The 2022-23 Australian state government budgets have revealed ever-increasing levels of debt, as state governments “borrow to build” and take their time to repair their operating budgets which were wrecked by the pandemic. Adept Economics has updated our interstate debt slide deck, which is available via the link below:
Interstate debt comparisons: 2022-23 state budget estimates
- Total state debt across the six states is set to reach $688 billion (27% of GSP) by 2025-26, led by Victoria ($226 billion) and NSW ($221 billion). For the general government sector (i.e. the departments of state and excluding government-owned corporations), the expected total is $543 billion (22% of GSP) across six states, with $182 billion for NSW and $202 billion for Victoria.
- Considering the state governments’ preferred measure of net debt, by 2025-26, total public sector net debt across the six states will amount to $506B (20% of total GSP). For the general government sector, total net debt across the six states will amount to $376B (15% of GSP).
- By 2025-26, general government interest expenses will cost the budgets of the six states over $17 billion yearly, absorbing 5% of total revenues. In Victoria that proportion will be 7%. These increasing payments to bondholders will constrain the budgetary options of future governments, which will likely be forced to repair budgets through spending cuts or tax hikes later this decade.
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