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Australia sold the furniture, paid down the credit card, then ran the card back up again.
That is the simple story of Commonwealth Government debt.
This is not household debt. It is not your mortgage. It is not business debt. It is Commonwealth Government debt — money borrowed by the federal government.
But it still matters.
It matters because interest on government debt uses money that could have gone to defense, hospitals, aged care, roads, tax relief, or simply not being borrowed in the first place.
Jump To Sections
The Big Question | What Happened Under Howard and Costello? | The Debt Came Back | Why it Matters | Surpluses | How to Get Back to Surplus | The Common Sense Position | Sources
The Big Question
The Howard–Costello Government came to office with Commonwealth Government debt around $100 billion.
They sold major Commonwealth assets, ran budget surpluses, and eliminated net debt for a period.
That sounds impressive.
But the question is:
What did it achieve if the debt came back anyway?
Today, Commonwealth gross debt is around the one trillion dollar mark. The 2026–27 Budget estimates gross debt at $982 billion at 30 June 2026, $1.051 trillion at 30 June 2027, and $1.249 trillion by 30 June 2030.
So the plain comparison is this:
The Commonwealth Government had roughly $100 billion of debt when Howard began. It now has roughly $1 trillion.
That is about ten times higher in dollar terms.
What Happened Under Howard and Costello?
The Howard–Costello Government did reduce Commonwealth debt.
That is true.
They also ran real budget surpluses. These were not just accounting tricks created by asset revaluations.
But the debt reduction was helped by selling major Commonwealth assets.
The biggest was Telstra.
The Commonwealth also sold airports, rail assets, defence industry assets, property businesses and other government businesses. The Department of Finance’s past sales list records major Howard-era sales including Telstra, Melbourne/Brisbane/Perth airports, Sydney Airport, regional airports, the National Transmission Network, ADI Ltd, DASFLEET, Australian National Railways assets, and others.
That matters because selling public assets is not the same as fixing the budget forever.
Selling an asset gives government a one-off pile of cash.
But once the asset is gone, it is gone.
If the debt later comes back, the country has the debt again — but not the asset.
The Debt Came Back
This is the uncomfortable part.
Australia sold many income-producing public assets.
The debt was reduced.
Then the debt came back.
That does not mean every asset sale was wrong. Some government businesses may have been better privately owned. Some may have needed competition or reform.
But the debt question remains:
If assets were sold to reduce debt, and the debt later returned, what did Australia really gain?
A country can only sell the furniture once.
If it sells the furniture, pays down the credit card, then runs the credit card back up again, it has not solved the problem.
It has just turned assets into cash, spent the benefit, and ended up back in debt.
Why It Matters
Government debt does not feel personal.
Most people do not wake up thinking about Commonwealth bonds.
But debt still matters because interest must be paid.
Interest is not a road.
It is not a hospital.
It is not a school.
It is not a submarine.
It is the bill for past borrowing.
The more interest the government pays, the less money is available for useful things.
That is why debt matters.
Not because every dollar of debt is evil.
Debt can be justified if it builds something useful, productive or necessary.
But debt used to fund ordinary spending is different.
That is not investment.
That is just pushing today’s bills into the future.
Surpluses
A surplus means the government collected more than it spent.
There is no magic in this.
A government surplus comes from two places:
Government must spend less than it collects, or collect more than it spends.
Since the Howard Government, there have only been two federal surplus years on the normal underlying cash balance measure: 2022–23 and 2023–24. The Parliamentary Budget Office’s 2026–27 Budget Snapshot also notes gross debt is expected to reach $1.1 trillion during 2027–28, equal to about $37,000 per person, and exceed $1.2 trillion during 2029–30.
That tells us something important.
A surplus for one or two years is good.
But it does not prove the budget is fixed.
The real test is whether government can keep spending under control year after year.
How Much Is Spent Running Government?
There are two ways to look at this.
The narrow official budget category is called general public services. In the 2026–27 Budget, this was estimated at about $32.5 billion, out of total Commonwealth expenses of about $833.3 billion. That is roughly 4% of federal spending.
But that is too narrow.
The broader cost of running departments is much larger. Budget reporting and budget commentary put departmental expenses at about $167 billion in 2026–27. That includes wages, contractors, property, systems, administration and operating costs across government. Not all of it is waste. Defence, border protection, tax collection and service delivery all cost money. But it is still where serious savings must be hunted carefully.
The common sense point is:
Do not pretend every dollar of administration is waste. But do not pretend a government spending more than $800 billion a year cannot find waste either.
How to Get Back to Surplus
Australia does not need lazy answers.
“Just raise taxes” is lazy.
“Just cut everything” is lazy.
The better question is:
What spending actually works?
Government should be forced to prove that programs are making Australia better.
1. Stop Funding Failure
Government often works like this:
Program fails. Inquiry held. New agency created. More money added. Failure continues.
