Australia’s aging population and the cost of servicing debt are among key factors that will blow out government spending by about A$140 billion ($89.7 billion) in the next 40 years, according to excerpts of a key report to be released in full Thursday.
(Bloomberg) — Australia’s aging population and the cost of servicing debt are among key factors that will blow out government spending by about A$140 billion ($89.7 billion) in the next 40 years, according to excerpts of a key report to be released in full Thursday.
The excerpts from the government’s Intergenerational Report, released Sunday, reveal the five fastest-growing spending pressures: health, aged care, the National Disability Insurance Scheme (NDIS), defense and interest payments on government debt.
“Combined, these spending categories are projected to increase by 5.6 percentage points of GDP over the 40 years from 2022–23 to 2062–63,” said an extract of the report emailed to Bloomberg. At the same time, income support and education payments are expected to grow in real per capita terms, but will decline as a share of GDP as the population ages, it said.
Interest payments on debt will rise from 0.7% of gross domestic product to 1.4% in the 40-year period, according to the excerpts.
Disability insurance and interest on government debt will be the fastest-growing categories over the next decade, while health and aged care are forecast to rise faster toward the end of the projection period as the population ages. Treasurer Jim Chalmers said the report showed the government’s budget is under intense pressure in the long term.
“We’re getting the budget in much better nick, but what the Intergenerational Report reveals is after this year, the pressure on the budget intensifies,” he said in an emailed statement.
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