Ahead of the week's Budget 2022-23 announcements, a brief look at how the federal government remains afloat

Budget Papers 2022-23 are expected to be presented to the Australian Parliament this sitting week.

This budget - like all other Morrison budgets since 2016 - comes with a background of increasing public debt. This fourth Morrison-Frydenberg budget can be no different, whatever clever accounting tricks are employed.

Financial Review, excerpt, 9 February 2022:

Commonwealth budgets and mid-year reviews have been ramping up spending, right up to the last mid-year review in December. As a result, spending in 2023/24 is estimated to be $41 billion higher than when it was first estimated in 2020. This increase has little to do with the pandemic.

The fiscal outlook is further clouded by the approach of a federal election. In recent weeks, the Prime Minister has been out and about sprinkling more fiscal largesse, which sits uneasily with his Treasurer’s “lines in the sand”.

Australian Office of Financial Management, Annual Report 2020-21 Financial Statements excerpt, 25 October 2021:

The cost and risk of the debt portfolio is managed through debt issuance and (where appropriate) investment activities. Since early 2009, budget deficits have required debt issuance volumes that have exceeded those necessary to maintain liquidity in Treasury Bond and Treasury Bond futures markets, affording the AOFM with a greater level of flexibility in setting its issuance program. In recent years the AOFM has lengthened the duration of its Treasury Bond portfolio through longer term issuance as a means of reducing refinancing risk and the variability of debt servicing costs over time.

Australian Office of Financial Management, 2021-22 Issuance Program, 7 January 2022:

This notice provides updated details of planned issuance of Australian Government Securities by the Australian Office of Financial Management (AOFM) for the remainder of 2021-22.

At MYEFO the AOFM indicated planned Treasury Bond issuance of around $105 billion (of which $44.3 billion has been completed). Two tenders will be conducted most weeks. A new November 2033 Treasury Bond will be issued by syndication in the final quarter of 2021-22 (subject to market conditions).

Planned issuance of Treasury Indexed Bonds is $5-5.5 billion (of which $4.1 billion has been completed). Two tenders will be held most months.

Regular issuance of Treasury Notes will continue. Weekly issuance volumes will depend on the timing and size of government receipts and outlays and the AOFM’s assessment of its cash portfolio requirements.

Details of weekly transactions will be announced at midday on the preceding Friday.

As at 28 February 2022 the total of Commonwealth borrowings liability was $859,702,529,974 (calculated in Australian dollars). That is an eyewatering amount of billions in anyone's language.

Two Treasury Bond tenders and a Treasury Note tender with a combined value of $2.8 billion were announced on Friday, 25 March 2022.

The next tender for the issue of Treasury Indexed Bonds is planned to be held on Tuesday, 12 April 2022.

Commonwealth gross debt has been rising since the Global Financial Crisis, but in the last three and a half years as the country lurched though mega bushfires, pandemic, catastrophic flooding and a significant loss of export market share in China, the Morrison Government budget papers have been exercises in hopeful fiction. Next Tuesday night's budget papers might possibly be accompanied by glittering unicorns.