It said governments had to take “urgent steps” to reverse the long-term trend in higher debt levels.
“Importantly, reducing debt burdens will create fiscal space and allow new investments, helping foster economic growth in coming years,” it said.
“Reforms to labor and product markets that boost potential output at the national level would support that goal. International cooperation on taxation, including carbon taxation, could further alleviate pressures on public financing.”
Australian federal government debt sits at $895.6 billion, short of the record $910 billion it reached at the end of the Morrison government in 2022. Annual GDP has now reached $2.2 trillion.
In the next fortnight, Treasurer Jim Chalmers will release the final result of the 2022-23 budget which is expected to show a surplus of about $22 billion. It will be the first budget surplus since 2007-08.
Government debt is dwarfed by the debts of the nation’s households and businesses. Total household liabilities have reached $2.9 trillion while among businesses, total liabilities now sit at $5.2 trillion.
Chalmers, ahead of job figures to be released on Thursday, said it would not be surprising for unemployment to rise given the combined impact of higher interest rates, inflation and ongoing global economic instability.
He said the economy had grown 3.4 per cent in 2022-23 compared to the previous financial year while unemployment had averaged 3.5 per cent last financial year.
It was the first time in 50 years that growth and unemployment rates had a 3 in front of them.
“We lead the global pack with better growth last year than major advanced economies and with an unemployment rate that is far lower than that of Canada, Germany, France and other comparable nations,” he said.
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