Australia could lose "low-debt" status without spending restraint and tax reform, report says

Australia risks ceasing to be a "low-debt" country unless governments combine spending restraint with tax reform, according to a new report, as the national debate intensifies over how to fund health, disability, defence and other fast-growing areas of public expenditure.

The analysis warns that higher structural spending-if not matched by sustainable revenue-could leave Australia more exposed when the next economic shock hits. In that scenario, the country would have less fiscal room to respond to downturns, disasters or emergencies without sharply lifting borrowing.

While day-to-day politics often focuses on "who spent what" in the last budget, the report's core argument is about trendlines: programs that grow faster than the economy eventually create hard trade-offs. Governments can cut services, raise taxes, redesign programs, or borrow more-each option comes with political and social costs.

The report lands amid broader public concern about cost of living and interest rates. When household budgets are strained, pressure rises on government to provide relief-but that can also worsen the longer-term fiscal picture if new measures become permanent without dedicated funding.

The warning is likely to feed into an already active argument in Canberra: whether Australia needs a more durable tax base (through reform of existing taxes or changes to the mix) and whether spending growth can be slowed without shifting costs to households and states.

For voters, the practical implication is that "budget repair" is no longer just an accounting exercise. It affects what services people can expect-bulk-billing, aged care, disability supports, education funding-and whether governments can respond quickly when the economy turns. The report's message is blunt: without structural changes, today's choices shape tomorrow's resilience.