This is a Paper by  and  on the ‘Tax and Transfer Policy Institute‘ (TTPI) website.

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Budgetary issues in Australia have dominated public policy discussion at the federal level since the 2008-10 Global Financial Crisis (GFC). Governments at both national and state level entered the GFC running budget surpluses, yet post-GFC Australia has experienced one of the fastest growing public debt levels in the world due to a series of historically large budget deficits that have persisted for longer than after previous economic downturns (see Figure 1).

Figure 1Australian, state and local government budget balances.

Figure 2 – Federal Government revenue and payments (percent of GDP).

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In answer to the second question (macro economic risks of deficits and debt), the main risk of failing to rein in the fiscal deficit is a downgrading of Australia’s AAA credit rating, which would add a risk premium to interest paid on government bonds.  A 30 basis point rise in interest paid on government debt, for instance, would increase the annual federal public debt interest bill by some $1.5 billion, other things the same.  

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