Mr Abbott's binge on government debt

Sun, 26 Apr 2015  |  

Having been in power for less than 20 months, the Abbott government has added over $83 billion to the level of government debt.

With gross government debt increasing at this breakneck speed, and with Treasurer Hockey using the Intergenerational Report to sneakily outline his policy to never ever pay it off even if it stays in power for 40 more years (see https://thekouk.com/blog/mr-hockey-s-plans-for-1-6-trillion-of-government-debt.html) it is no wonder he was so keen to abolish the debt ceiling legislation soon after taking office.

From a level of $273 billion at the time of the election in September 2013, the level of debt now stands at $356 billion. There is no hint that the pace of debt accumulation is slowing despite the promises of Abbott, Hockey, Cormann, Robb and others to “pay it off”. It looks like an epic fail.

Each week, the Australian Official of Financial Management publish the level of Commonwealth government gross debt on its web site. It is a figure that ‘nets out’ new borrowing which are undertaken each week against the maturating debt from bond and T-Note issuance taken out sometime in the past.

I have no concern about Australia’s level of government debt – I didn’t 1 or 2 or 5 or 10 years ago. I don’t think I ever have. I still don’t now despite the surge in debt over the past 20 months. (The only exception might be that government debt was too low to allow for smoothly functioning financial markets – that is for another day.)

But those currently in government did worry about debt and made what are absurd promises about it. They made great play of government debt and still do when the go on about the debt and deficit “disaster’.

Maybe I am wrong and government debt is a problem. Maybe Hockey and Abbott are right. I strongly doubt it but if they are, then their efforts to tackle the problem have been not only ineffectual, they have compounded the with this record breaking borrowing binge.

 

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