An overview of the Australian national fiscal outlook (NFO), consolidating forecasts from state and territory budgets with the Australian Government’s budget. Although the fiscal position has worsened across states and territories, the overall outlook has improved, driven by elevated commodity prices and a robust labour market. 

The fiscal position has worsened across states and territories despite improved forecast revenue in every state, as expenses for cost-of-living relief and health measures are expected to increase. Nevertheless, the total state net operating balance is expected to be in surplus from 2025-26.

Compared to the 2023-24 NFO, all of the main budget aggregates, except for public debt interest payments, have improved as a share of GDP at the national level.

Key findings

• The debt-to-GDP ratio is expected to trend downwards over the next 40-year period. 
• The national fiscal position has improved and is likely to remain sustainable, providing sufficient fiscal space to address key risks.
• Forecast national net debt has improved compared to the 2023-24 NFO but remains on an upwards trajectory.
• National net capital investment, which includes spending on infrastructure like roads and hospitals, is declining as a share of GDP, although at a slower pace than previously forecast.