Total Australian government debt sails past $1.6 trillion
Many commentators are forecasting when federal government debt will clock over the $1 trillion mark. But nationwide – across federal, state, and local levels – Australia passed that barrier in 2020, with total debt sailing past $1.6 trillion last financial year.
Analysis of the Australian Bureau of Statistics’ new government finance statistics dataset reveals:
- Total public sector debt was $1.62 trillion in 2025.
- This was 13 per cent higher than 2024, which was $1.44 trillion.
- Total Australian public sector debt has increased by 37 per cent since 2020.
Chart: Total public sector debt securities
State debt cannot be ignored. Because the federal government will be liable to bail out states that are unable to pay off their own debt, all Australian taxpayers will ultimately foot the bill for public debt, no matter which jurisdiction runs it up.
The IPA’s analysis of total Australian government debt is available at the IPA website here.
The smashing of Australia’s small business sector
New IPA research into the number of businesses in Australia reveals the shifting economic power away from family businesses and entrepreneurs and towards large corporates.
Our research finds that since June 2022, there has been a net loss of nearly 33,500 small employing businesses (those with between one and 19 employees). And the number of small employing businesses has declined for three consecutive years.
Chart: Cumulative change in the number of small businesses (one to 19 employees) since June 2022
It is normal for there to be an outflow of business from the small business category over time, either due to moving to another size category or exiting, but in the past this has usually been offset by the establishment of even more completely new businesses.
That this has ceased to be the case is indicative of an underlying issue with entrepreneurship and small business creation in Australia.
The full IPA research note, Australian small business sector in crisis, is available at the IPA website here.
The real inflation rate
The cost-of-living debate revolves around a flawed consumer price index (CPI) metric that excludes key housing metrics which deviates from households’ experience and gives Australians and policymakers an incomplete picture of the cost-of-living debate. New IPA research explains why the pervasive CPI measure is flawed and constructs a new inflation measure which corrects the systematic understatement of the true rise in the cost-of-living:
- Despite the annual CPI over the 2025 calendar year being reported as 3.6 per cent, the real inflation rate was 5 per cent.
- This systematic understatement of inflation means that since 1998, cumulative inflation has been 40 percentage points lower than if dwelling prices were included.
- Once dwelling prices are included in the CPI, Australians’ real wages are down between 0.5 per cent and 9 per cent since the late 1990s.
This is what happens when governments ramp up demand for housing through migration while state and local governments pile red tape on new housing while hoarding construction labour and materials for their white elephant infrastructure projects.
These decisions have been made in part off the back of statistical measures that assured policymakers inflation is “under control”, but which painted an inadequate picture of how mainstream Australians are affected by these policies.
The full IPA research note, The CPI Myth: How official inflation statistics ignore house prices and hide a collapse in real wages, is available at the IPA website here.
Victoria: the state of disrepair
The cover story of the latest edition of the IPA Review is Adam Creighton’s appraisal of Victoria since 2014, characterised by a reckless increase in spending, the notorious lockdowns, union dominated infrastructure programmes, tax hikes, and soaring debt:
For all the many thousands grievously harmed by [the Andrews’ government’s] disastrous pandemic response, it is his legacy of fiscal recklessness, overreach and denial, that has most scarred this once proud manufacturing powerhouse.
Adam notes that Victoria is in a state of financial peril with few levers left to pull. With a balance sheet likely to deteriorate further, the state offers a stark warning to other jurisdictions following suit.
You can find more information about the latest edition of the IPA Review here.