That should stop.
Before a failed program gets more money, government should have to explain why the last money did not work.
No proof, no extra funding.
2. Every New Program Should Replace an Old One
If government creates a new program, it should name the old program being abolished to pay for it.
Otherwise government just grows forever.
The rule should be simple:
New program in. Old program out.
3. Publish a Program Graveyard
Every budget should include a list of programs abolished, merged, reduced or closed.
Spending announcements are always loud.
Savings are usually quiet.
That should change.
The public should be able to see what government stopped doing — not just what it started doing.
4. Stop Paying Three Governments to Do One Job
Australia has federal, state and local governments.
Too often, all three are involved in the same problem.
Housing. Health. Skills. Environment. Infrastructure. Indigenous programs. Disaster recovery.
That means meetings, grants, reports, delays, blame-shifting and duplicated administration.
The common sense rule should be:
If two governments are doing the same job, taxpayers are probably paying twice.
Pick who is responsible.
Fund them properly.
Then hold them accountable.
5. Cut Red Tape That Creates No Public Benefit
Regulation has a cost.
Forms have a cost.
Delays have a cost.
Approvals have a cost.
Compliance has a cost.
Those costs are often hidden, but they are real.
CSA’s Red Tape Register should connect directly to this page.
The rule should be:
No new regulation unless government can show the public benefit is worth the cost.
And if government cannot explain the benefit in plain English, the rule probably should not exist.
6. Stop Measuring Compassion by Money Spent
Government often claims success by saying it spent more money.
But spending more does not prove a problem was solved.
A program that gets more expensive every year but does not improve outcomes should not be called a success.
It should be treated as a warning sign.
Not:
7. Cut Consultants, Contractors and Labour Hire Where They Replace Real Capability
Sometimes consultants are needed.
But if government constantly hires outsiders to do ordinary government work, something is wrong.
Either the public service lacks the skill, lacks the discipline, or is avoiding responsibility.
Major consultancy contracts should be published clearly:
- who was hired;
- what they were paid;
- what they were asked to do;
- what the public got for the money.
No fog. No spin. Just the bill and the result.
8. Hunt Fraud and Leakage Permanently
This is not about cutting genuine help.
It is about stopping money going where it should not go.
Fraud and leakage in welfare, Medicare, aged care, NDIS, training subsidies, grants and procurement should be hunted permanently.
A dollar lost to fraud is not harmless.
It is money taken from taxpayers and from people who genuinely need help.
9. Grow the Economy That Pays the Bills
A stronger economy gives government more revenue without raising tax rates.
A weaker economy forces government to argue over who gets squeezed next.
That is why energy, productivity, housing approvals, skills, infrastructure and red tape all connect to federal debt.
Debt is not just a budget issue.
It is a national performance issue.
If Australia becomes harder to build in, harder to invest in, harder to employ in and more expensive to produce in, the budget will suffer.
The Common Sense Position
CSA does not need to say all debt is bad.
That would be too simple.
Debt can be justified if it builds something useful, productive or necessary.
But debt used to fund ordinary spending is different.
Australia should not sell assets, celebrate lower debt, then allow the debt to come back.
The rule should be:
If government sells an asset, the public should be told what was sold, what the money was used for, and whether the debt later returned.
And the bigger rule should be:
Government should not borrow for ordinary spending unless there is a genuine emergency.
Surpluses are not created by speeches.
They are created when government has the discipline to spend less than it collects.
That means killing failed programs, stopping duplication, cutting waste, cutting useless red tape, and growing the economy that pays the bills.
Final Word
Australia sold the furniture, paid down the credit card, then ran the card back up again.
That is not common sense.
Selling assets can only work once.
If the debt comes back after the assets are gone, the country is not stronger.
It is weaker.
CSA believes policies should be judged by real world results and consequences — not ideology, slogans or good intentions.
On federal debt, the real-world result is clear:
The debt came back. The assets did not.
Sources Reviewed
The following sources were reviewed in preparing this page. Not every source is quoted directly in the page, but they informed the debt history, asset-sale history, budget-surplus discussion, and government spending figures.
