Gary Hardgrave:
To break it all down, a bloke who understands this, he’s Chief Economist at the Institute of Public Affairs, Adam Creighton, joins us. Adam, welcome to the Ministry of Common Sense. We always point to Victoria, but Queensland and South Australia are giving them a run for their money.
Adam Creighton:
Yeah. Look, certainly, Gary, I think Victoria still has the dunce hat, but it’s definitely worth pointing out that Queensland and South Australia will eventually, at least on current trajectory, give Victoria a run for its money for this dubious crown. I mean, I guess in Queensland’s case, you can say, well, the Olympics are coming, et cetera, but that’s still no excuse for running up extraordinary debts that the next generation will have to pay for. I mean, Queensland’s net debt is forecast in its own budget, which goes out to 2030, as you know, to grow sevenfold from 14 billion to 98 billion. So that’s an increase of almost 600%. And South Australia with a much smaller population, its debt’s going up to 41 billion.
And in South Australia’s case, I mean, I had a look, and if you just look at the state’s own taxation, so the taxes the state government itself raises, not GST, et cetera, I mean, the interest bill of that state’s going to consume about a third of the state’s tax. So you just think payroll tax, stamp duty, all that will be going just to service the interest on that state’s debt more or less, which is a pretty sorry state of affairs. And just in your intro, you’re very right to point out there’s always focus on the trillion dollars, and I get it. It’s a big number. It’s a good headline. I was a journalist for many years.
Gary Hardgrave:
Yep.
Adam Creighton:
But there’s another 700 billion at the state level. So we’re actually already at 1.7 right now. And what kind of frustrates me is there’s too much focus on the federal government’s debt because the state government’s debt is no less public, it’s no less national than the federal government, because ultimately the federal government is going to bail out any state that ever got to a crisis. So each state’s debt is ultimately everyone’s problem.
Gary Hardgrave:
Indeed it is. And that’s the point we’ve got to keep hammering and hammering and hammering. I actually have a view that I think we should cut taxes, get rid of a whole lot of red tape and all the fees and forms and everything because states keep looking and federal governments are constantly looking at new taxes, believing that’s the way, it can tax us into prosperity. I would have thought cutting taxes and getting energy back into our economy, investing in nation-building infrastructure. Adam, I keep talking about Melbourne to Townsville, standard-gauge rail. I mean, if the North of Australia is there to defend us, why haven’t we got standard-gauge rail north of the CBD of Brisbane? We haven’t, 125 years after federation. So we’ve got to be starting to focus where we’re spending our money. We’re borrowing big to pay for today’s groceries, not building the house and the infrastructure we need for the future.
Adam Creighton:
Yeah, certainly that’s right. Look, I’d agree with that. And also it strikes me it’s strange we don’t have a gas pipeline from Western Australia to the East Coast states. I mean-
Gary Hardgrave:
Exactly.
Adam Creighton:
… effectively two separate nations, basically. Those gas markets are not integrated at all. That’s another travesty in my view. And when you do have infrastructure, I mean, I’ve been very extremely disappointed this morning to hear the new Premier of Victoria basically say he’s going to go ahead with this suburban rail loop, which is going to be hundreds of billions of dollars. It doesn’t pass the cost-benefit analysis. And frankly, being cynical, I think it’s more about just providing a steady stream of union CFMEU jobs for decades into the future.
Gary Hardgrave:
Yeah, we’ve done that with Cross River Rail here. Went from 5.4 to now $20 billion. If you just say it quickly, it’s not much.
Adam Creighton:
And, I mean, each of the states has about a 5% payroll tax on all employment. Victoria’s is the highest. I think Queensland will be about 5, too. So the states often have the worst taxes. I mean, stamp duty on buying a home is amongst the worst because no one moves. Once you buy a place and fork out 30, $40,000 probably now for a normal house in Brisbane, maybe more. And so once you’ve done that, you’re extremely reluctant to move again and be hit twice.
Gary Hardgrave:
I think stamp duty is the most insidious tax. The Insurance Council tells me-
Adam Creighton:
Oh, it’s preposterous.
Gary Hardgrave:
… that, in fact, state governments collect more in stamp duty on insurance premiums than the insurance companies collect in premiums. This is insane, Adam.
Adam Creighton:
Yeah. No, it is. And actually the states have now left themselves super vulnerable, too, to a downturn in the property market, not just prices, but even more so volume of transactions because there’s been a big change in the federal tax regime. So it’s only natural that if you’re a buyer, you’d probably wait and see what’s going to happen. So there’ll be a big decline in volumes. You’ve already seen the bank say that their loan applications have fallen 20%. That’s all perfectly predictable. And you’ve got all these state governments which are heavily in debt. Although let’s just point out, they’ll say they’re in surplus because with state accounts, they don’t have to include their infrastructure spending in the headline. So they all say they’re in surplus or tiny surpluses, but actually they’re in huge cash deficits, all of them pretty much. And that’s what matters. Ultimately, it’s money in, money out.
Gary Hardgrave:
Yeah. One moment of thought. So I would have though we have to grow the economy bigger. So maybe we’ve got to do stuff we haven’t been doing. Maybe we’ve got to start to exploit more of the uranium minerals we have in the ground, getting more customers for the stuff we have got. But what about this big $226 billion refinancing cliff that you say is going to come 2030? The cheap pandemic loans are going to mature. This is bad news.
Adam Creighton:
Yeah. Well, that’s right. Well, so the reason I focused on that is because the current state budgets only go to 2030, and basically none of these huge loans that were taken out in 2020 and 2021 and some in 2022 when all the COVID madness was occurring and it was money for free, everyone was borrowing like there was no tomorrow. I mean, then the federal government borrowed about $300 billion just is, but the states, they still have on their books collectively 226 billion I calculated with an average interest rate of about 2%, I think 1.9%. So that’s what they’re paying on that debt at the moment.
Now, that’s all going to come due progressively from the beginning of 2031 and it’s going to be refinanced you’d think at 5.5%, which is what the current rate is. So just imagine you’ve got 226 billion, which you’re currently paying 1.9% on, and then they’ll be paying 5.5% or who knows, it could be more. I mean, there’s very troubling signs in bond markets globally at the moment. So the point is that they’re going to have a massive hit in their interest costs even if they don’t run a single other deficit, which is very hard to believe.
Gary Hardgrave:
Yeah, they’re just going to-
Adam Creighton:
And-
Gary Hardgrave:
… have to grow the economy. They’re just going to have to-
Adam Creighton:
… well-
Gary Hardgrave:
… lower taxes-
Adam Creighton:
… exactly. I mean-
Gary Hardgrave:
… and make the economy bigger.
Adam Creighton:
That’s exactly true. That’s exactly true. I mean, the only realistic way out of this is to have a lot of inflation, which, of course, is a terrible thing to do and we know we don’t want that. But the other one, the more rational one, is to drastically increase economic growth. And I think they need to cut taxes. I think they need to be smarter about their regulation. But sadly, we’re not seeing much of that at federal or state level-
Gary Hardgrave:
No, we’re not.
Adam Creighton:
… sadly.
Gary Hardgrave:
No. Well, we can only but point it out. Great to talk to you always, Adam. Thanks for the…
Adam Creighton:
Yeah, likewise. Yeah.
Gary Hardgrave:
… great work you do. Adam Creighton, Chief Economist, The Institute of Public Affairs.
This transcript with Adam Creighton talking on Mornings with Gary Hardgrave – 4BC from 26 August 2026 has been edited for clarity.
