In the run-up to Christmas there are a few mid-year economic updates to come from the federal and state governments that might well be lost in the yuletide rush by, well, just about everybody.
As it happens there are some updated figures from the Parliamentary Budget Office. Generally, the news is on the positive side, with the economy recovering faster than expected, compared with February estimates.
Still, for those who fleetingly wonder whether the current optimism about growth in employment and business activity (and property prices that are a quarter higher over the past year) implied the Covid pandemic may not have been a bad thing need only look at the scale of the debt hole we’re still excavating.
National net debt is forecast to increase from 38% of GDP ($774bn) in 2020-21 to 55% of GDP ($1.325tn) in 2024-25, the PBO said. That’s less than previously forecast but still pretty ginormous.
Swelling the debt will be extra interest repayments as rates rise. Assuming the increase is 0.8 percentage points across the four years to 2023-24 compared with the level expected in the 2021-22 budget, that means annual repayments will be an extra $3.2bn over the period.
By 2024-25, $34bn will have to come from state and federal budgets to pay off that debt. Higher rates, if that’s what happens, could swell that bill further.
Speaking of holes, there’s a bit of a boring story from Scott Morrison’s visit to Snowy Hydro’s giant pumped hydro project earlier today.
A second tunnel boring machine has been commissioned, apparently dubbed “Kirsten” for some reason. There’s no word about what happened to the first one, or what its name was.
“Our $1.38bn investment in this project is already creating a local jobs boom, with a current workforce of more than 1,300 people and an expected 4,000 direct jobs over the life of the project, and many opportunities for local Australian businesses and suppliers,” the prime minister said.
