The International Monetary Fund has raised the alarm that taxpayers could ultimately be left footing the bill for soaring state debts.

As states and territories, particularly Victoria and NSW, continue borrowing to fund government spending, the IMF warned liabilities may not remain contained at the state level.

In its latest Article IV Consultation, the fund warned that the rapid accumulation of sub-national debt risks credit rating downgrades and rising borrowing costs.

These pressure inevitably flow through to taxpayers, given that the federal government serves as a de factor guarantor to state debt.

“As the Commonwealth is viewed as a de facto guarantor of state debt by some credit rating agencies, higher sub-national debt could eventually impact Commonwealth borrowing costs,” it said.


Net debt in Victoria has exploded, with forecasts of almost $200 billion by 2028-29, above NSW on $130 billion and Queensland of $93 billion.

Treasurer Jim Chalmers addressed the issue on Monday, acknowledging the link between spending and inflation, but refusing to criticise the states.

“I don't give free advice to my colleagues. The federal government hasn't been considering any kind of bailout, but all of our budgets are under pressure,” he said.

Mr Chalmers' own budget has been buried in debt, with gross debt forecast to exceed $1 trillion in the near future.

S&P Global Ratings recently warned that state governments were spending like it was the pandemic, with aggregate debt of $660 billion, or 24 per cent of GDP in 2026.

“Some Australian state governments are spending like they’re still in pandemic lockdown,” S&P analyst Martin Foo said.

The agency predicted that state government debt would roughly triple from 2019 to 2027.

Credit ratings for ACT and Tasmania were recently downgraded to AA, while NSW and Queensland carried a negative outlook.

Meanwhile, publicly-funded major public infrastructure projects have ballooned well above their forecasts, adding further strain to state budgets.
Deloitte Access Economics found that across 13 publicly funded megaprojects valued at $10 billion or more, costs were $130 billion higher than initially predicted.

https://www.skynews.com.au/australia-news/politics/taxpayers-may-be-forced-to-ba...

But isn't 'Footy' the Victorian priority?
If you Victorians made Politics more of a priority.
You could have had someone like Bob Carr making Victoria Great Again.