Paying the interest on Australia’s debt is equivalent to $700 a second

Servicing Australia’s trillion-dollar debt will cost $110bn in interest over the next five years, new Treasury figures show.

Paying interest on Australia’s debt will cost $700 every second for the next five years as the federal government moves to target mega gas profits, high super balances, smokers and multinationals with tax hikes to raise budget revenue.

Treasurer Jim Chalmers is expected to deliver a surplus in his second budget to be handed down on Tuesday, but the “substantial improvement” to the bottom line will be short-lived, with big deficits to follow in later years because of the huge costs of defence, health, aged care, the NDIS and debt interest payments.

Servicing Australia’s trillion-dollar debt will cost $110bn in interest over the next five years, say new Treasury figures.

The eye-watering payments – equivalent to $700 a second – total more than what the government will spend on the family tax benefit, childcare or infrastructure over the same period.

In an exclusive interview ahead of the May 9 budget, Dr Chalmers said the government’s priorities were dealing with the current cost-of-living pressures, reining in inflation, putting the budget on a “more sustainable footing” and laying the foundations for future growth.

Paying interest on Australia’s debt will cost $700 a second for the next five years. Picture: Dylan Coker

“I think childcare, energy-bill relief, and cheaper medicines are all important ways that we take some of the sting out of this inflation, which is more persistent and higher than we’d like for longer than we’d like,” he said. “The task in the budget is to strike the right balance between providing this cost-of-living relief at the same time as we try and put downward pressure on inflation.”

Dr Chalmers said while legislated stage-three income tax cuts would remain in this budget, there were other taxation changes to come.

“Well, the priority when it comes to revenue is to treat the upgrades in the most responsible way and make modest and meaningful tax changes elsewhere in the budget,” he said.

“The focus will be on bedding down our superannuation changes for the biggest balances, advancing our multinational tax agenda. We’ve announced a small increase in the tax on cigarettes.”

Dr Chalmers said the government would have “more to say” on the petroleum resource rent tax in due course.

Labor is expected to deliver a first federal budget surplus since 2007, after new Finance Department figures showed the nation’s finances were marginally in the black over the 12 months to March.

Low unemployment and higher commodity prices are the key sources of the unexpected revenue windfall.

Originally published as Paying the interest on Australia’s debt is equivalent to $700 a second