‘Debt-funded largesse': Majority of voters depend on government income, new research finds, as public spending hits post-war high
CIS economist Robert Carling has warned that such widespread dependence has fuelled unsustainable government spending and eroded economic resilience.
In a new paper published on Wednesday, Leviathan on the Rampage, Mr Carling warned that federal spending alone has reached 27.6 per cent of GDP.
This was up from 24-25 per cent of GDP in 2012-13 and has been fuelled by a 'program expansion in social services, defence and debt interest'.
More than half of Australian voters rely on government for most of their income—through wages, benefits or subsidies—according to new research by the Centre for Independent Studies.
Federal government programs spiral
Mr Carling's report highlighted that a small group of rapidly expanding programs drive more than 60 per cent of the growth in federal spending since 2012–13.
These programs include the National Disability Insurance Scheme (NDIS), aged care, Medicare, and defence.
The NDIS has exceeded the entire federal government's expenditure on defence and will cost taxpayers $52 billion in 2025, compared to $51 billion for the defence budget.
According to the federal budget 2025-26, the NDIS recorded the second highest annual growth in major payments, behind only interest.
It has been projected to cost more than $64 billion by the end of the decade.
Meanwhile, the federal budget has been projected to endure a decade of deficits and surge past $1 trillion of debt.
Robert Carling is a Senior Fellow at the Centre for Independent Studies and a former World Bank, IMF and federal and state Treasury economist.
Drawing on influential economist Frederic Bastiat's warning that 'the state is that great fiction by which everyone tries to live at the expense of everyone else', Mr Carling argues Australia has crossed a tipping point.
'Without a determined reset of expectations, Australia risks sliding into a European-style welfare state — slower growth, higher taxes and a culture where 'voting for a living' replaces 'working for a living'," he said.
'The honeymoon of debt-funded largesse is over.'
The CIS report warns that even if current growth in some areas slows, debt interest costs are projected to rise by 9.5 per cent annually over the next decade.
Meanwhile, over $100 billion in off-budget 'investments', including energy transition funds and student loan schemes, remain hidden from headline spending figures.
Leaked treasury advice calls for tax hikes
The findings come just days after leaked Treasury advice revealed the Albanese government has been advised to pursue 'spending reductions'.
The independent Treasury said that Treasurer Jim Chalmers would need to find 'additional revenue and spending reductions' to ensure 'sustainable budget'.
Opposition Leader Sussan Ley warned on Tuesday that 'clearly there is work going on to increase taxes'.
'We know this because of leaked Treasury advice that demonstrates that there will be a plan coming forward to tax Australians more,' she said.
'Now that's a broken promise if that happens, and we will hold them to account.'
Treasurer defends long-term reform plan
Treasurer Jim Chalmers has defended the government's fiscal plan and said the leaked briefing was not inconsistent with the government's stated priorities.
'The (upcoming economic reform) roundtable is all about building consensus on long-term economic reform, with a focus on … budget sustainability,' he said on Friday.
'It's an outstanding group of people who we believe will make a big contribution to the future direction of economic reform.
'While we can't invite representatives from every industry or organisation, everyone has the chance to have their say in this process with online submissions still open.'
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