Mike's Minute: The interest on our national debt will hit $11B

June 2026 is not far off. 

In fact, it's next year and next year is election year. 

By that time, it is being reported, the interest on our national debt will be $11b. 

Do you see how this works? 

Not long ago the warnings were issued that it might reach $10b and at the time, it was pointed out that that is multiple times more than the Police budget. 

That's just in interest. Once we pay the $10b our debt doesn’t diminish. It's exactly the same. We have gone nowhere. We've just kept the wolf from the debt door for another 12 months. 

Well, the $10b has gone and we are now heading for $11b. 

Why? 

Because as the Finance Minister keeps warning, and she is doing this because the budget is close, the cost of borrowing is going up. 

Why? 

Because we are a greater risk. Risky people who want money have to pay a higher price. It's why credit card debt is more expensive than mortgage debt. 

The Government sells bonds, they ask for money and in return they will give you interest. For you to give them that money you want a decent return. 

The last time they put some 10 year bonds out they were paying 4.62%. That’s a big interest bill on billions of dollars. 

Remember also that they are adding to that debt pile each and every year until they reach an annual surplus. Even if they reach an annual surplus, which they aren't going to now for years, all you have achieved is not adding to the pile of debt. 

Even if you add not one more dollar to the debt, the debt doesn’t shrink. It demands another $11b from you to pay the interest bill. 

The mistake that is often made is we look to other countries and go "look, their debt is more than ours", either in dollar terms or as a % of GDP. What isn't pointed out is how small and vulnerable and unable we are to grow our way out of that. 

We owe a lot and ratings agencies, although not alarmed, are alert. 

This Government were left with a shed load of debt from an economically criminal previous Government. 

And that bill is about to hit $11b a year, or over $30m a day. 

Every day, forever. 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So June twenty twenty six, right, June twenty twenty six,
not far off. In fact, it's next year, and next
year's election year. Of course, by that time, it has
been reported this week the interest, the interest bill on
our national debt will be eleven billion dollars. You see
how this works. Not long ago I was sitting here
on this program, the warnings were being issued that it
might reach ten billion, ten and at the time it
was pointed out that that ten is about two lots

(00:21):
of the police budget, two times the police, just an interest.
Once we pay the ten billion, our debt doesn't diminish.
It's exactly the same. We've gone nowhere. We've just kept
the wolf from the debt door for another twelve months. Well,
the ten has now gone. We're heading towards eleven two
lots of police and another billion dollars on top. Why because,
as the Finance Minister is pointing out and keeps warning,

(00:41):
she is doing this, by the way, because it's budget's
getting closer. But as she keeps warning, the cost of
borrowing is going up. Why because we're a greater risk.
Risky people who want money have to pay a higher price.
It's why credit card debt is more expensive than mortgage money.
The government sells bonds, they ask for money in return,
and they will give you interest for you to give
them that money. You want a decent return, don't you, Yes,
you do. Last time they put out ten year bonds.

(01:02):
The other week they were paying four point six two
percent big interest bill on billions and billions of debt.
Remembering also that they're adding to that debt each and
every year until they reach an annual surplus. And even
if they reach an annual surplus, which they aren't, they're
not going to for years. All you've achieved is not
adding to the pile of debt. Even if you add
not one more dollar to that debt, the debt doesn't shrink.

(01:25):
It demands another eleven billion dollars from you to pay
the interest bill. The mistake that is so often made
as we look at other countries and go, oh, look
at their debt. It's more than ours, either in dollar
terms or a percentage of GDP. What isn't pointed out
is how small and how vulnerable and how unable we
are to grow our way out of this particular problem.
We owe a lot and ratings agencies, although not alarmed
are these days alert to the problem. This government were

(01:48):
left with a shedload of debt from an economically criminal
previous government, and that bill is now sitting about to
hit by June of next year eleven billion dollars a year, or,
if you want to put it another way, thirty million
dollars a day, every day forever. For more from The
Mic Asking Breakfast, listen live to News Talks at B

(02:10):
from six am weekdays, or follow the podcast on iHeartRadio.