, the highest level since 1986 outside of the 2020 Covid pandemic.
Public spending is forecast to hit $777.5billion in 2025-26 as gross government debt climbs above $1trillion for the first time ever during the next financial year.
But Dr Chalmers used his Budget speech in Parliament to argue gross debt would be $940billion in 2024-25, or $177billion less than forecast in 2022 when the Coalition was last in power.
‘This means we will avoid around $60billion in interest costs over the decade. These are some of the dividends of our responsible economic management,’ he said.
Gross government debt is set to make up 35.5 per cent of gross domestic product, or GDP, in 2025-26, up from 33.7 per cent in 2024-25.
Government spending is set to hit the highest level in almost four decades outside of Covid as debt climbs above $1trillion for the first time ever (Prime Minister Anthony Albanese is pictured with Treasurer Jim Chalmers and Finance Minister Katy Gallagher)
Under Labor, government payments as a proportion of the economy is set to hit 27 per cent of gross domestic product, the highest level since 1986 outside of the 2020 Covid pandemic
While Labor has delivered two consecutive Budget surpluses since coming to power, only deficits are forecast from the next financial year onwards, with no return to surplus in sight.
A deficit of $27.6billion is forecast for 2024-25, with the red of sea growing to $42.1billion in 2025-26 – making up 1.5 per cent of GDP.
Treasury is expecting the spot price of iron ore, the commodity used to make steel, to fall to $US60 a tonne by March 2026, down from levels above $US100 a tonne now.
Weaker iron ore prices, as a result of less demand from China, means less company tax revenue for the federal government.
But in a sign Labor has more election promises to announce, the Budget has contingency reserve funding of $40.838billion set aside over four years.
Governments set aside funding for new policies that are yet to be announced.
By comparison, just $1.95billion has been set aside for natural disaster relief from July 2025 to June 2029, even though.
