DEBTS

Victoria’s debt levies haul in far more than expected

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Original article by Patrick Durkin, Gus McCubbing
The Australian Financial Review – Page: 11 : 13-Nov-24

The Victorian government’s budget update shows that the state’s net debt is slated to top $188bn by 2027-28. The update also reveals that the government’s Covid debt levies are expected to raise $529m more over four years than had been forecast in the 2023 budget. The levy on businesses with payrolls exceeding $10m had been expected to raise $3.9bn over four years, and the levy on property investors was slated to raise $4.7bn. Meanwhile, the government’s employee expenses rose by 7.94 per cent to $15.48bn in 2023-24.

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Vic ratings warning over debt

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Original article by Gus McCubbing, Patrick Durkin
The Australian Financial Review – Page: 1 & 8 : 8-May-24

The Victorian government’s budget papers show that it expects to post an operating surplus of $1.5bn in 2025-26. However, the state’s net debt is forecast to rise from $156.2bn in mid-2025 to $187.8bn by 2028. S&P Global Ratings analyst Anthony Walker says the firm expects Victoria’s gross debt as a proportion of revenue to rise above 200 per cent of operating revenue. He warns that the state’s credit rating could be downgraded again if its debt rises to 240 per cent of operating revenue or interest payments rise to 10 per cent of operating revenue. Meanwhile, interest payments on the state’s debt will rise from $6.5bn in 2024-25 to $9.4bn by 2028, and interest as a share of revenue is forecast to rise from 6.3 per cent to 8.8 per cent.

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S&P GLOBAL RATINGS

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

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AUSTRALIA. DEPT OF THE TREASURY

Chalmers to fight inflation, then spend

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

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AUSTRALIA. DEPT OF THE TREASURY

Total debt pile triples in 10 years

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Original article by Patrick Commins
The Australian – Page: 4 : 1-Nov-23

Data from the Parliamentary Budget Office shows that Australia’s net debt has risen to $31,400 per capita over the last decade. Net debt per capita totalled just $8,600 at the federal level in 2013-14, but this is forecast to reach $21,300 in 2023-24. Across the states and territories, net debt per person was just $2,000 in 2013-14, and is slated to reach $11,200 in the current financial year. Victoria has recorded the biggest increase in net debt per capita among the states over the last decade, ahead of NSW and South Australia.

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AUSTRALIA. PARLIAMENTARY BUDGET OFFICE

Government debt bill poised to double: IMF

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Original article by Michael Read
The Australian Financial Review – Page: 5 : 13-Apr-23

The International Monetary Fund has forecast that federal and state government spending as a share of the Australian economy will settle about two per cent above its pre-pandemic average. It also expects the general government interest bill to account for 1.8 per cent of GDP by 2028; this is more than double the size of the interest bill in the years leading up to the pandemic. Treasurer Jim Chalmers says the federal budget has structural issues, due to factors such as the growing debt bill, the rising cost of the National Disability Insurance Scheme and spending in areas such as health, aged care and defence.

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INTERNATIONAL MONETARY FUND, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Victorians get poorer under Labor

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 10 : 23-Nov-22

Data from the Australian Bureau of Statistics shows that Victoria’s gross household disposable income per person was $52,488 in 2021-22, which is the second-lowest among the states and territories. Victoria’s gross household disposable income per person had been ranked fourth in 1999, and reached the third-highest in the early 2000s. Former federal Treasury economist Stephen Anthony says the state government has overseen a "pyramid scheme" built on high debt; he says it is very clear that Premier Daniel Andrews has destroyed living standards and been "fiscally profligate". Victoria’s net debt is forecast to rise to $166bn in 2025-26, which equates to 24.6 per cent of the state’s economy

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AUSTRALIAN BUREAU OF STATISTICS, VICTORIA. DEPT OF PREMIER AND CABINET

Victorian budget a risk to recovery

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Original article by Rachel Baxendale, Geoff Chambers
The Australian – Page: 1 & 6 : 21-May-21

The Victorian government’s May 2021 Budget shows that the state’s net debt will blow out to $156.3bn by mid-2025. However, the government has confirmed that the state’s deficit for 2020-21 will be much lower than previously forecast, at $17.4bn. The key measure announced in the Budget is a payroll tax surcharge of 0.5 per cent on businesses with a wages bill of more than $10m; this will rise to one per cent for businesses with wages costs of more than $100m. The surcharge is slated to raise $387m in 2021-22 and about $3bn over four years, with the proceeds to be used to finance a $3.8bn mental health package. The levy has been criticised by business leaders and federal Treasurer Josh Frydenberg, who warn that it will cost jobs and undermine the national economy’s recovery from the pandemic.

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AUSTRALIA. DEPT OF THE TREASURY

AAA rating likely to be downgraded

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Original article by Michael Read
The Australian Financial Review – Page: 15 : 13-May-21

S&P Global Ratings placed Australia’s triple-A credit rating on negative outlook in April 2020, in response to the COVID-19 pandemic. The Commonwealth Bank has warned that Australia could potentially be downgraded to AA+ when S&P undertakes its annual review of the nation’s credit rating in September. Fixed income strategists Philip Brown and Martin Whetton attribute this to Australia’s rapidly growing net debt. However, ratings agencies are generally positive about Budget measures aimed at further stimulating the economy.

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S&P GLOBAL RATINGS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

National cost of pandemic response to reach $327bn over five years

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Original article by Patrick Commins
The Australian – Page: 4 : 5-Mar-21

The Parliamentary Budget Office estimates that the combined net debt of Australia’s three levels of government will blow out to almost $1.3tn in the five years to 2024. Federal, state and local governments are forecast to collectively spend some $327bn on COVID-19 measures over the five-year period. The independent budget watchdog now expects the national net operating balance across all levels of government in 2020-21 to be a deficit of 11.1 per cent of GDP; it had previously forecast a surplus of 1.7 per cent of GDP for the current financial year.

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AUSTRALIA. PARLIAMENTARY BUDGET OFFICE