Australian Treasurer Jim Chalmers has warned that higher global borrowing costs will significantly increase the federal government’s interest bill, placing further pressure on taxpayers and the budget. His comments come as the Albanese government faces continuing deficits and scrutiny over gross debt surpassing A$1 trillion.

Australia’s 10-year government bond yield has risen to about 5.3%, from 4.8% at the start of the year. RBC estimates that increases since May could add roughly A$6 billion to deficits over four years, on top of A$146.3 billion already allocated for interest payments; the government is also forecast to record a A$64.1 billion deficit this financial year. Chalmers defended Australia’s finances compared with other countries, citing two recent surpluses and compulsory superannuation as factors that could limit longer-term pressures.