The warning comes from reporting by The Canberra Times, which cites a recent Standard & Poor's assessment of Australia's sub-national debt position. The ratings agency predicts state and territory debt will hit $1 trillion by 2030 and offers a scathing assessment of governments' widespread inability to scale back spending.
Standard & Poor's warns that escalating interest expenses will soon overwhelm operating balances. By the end of the decade, almost every jurisdiction except Western Australia will spend nearly 10% of its operating revenue simply servicing debt.
Victoria leads the nation in interest cost ratio, holding the highest level since 2022. The ACT is fast catching up, while Tasmania recently incurred the steepest increase in interest costs due to its ballooning debt. Western Australia remains the sole positive outlier, effectively insulated by lucrative mining royalties and a generous GST deal.
The report draws a distinction between good debt used for nation-building projects like the Snowy Mountains scheme and what it describes as borrowing to cover recurrent expenditure and middle-class welfare masquerading as cost-of-living relief.
The era of cheap money is over, the article notes, and rising interest rates are set to gouge a massive chunk out of public budgets across the nation. Federal debt has long dominated the national conversation, but the Standard & Poor's report reveals a grim reality at the state and territory level.