Original article by Michael Read
The Australian Financial Review – Page: 1 & 6 : 21-Oct-26

The recent rise in bond yields will add to government borrowing costs, which was not factored into the federal or state budgets for 2026. The federal Treasury had already forecast a $64.1bn headline budget deficit for 2026-27 prior to the increase in bond yields, and the government will have to achieve some $11bn worth of spending cuts to prevent a much larger deficit. Treasurer Jim Chalmers recently advised that the upcoming mid-year budget update will include a savings package. HSBC’s chief economist Paul Bloxham says the government should consider reducing off-budget spending, which is forecast to exceed $32bn in 2026-27.

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