Australia hits $1 trillion debt for the first time

Australia has hit $1 trillion of debt for the first time as Labor and the Coalition go back and forth on which party is to blame.

The Australian Office of Financial Management calculates Commonwealth gross debt at $983.7 billion as of August 14 – when it was last updated – but will account for an extra $13 billion in syndicated debt and $4 billion of treasury bond.

That will bring the gross debt to $1.0008 trillion when the website is updated at 10.30am on Thursday.

Then, $6 billion of repayments to be made on Friday will bring the gross debt back down below the trillion-dollar mark until more debt is issued over the coming weeks and officially increases debt to $1 trillion.

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Shadow treasurer Tim Wilson blamed the record gross debt on persistently above-target inflation and federal government spending.

“Today is ultimately a sad day for the country,” he told reporters on Thursday.

“Simple reality is this government is addicted to spending, it’s addicted to inflation.

“Then they go and tax the inflation, and they spend the inflation in a vicious cycle, which is why Australians are falling further and further behind.”

Treasurer Jim Chalmers said the Coalition would have caused gross debt would to reach $1 trillion three years ago, with a forecast from the previous Coalition government showing it expected debt to reach that number by 2023-24.

“No amount of hyperventilating from the Liberal Party today will change the fact that debt is $200 billion lower this year than what they left us,” he said.

“If the Coalition had been in power today gross debt this year would already be approaching $1.2 trillion.

“The government’s responsible economic management has got debt down from what we inherited from the Coalition and Australia is avoiding more than $70 billion in interest.

“The Liberals took to the last election a policy for higher taxes, bigger deficits and more debt and that’s why they can’t be taken seriously today or any day.”

Wilson hit back at the accusation, accusing Chalmers of not taking responsibility for the economy.

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The Parliamentary Budget Office’s 2026-27 national fiscal outlook also estimated the Commonwealth gross debt to be $1 trillion or 34 per cent of GDP.

It expects that debt to grow to almost 36 per cent of the GDP by the end of the decade.

The International Monetary Fund has forecast Australia’s total debt-to-GDP ratio – which includes federal and all state and territory debt – to reach 50.7 per cent in 2026-27.

In comparison, the United Kingdom’s debt-to-GDP ratio is 110.7 per cent while Canada’s is 103.6 per cent.

Both countries, however, have a greater population to Australia’s 28 million people with 70 million and 41 million respectively.