“The fruits of reckless and irresponsible governments at all levels have been laid bare in new ABS data showing public sector debt blew past $1.6 trillion dollars in the 2025 financial year,” said Adam Creighton, Chief Economist and Senior Fellow at the Institute of Public Affairs.
Today, the Australian Bureau of Statistics (ABS) released its new Government Finance Statistics report with the reference period the financial year ending June 2025. It reveals that total public sector debt, including all three levels of government, reached $1.62 trillion in 2025, a 13 per cent increase from the previous year ($1.44 trillion) and a 37 per cent increase since 2020.
“Federal government debt, often reported to be close to $1 trillion, is obviously obscenely excessive and represents a failure of successive governments in Canberra to get spending under control. But this is only one part of an even more grim picture, with hundreds of billions of dollars in state public debt hidden in plain sight,” said Mr Creighton.
The ABS Government Finance Statistics for the total public sector debt takes into account not just gross federal government debt, but also state, territory, and local government debt. It not only takes into account the ‘general government’ component of public sector debt, but also debt for the rest of the public sector, collectively labelled as “debt securities” in the Government Finance Statistics’ balance sheet for the entirety of the public sector at “all levels of government”.
“The lazy approach of using government spending and mass migration to grow Australia’s economy needs to end.”
“The path to sustainable economic growth is clear. Stop reckless spending, reduce the overseas migrant intake to sustainable levels, and reinvigorate the value-adding components of the private sector such as mining, manufacturing, and agriculture,” said Mr Creighton.
IPA research has found that since the year 2000, the public sector has been replacing the private sector in the Australian economy, with government spending accounting for about 28 per cent of economic activity, and private investment and net exports only accounting for about 20 per cent.
“State debts cannot be ignored. Australia’s structural vertical fiscal imbalance means that the federal government will have to bail out failed states. Ultimately, all Australian taxpayers will have to foot the bill,” said Mr Creighton.
“The fixation on federal debt is short-sighted given the bond market increasingly sees state debts as the responsibility of the federal government – which is why states pay almost the same rate of interest on their borrowings regardless of their indebtedness,” he added.
“Government borrowing for productive investment or during an economic crisis can be excusable but borrowing to fund handouts, subsidies and an ever large bureaucracy is reckless and undermines the nation’s prosperity over the long term,” Mr Creighton said.
To download the IPA’s research click here.
Chart: Total public sector debt securities (Source: ABS, IPA)
