Ratings agency warns on record government spending

Key points

• A major ratings agency has warned that record-high government spending could threaten Australia's fiscal health if economic conditions worsen. Federal government payments reached 26.9 per cent of GDP in 2025/26, the highest level in 40 years excluding COVID-19.
• S&P Global Ratings lead analyst Martin Foo noted that while high tax revenue currently offsets this, structural spending increases and potential declines in revenue could pose long-term risks.
• Veteran economist Chris Richardson echoed these concerns, cautioning against making permanent spending commitments based on temporary revenue windfalls.