Commonwealth debt and budget position
- Australian Government Budget Paper No. 1, 2026–27
Used for current and forecast Commonwealth gross debt, total expenses, and budget aggregates. - Parliamentary Budget Office — 2026–27 Budget Snapshot
Used for the statement that gross debt is expected to reach $1.1 trillion during 2027–28, around $37,000 per person, and exceed $1.2 trillion during 2029–30. - Mid-Year Economic and Fiscal Outlook 2025–26
Reviewed for gross debt forecasts, debt-to-GDP forecasts, net debt forecasts, and projected interest-cost savings. - Treasurer’s media release — 2025–26 MYEFO delivers a stronger budget
Reviewed for the government’s stated position that gross debt was forecast at $993 billion by the end of 2025–26 and forecast to peak at 37.0% of GDP. - Reserve Bank of Australia Annual Report 1996 — Financial Markets
Used for the statement that the Commonwealth Government had about $100 billion in debt on issue around the time the Howard Government came to office. - 1996–97 Budget Statement 1
Reviewed for the starting position of Commonwealth general government net debt, including the statement that net debt had risen to over 19% of GDP in 1995–96. - Treasury Annual Report 1996–97
Reviewed for Commonwealth debt management and debt redemption information from the early Howard period. - Australian Government Final Budget Outcome 2006–07
Reviewed for the Howard-era debt position, including the fall in net interest payments from $8.4 billion in 1996–97 to $198 million in 2006–07. - Australian Government Final Budget Outcome 2007–08
Reviewed for the final Howard-era/Rudd transition surplus year, including the $19.7 billion underlying cash surplus in 2007–08.
Asset sales and privatisation
- Department of Finance — Past Sales
Main source for Commonwealth asset sales, including Telstra, airports, Commonwealth Bank, Qantas, CSL, rail assets, ADI Ltd, National Transmission Network, DASFLEET and other sales. - Reserve Bank of Australia Bulletin, December 1997 — Privatisation in Australia
Reviewed for broader privatisation context, including the RBA’s statement that privatisation proceeds in the 1990s were about $61 billion to that point, roughly split between Commonwealth and state governments. - ANAO Report — Phase 2 of the Sales of the Federal Airports
Reviewed for detail on airport privatisation after the first major airport sales. - ABC AM Archive — Sydney Airport sale report, June 2002
Reviewed for contemporary reporting on the Sydney Airport sale and the near-completion of the Commonwealth airport privatisation program. - SBS News — Planes, phones and a bank: What Australians used to own
Reviewed for plain-language background on Commonwealth Bank, Qantas and Telstra privatisations. Not relied on over official Finance figures where the two overlapped.
Budget balance definitions
- Department of Finance — Underlying Cash Balance glossary
Used for the definition of underlying cash balance as a cash measure showing whether government has to borrow from financial markets to cover its activities. - Department of Finance — Major Fiscal Aggregates
Reviewed for the distinction between underlying cash balance, headline cash balance, fiscal balance and net debt. - Parliamentary Budget Office — Budget glossary
Reviewed for plain-English definitions of underlying cash balance and headline cash balance. - Parliamentary Budget Office — Online Budget Glossary
Reviewed for the distinction between headline cash balance and underlying cash balance. - Treasury — Commonwealth debt management review, Chapter 5
Reviewed for explanation of the main Commonwealth budget balance measures. - RBA — Box C: Fiscal Policy and Economic Activity
Reviewed for the difference between headline and underlying cash balance, including treatment of financial investments.
Surplus years
- Final Budget Outcome 2022–23
Used for the $22.1 billion underlying cash surplus in 2022–23. - Treasurer / Finance Minister media release — Final Budget Outcome shows first surplus in 15 years
Reviewed for the official government statement that the 2022–23 underlying cash balance was a $22.1 billion surplus. - Final Budget Outcome 2023–24
Used for the $15.8 billion underlying cash surplus in 2023–24 and the statement that 2022–23 and 2023–24 were the first back-to-back surpluses in nearly two decades. - Finance Minister media release — Labor delivers biggest ever back-to-back surpluses
Reviewed for the government’s public summary of the 2022–23 and 2023–24 surpluses. - ABC News — Final budget result delivers $15.8 billion surplus
Reviewed as media confirmation and context for the 2023–24 surplus. Official Final Budget Outcome remains the preferred source. - Reuters — Australia posts budget surplus for second straight year
Reviewed as media context for the 2023–24 surplus. Official Final Budget Outcome remains the preferred source.
Government administration and departmental spending
- Budget Paper No. 4, 2026–27 — Agency Resourcing
Reviewed for departmental expenses, agency resourcing and the broader cost of running Commonwealth departments and agencies. - Budget Paper No. 4 index page
Reviewed to confirm the Budget Paper No. 4 structure and agency resourcing documents. - Department of Finance — Portfolio Budget Statements 2026–27
Reviewed for agency-level resourcing context. - The Mandarin — Budget 2026: public service savings / razor gang reporting
Reviewed for commentary on public service savings, contractors, external labour and non-wage expenses. This is a secondary source, not a preferred source for final numbers.
Other sources checked but not relied on heavily
- ANAO — AOFM management of Australian Government debt
Reviewed for background on Australian Government debt management and borrowing, especially recent large-scale borrowing context. - Parliamentary Library FlagPost — Release of the 2025–26 MYEFO
Reviewed for independent parliamentary summary of MYEFO policy decisions and budget changes. - 2024–25 Final Budget Outcome
Reviewed for the latest completed budget outcome before the 2026–27 Budget, including the return to deficit after the two surplus years.