Taxpayers face a $2.2 billion annual interest bill from the federal government’s growing outlay on “off budget” projects that could help produce a faster surplus in next week’s budget but deepen Commonwealth debt.
Australian Conservatives leader Cory Bernardi has been warning about this exploding interest bill since last May’s budget.
The Sydney Morning Herald reports, the capital expenses are climbing toward $73 billion as the approach Labor used to finance the national broadband network is replicated by the Coalition for projects such as the inland rail line from Brisbane to Melbourne.
Economists are warning of “time bombs” in the budget papers from mammoth outlays that are not included in the deficit because the policies are treated as a commercial investment where the debt is balanced by the asset value of the project.
Finance Minister Mathias Cormann rejected the “off-budget” description for the projects and insisted all were being treated as commercial projects under long-standing accounting rules.
The capital items include $47 billion for the national broadband network, $6 billion to take full Commonwealth ownership of the Snowy Hydro power scheme, $10 billion to build the inland rail line, $5 billion for western Sydney airport and $5 billion to set up the Northern Australia Infrastructure Fund to lend to commercial projects.
The commercial return of the NBN is under question and the viability of the inland rail is doubted by critics who believe there will not be enough freight to deliver a commercial return.
Deloitte Access Economics director Chris Richardson warns in the firm’s latest budget monitor that the “underlying cash balance” traditionally used to measure the deficit is now hiding some of the capital outlays that are included in the “headline cash balance”.
The firm estimated the annual deficits would be $10 billion or $15 billion deeper when all the capital spending was considered.
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