If you search really hard, you’ll find some reporting of this:
“The Federal Government’s debt ceiling could be raised to $400 billion in a bid to head off the financial tremors facing the US.
Treasurer Joe Hockey has used a speech in the US to signal the debt ceiling – currently $300 billion – would be increased to take account of the Government’s required borrowings.
Mr Hockey will have to increase Australia’s debt ceiling by Christmas. Total debt is expected to peak at $370 billion by April 2016.
Mr Hockey said yesterday the ceiling was likely to be well above the bare minimum required.
“We believe the debt limit needs to be set at a level that provides sufficient headroom to accommodate likely events but also to provide discipline to budgetary management,” he said.
“It must be the case that debt limits should only be altered when unexpected significant events necessitate a call on the markets.”
The Federal Government yesterday sold $800 million in debt at an interest rate of 3.8 per cent, taking total debt on issue to $284.5 billion.”
The West Australian
Of course part of this, like everything for the next few months, can reasonably be argued as a hangover from Labor. (Although I suspect any fall in unemployment will be claimed immediately!) It’s the sentence sandwiched in between all those other boring numbers that I want to draw everyone’s attention to!
“Total debt is expected to peak at $370 billion by April 2016.”
Now I know that there are various ways in which it can be argued that our net debt isn’t as high as the figures being thrown about. And I am well aware that relative to GDP, Australia is very well off compared to the rest of the world. Economics is rarely ever straightforward, so I don’t want to be distracted from the main point here by all the intricacies of Australia’s debt.
Taking the figure quoted in the article, our current debt in $284.5 billion, then the estimate of $370 billion by 2016 increases our debt by $85 billlion dollars. I’m aware that almost no-one – including me – grasps really big numbers, so let me break this down a little.
After nearly three years of an Abbott Government that was elected to stop Labor’s “wasteful” spending” and to stop putting things on the “credit card”, they will have actually increased our total debt. Of course, it could be argued that this figure is only an estimate, but according to some reports Hockey wants to raise the debt ceiling to $400 billion to cover “contingencies”.
Or to break the figure down a little more, it means that the Government will be borrowing close to $100 million a day for the next three years. Now where have I heard that figure before? Oh that’s right, from here:
“Every year that the budget is in deficit is a year that Australia is living beyond its means,” says the Coalition’s Treasury spokesman, Joe Hockey.
The Coalition’s calculation that Australia is borrowing $100 million a day gives a sense of government excess.
I think that if the Government wasn’t borrowing $100 million every single day it would a lot easier for the banks to keep interest rates down. Everyone needs to understand that when the Government is out there borrowing $100 million every single day, there is going to be upwards pressure on interest rates. So, the best thing the Government can do to help the Australian people is get its own spending under control.
Just as well the Liberals are there to fix this budget emergency, because borrowing well in excess of $90 million dollars day is apparently no problem at all.