Net debt
Chart 5 shows that consolidated general government net debt as a share of GDP is expected to continue to decline over the forward years. Consolidated NFPS net debt is estimated to be 4.9 per cent of GDP in 2004‑05, compared with the most recent peak of 35 per cent in 1994-95.
Charts 3 and 5 show the broad correlation between cash deficits and net debt levels. The financing of Australian Government cash deficits resulted in a substantial increase in general government net debt as a share of GDP over the early 1990s.
Chart 5 also shows the decline in PNFC sector net debt as a share of GDP since the late 1980s, reflecting lower levels of capital expenditure, improved efficiency and privatisations. This decline moderated the increase in NFPS net debt as a share of GDP in the first half of the 1990s.
The subsequent improvement in NFPS net debt primarily reflects both the Australian Government and the state/local sector moving back into budget surpluses and the application of privatisation proceeds to debt retirement at both the Australian Government and state/local government levels.
Chart 5: Consolidated non-financial public
sector net debt by sector
(as at end of financial year)(a)
- Data for the consolidated PNFC and NFPS sectors are only available to 2004-05, while data for the general government sector are available to 2007-08.
Panel A of Chart 6 shows that most Australian Government net debt is held by the general government sector whereas Panel B of Chart 6 shows that, since 2002-03, all state/local net debt is held in the PNFC sector.
As shown in Panel A of Chart 6, Australian Government general government net debt as a share of GDP grew from low levels in the late 1980s to a peak of 19.1 per cent in 1995-96. Since then, successive surpluses and asset sales (most notably the partial sale of Telstra) have reduced Australian Government general government sector net debt to an expected 1.9 per cent of GDP in 2004-05.
In contrast, state/local general government net debt grew more modestly in the early 1990s and is expected to decline from a peak of 10.3 per cent of GDP in 1992-93 to a net debt position of approximately -2.1 per cent of GDP in 2004-05, as shown in Panel B of Chart 6. This improvement within the state/local general government sector reflects both the impact of asset sales and fiscal consolidation during the second half of the 1990s. However, some individual states continue to face relatively high net debt burdens in either their general government sector or in their PNFC sector (for further information, see Budget Paper No. 3, Federal Financial Relations 2005-06).
Chart 6: Non-financial public sector net
debt by level of government and sector
(as at end of financial year)
A: Australian Government
B: state/local
C: Consolidated
