How did we get here? The 20-year journey to $1t in debt

August 21, 2026 — 5:00am

You have reached your maximum number of saved items.

Remove items from your saved list to add more.

When John Howard lost the 2007 election, he could proudly and correctly claim the nation’s finances had never been in better condition.

Budget surpluses and government policy such as the sale of Telstra had dramatically improved the nation’s books. Gross government debt was $55 billion or just 0.3 per cent of GDP.

You would have to go back to the 1910s to find debt at such a low level, when the then-Fisher government started borrowing to pay for Australia’s involvement in World War I.

But in the intervening years, gross debt has climbed and climbed and climbed – to stand at $1 trillion on Thursday, August 20.

It prompts the question first posed by those fiscal hawks, the Talking Heads: how did we get here?

Three large factors – two crises, the third a long-term trend – account for the bulk of that $1 trillion debt.

Howard and Peter Costello lost power in November 2007. By March 2008, American investment bank Bear Stearns had collapsed.

The global financial crisis was just getting started. Tax collections under the Rudd government fell for two consecutive years – the first time that had occurred since the 1940s.

Falling revenue plus stimulus measures to keep the economy afloat meant a sharp lift in debt. By the time the Rudd government was kicked out of power in 2013, gross debt had climbed beyond $260 billion.

The second crisis was COVID. Then treasurer Josh Frydenberg had almost delivered a budget surplus in........

© Brisbane Times