A lot of attention is rightly focused on Australia’s forecast decade of federal budget deficits. Yet the role played by state governments in the nation’s addiction to ever-bigger borrowing and spending tends to fly under the radar and escape the same level of scrutiny.
Since the pandemic, state and territory governments have embarked on a debt binge: their share of public debt has risen from 30 per cent in 2019 to 40 per cent today. With total national debt set to soar beyond the $1 trillion mark in the next four years, international credit rating agencies have warned that continued growth in state government borrowings could jeopardise the federal government’s top-notch triple AAA creditworthiness score.
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