$20 billion budget deficit may underestimate actual debt

Treasurer Jim Chalmers will announce a budget deficit of about $20 billion on Tuesday night, but this figure may not show the full picture. Some costs are kept off the official budget, which could mean the actual deficit is nearly double. The federal budget is described as a “debt-creation machine.” This happens when the government finances projects like low-interest loans or investments in technology without showing these on the budget. These costs are hidden because they are seen as investments that might bring money back in the future. Economist Stephen Anthony says this practice makes it hard to understand how government spending affects the economy. He points out that the real deficit is more serious than reported, given that off-budget items could add about $20.8 billion in costs for the next financial year. The biggest off-budget expense comes from student loans, which include many types of financial support. These loans aren't included in the budget deficit, even as their costs increase. Recently, the government decided to reduce student debt by 20%, raising the total expected cost of these loans significantly. Other major projects, like Sydney's WestConnex, are also funded off-budget, leading to higher overall costs. Major expenses like the Northern Australia Infrastructure Facility and the Clean Energy Finance Corporation are similarly accounted for outside the budget. Chalmers has downplayed concerns about rising off-budget costs, suggesting they may be better than expected. He highlights improvements in the overall budget position since his government took office. Experts believe that more transparency is needed in how these off-budget entities are reported. This could help ensure that taxpayer money isn't misused in ways that hurt economic growth.