Australia's next intergenerational report projects $500 billion debt reduction by 2060s

Treasurer Jim Chalmers is set to unveil the seventh intergenerational report, which will reveal that gross Australian government debt is projected to drop to around a quarter of GDP by the early 2060s, trimming the nominal debt by more than $500 billion from earlier estimates. The forecast attributes the decline to a combination of stronger recent tax revenue and significant spending reductions, especially in the National Disability Insurance Scheme, which also eases future interest expenses for taxpayers.

The report expects the deficit in 2062-63 to be close to 1.5% of GDP, about 1.2 percentage points lower than the previous outlook. Tax collections are not expected to exceed the 2005-06 high of 24.2% of GDP, slightly below Chalmers’ 2023 projection. Despite the long-term fiscal relief, the Treasury notes that rising global interest rates, reflected in a recent 5.39% yield on new Australian debt, are increasing the immediate cost of borrowing. Opposition shadow treasurer Tim Wilson has called for further spending cuts to curb inflationary pressures.