Net debt and net worth
With the budget remaining in cash surplus in 2005‑06 and the forward years, further falls in net debt are expected. From its peak of 19.1 per cent of GDP in 1995-96, net debt is estimated to fall to $6.1 billion (0.7 per cent of GDP) by the end of 2005-06. Net interest payments are also expected to fall over the forward estimates.
Table 5 and Chart 1 provide a summary of Australian Government general government sector net worth, net debt and net interest payments.
Table 5: Australian Government general government
sector net worth, net debt
and net interest payments
- Net debt equals the sum of deposits held, advances received, government securities, loans and other borrowing, minus the sum of cash and deposits, advances paid and investments, loans and placements.
- Includes the impact of the further sale of the Australian Government’s shareholding in Telstra, but may change as a result of the establishment of the Future Fund.
- Australian Government cash interest payments less cash interest receipts. The 2005‑06 estimates include the recognition in cash terms of the capital growth on inflation indexed bonds maturing in that year.
Chart 1: Australian Government general government
sector net debt
and net interest payments
Source: Data are from ABS Cat. No. 5513.0, Australian Government Final Budget Outcomes and Treasury estimates.
Australia’s net debt is at low levels and is projected to fall over the forward estimates period. The net debt projections have improved considerably since MYEFO, reflecting larger than anticipated cash surpluses.
Australia’s net debt position compares favourably to other industrialised countries. The ratio of Australia’s total general government sector net debt to GDP is among the lowest in the OECD and is considerably lower than in Europe, Japan and the United States (see Statement 1).
Having peaked at $8.4 billion in 1996-97, net interest payments are expected to decline to $2.8 billion in 2005-06, representing annual interest savings of around $5.7 billion.
Net worth is expected to improve from -$34.1 billion in 2004‑05 to -$5.9 billion in 2008-09, mainly reflecting cumulative surpluses in the forward estimates. The prospects for net worth mean the Government’s finances are well placed to deal with emerging fiscal pressures.