Australia’s massive debt is unlikely to be paid back until 2050

Analysis shows the nation's troubling financial outlook

Australia’s massive debt is unlikely to be paid back until 2050
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A baby born today would be 28 years old before Australia was out of debt, a study has found. And that analysis assumes things go well.

The PwC report, commissioned by News Corp, said at least $44 billion would need to be slashed from the federal budget every year between now and 2050.

Assuming the cuts were made and that government revenue stayed steady at 25 per cent of GDP, the country would be out of debt at the midpoint of the century.

PwC chief economist Amy Auster said a spending cut of 0.2 per cent of GDP - or about $44 billion in current terms - was a “manageable”.

“We can just chip away … a little bit year after year, and we‘ll get there,” she said.

But she warned that until the government had a plan to reduce outgoings that had been fuelled by big spending on defence, hospitals, disability and aged care, any talk of returning to fiscal surplus was “premature”.

“We still have a structural fiscal deficit, and this will remain the case until such time that government embarks on a strategy to return to fiscal surplus,” Auster said.

She said recent increased commodity tax revenue would help to reduce the budget deficit but that such “one off surprises” would provide only “temporary” budget relief without significant spending cuts.

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  • By Avi Yemini

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