Australia’s government expenditure has surged to a post-war high (except for the pandemic-era spike) of 38%–39% of GDP, up from 34%–35% before the 2008 global financial crisis. This report warns that warns that federal spending alone has climbed from 24%–25% to above 27% of GDP since 2012–13, fuelled by program expansion in social services, defence and debt interest. 

The growth of government spending remains a serious economic concern because of what it means for persistent budget deficits, rising public debt and taxation, weak productivity growth and the societal consequences of a deepening dependency on government. The community’s expectations of government have outgrown its economic capacity to respond responsibly, and only government itself can reset those expectations. The report calls for immediate expenditure reform.

Key findings

• Real per capita federal spending has risen 1.8% on average annually since 2012–13, far exceeding Australia’s 0.5% productivity growth.
• A dozen fast-growing programs – including the NDIS, aged care, defence, schools, Medicare and child care – account for 63% of the increase in federal own-purpose spending in that period and now represent around half of such spending.
• Public debt interest is projected to rise 9.5% a year for the next decade.
• Off-budget ‘investments’ – from student loans to energy transition funds – add a further $104 billion in hidden spending over five years.

Key recommendations

• Rolling reviews of major programs to cut waste and lift effectiveness.
• Fiscal rules to cap per-capita spending growth below GDP growth.
• Freeze public-service numbers and shift from consultants to permanent staff.
• Shelve new spending ideas – including universal child care and expanded Medicare dental cover.
• Return to structural surplus by 2029–30, echoing successful consolidations of the 1980s and 1990s.

The report has an accompanying audio.