Australia's Commonwealth Government was last net debt-free around April 2006, a milestone celebrated as "Debt-Free Day" by Treasurer Peter Costello after years of budget surpluses and asset sales. The government achieved this by eliminating its accumulated debt, making it a net lender rather than a borrower, a position it held for a few years before the Global Financial Crisis (GFC) led to renewed borrowing.
The U.S. has had debt since its inception. Our records show that debts incurred during the American Revolutionary War amounted to $75,463,476.52 by January 1, 1791. Over the following 45 years, the debt grew. Notably, the public debt actually shrank to zero by January 1835, under President Andrew Jackson.
Net debt, which reached zero in 2005-06, improved by $25.4 billion over the financial year to -$30.8 billion. In cash terms the outcome was $3.6 billion higher than estimated at the time of the 2007-08 Budget, with cash payments $1.5 billion lower than expected and cash receipts $2.1 billion higher than expected.
Australia defaulted on its entire stock of domestic debt owed to bond and note holders. See Great Depression in Australia. Default only on domestic debt, not external debt.
Australian Government debt was progressively reduced after the Second World War and largely eliminated by the beginning of the 1970s.
The United States has the largest total national debt in absolute dollar terms (over $38 trillion), followed by China and Japan, but Japan has the highest debt when measured as a percentage of its Gross Domestic Product (GDP) (over 230%), indicating a much larger debt burden relative to its economic output.
At Almost $1 Trillion, Australia's Government Debt Is Surprisingly Seen as Small. It says a lot about the state of the world that Australia is considered to have a low government debt, when by our own standards our debt is very high.
Including both private and public debt holders, the top three December 2020 national holders of American public debt are Japan ($1.2 trillion or 17.7%), China ($1.1 trillion or 15.2%), and the United Kingdom ($0.4 trillion or 6.2%).
The 28/36 rule in Australia is a financial guideline for borrowing, suggesting housing costs shouldn't exceed 28% of your gross monthly income, and total debts (housing, car loans, credit cards) shouldn't surpass 36% of your gross monthly income; it helps prevent mortgage stress by ensuring you can afford repayments, though Australian lenders often use slightly different (sometimes higher) benchmarks like 30% for housing costs, plus an APRA serviceability buffer.
Yes, Australia is facing significant financial challenges, with many households struggling with the cost-of-living crisis, high interest rates, slowing economic growth, and rising government debt, leading to declining living standards despite the economy not being in official recession. Key issues include soaring housing and essential costs, stagnant real wages, weakening productivity, and increasing state and federal debt levels, creating a "gentle decline" where many feel financially squeezed.
That borrowing came from both domestic and foreign creditors, with the former holding more than two-thirds of it.
Victoria currently has the highest total state debt in Australia in nominal terms, with projections showing it surpassing $194 billion, making it the most indebted state by absolute value and per capita, though the Northern Territory has the highest debt per person when population size is considered. Debt levels in Victoria are driven by significant infrastructure spending and past pandemic-related costs, leading to concerns about its financial position.
Payment of US national debt
On January 8, 1835, president Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished.
The oldest bond that is still paying interest is one issued in 1624 by the Hoogheemraadschap Lekdijk Bovendams (NLD) to fund repairs to flood defences on the Lek river, south of Utrecht. The holder is entitled to annual interest payments of 2.5% of the principal (which was 1,200 Dutch guilders).
Recent data from credit bureau Experian reveals that Generation X has the highest average credit card debt among the age groups of U.S. adults.
Myth 1: Being debt-free means being rich.
A common misconception is equating a lack of debt with wealth. Having debt simply means that you owe money to creditors. Being debt-free often indicates sound financial management, not necessarily an overflowing bank account.
Out of the total $36 trillion the government's on the hook for, it owes $29 trillion to the public at large — anyone or any organization that holds a government bond. “Most that is held domestically by various financial institutions, pension funds, banks hold a lot of it.
Finder's Consumer Sentiment Tracker of 1,310 respondents revealed 2 in 5 (43%) Australians – equivalent to 9.2 million people – have less than $1,000 in their bank account. Of those who have less than $1,000 on hand, the average bank balance is just $215 – barely enough to pay for groceries.
In Australia, most unsecured debts (like credit cards, personal loans) have a statute of limitations of 6 years (or 3 years in the Northern Territory) for a creditor to start court action, starting from the last payment or acknowledgment. If this period passes without court action, the debt becomes "statute-barred," meaning you have a legal defense against collection, though debt collectors might still try. Court judgments extend this period, often to 12 years or more.
"FDI lending accounts for more than three quarters (77 per cent) of China's official sector lending portfolio in Australia," Ms Escobar said. "[Australia] has received Chinese FDI loans worth more than $US100 billion, as compared to the US, which has received less than $US75 billion."
Eliminating the U.S. government's debt is a Herculean task that could take decades. In addition to obvious steps, such as hiking taxes and slashing spending, the government could take a number of other approaches, some of them unorthodox and even controversial.
As the world's biggest gambling hub, Macao SAR has zero debt, bolstered by billions in gaming revenue and healthy financial reserves. Liechtenstein ranks in second, with virtually no debt and the only country in Europe ranking in the top 10.
The U.S. ($38.3T) and China ($18.7T) are the two countries with the most government debt, and together make up just over half of the world's total debt ($110.9T).