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Spare change anyone? Australia owes the world $500 billion to mark new debt milestone

Shane Wright, Economics EditorThe West Australian
The value of bonds sold by the Government will top the half-trillion mark today.
Camera IconThe value of bonds sold by the Government will top the half-trillion mark today. Credit: WA News

The Federal Government will owe the world a record $500 billion today, with the tab to be left to future generations to pay.

The total value of bonds sold by the Government will top the half trillion mark with a sale of $800 million worth of securities today.

The Australian Office of Financial Management website on Friday put the figure at $500.129 billion.

Malcolm Turnbull had criticised the Rudd-Gillard governments when it predicted the nation’s gross debt would reach $300 billion, labelling it gigantic and frightening.

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In the 2014 Budget then treasurer Joe Hockey predicted total debt would not surpass $500 billion, arguing cuts in Government spending would save taxpayers more than $16 billion in interest over the coming decade.

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This year’s Budget forecasts debt to reach $725 billion by 2027-28, with the interest bill expected to reach $16.2 billion this year.

Treasurer Scott Morrison said it was the Labor Party that should apologise for the $500 billion problem, arguing it had run up the debt.

Shadow finance spokesman Jim Chalmers said not only had gross debt exploded under the Government there were no signs it would fall.

“The problem is that when it hits half-a-trillion dollars, gross debt keeps climbing – $606 billion by the end of the forwards, $725 billion after 10 years and continues to rise with no peak in sight,” he said.

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Centre for Independent Studies senior fellow Robert Carling said even the Government’s projections of reaching $600 billion in debt by the end of the decade was based on optimistic forecasts.

“It's not so much the level of debt that’s a concern but its upward trajectory towards increasingly risky territory,” he said.

“Whether that trajectory can be changed and the debt stabilised or better still paid down depends on the Government achieving the Budget surpluses it is projecting after 2019-20.

”Right now you would have to say those surpluses are unlikely to materialise.”

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