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Drowning in debt: Why Australia is paying $700 per second – just for the interest

The total interest bill on federal government debt is expected to add up to about $110 billion across the next five years – about $700 a second.

May 05, 2023, updated May 05, 2023
Consumer sentiment has taken a small bounce on the promise by Treasurer Jim Chalmers of a budget surplus. (Image: AAP).

Consumer sentiment has taken a small bounce on the promise by Treasurer Jim Chalmers of a budget surplus. (Image: AAP).

This is more than the Commonwealth spends on child care or infrastructure, according to figures from the treasurer’s office.

Forecasts for interest payments have improved a bit since October, but this year alone, the Commonwealth will pay just under $18 billion in interest on almost $1 trillion dollars of debt.

Australia’s total interest bill is then expected to climb above $20 billion in 2024-25 and reach $26 billion in 2026-27.

Acting Prime Minister Richard Marles says the interest bill is adding real pressure to the budget.

“It’s there. We have to work with it,” he told Nine’s Today Show on Friday.

“We, as a government, inherited a trillion dollars of debt from the former government which for all their rhetoric, was a big spending, high-taxing government which lacked discipline.”

But Opposition Leader Peter Dutton hit back, saying you couldn’t trust Labor when it came to talking about debt.

“We got the budget back into balance and then COVID hit,” he said.

“We spent $343 billion through JobKeeper, keeping people in their jobs, keeping businesses afloat. Labor supported every dollar of that spend.

“So it’s a bit rich now for (Mr Marles) to go out there and say when spending is going up under this budget.”

In October, the government banked more than 90 per cent of its upward revisions to revenue from high commodity prices.

The budget is on track to receive another multi-billion-dollar revenue boost and Treasurer Jim Chalmers has said previously the plan is to bank the majority of those upgrades again.

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“More than a hundred billion dollars of interest payments was the Liberals’ parting gift to the country,” he said.

“It will take more than one budget to clean up the mess we were left with.”

Chalmers said the cost of servicing debt was one of the fastest-growing pressures on the budget.

Other major areas of spending include defence, health, aged care and the National Disability Insurance Scheme.

The government will also extend the Medicare rebate for heart check-ups to mid-2025.

Heart disease is responsible for almost one in 10 deaths and for six per cent of Australia’s total disease burden.

More than 455,000 heart health checks have taken place since they were introduced in April 2019.

Health Minister Mark Butler said talking to a GP about heart health not only saved lives but helped to prevent or catch the disease before it was too late.

“Our government’s action on this has the potential to save thousands of lives,” he said.

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