$500 billion to be wiped off Australia’s debt | Chalmers’ $500b debt turnaround relies on ‘…

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Chalmers’ $500b debt turnaround relies on ‘unrealistic’ forecasts

Claims in the upcoming Intergenerational Report that Australia is on track for a $500 billion improvement in the federal government’s long-term debt outlook hinge on an overly optimistic assumption about the nation’s productivity potential, economists say.

They say the report, to be released on Monday, would instead have revealed a deterioration in the federal government’s debt position over the next 40 years had Treasury used a more realistic forecast for productivity growth than its current assumption of 1.2 per cent.

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Chalmers wipes more than $500b off nation’s debt – in four decades’ time

Hundreds of billions of debt that would weigh on future taxpayers is likely to be avoided, a long-term forecast on the state of the federal budget will reveal, even as the government faces growing spending pressures and a blowout in the nation’s interest bill.

The seventh release of the intergenerational report, to be released by Treasurer Jim Chalmers on Monday, will show gross government debt far lower than expected and deep spending cuts in this year’s budget improving the budget bottom line into the 2060s.

Yet the immediate pressure on the budget is growing with another step-up in the interest rate on Australian government debt amid a global repricing of public debt exposing fiscal problems in the United States.

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