It's now $61.15 billion of gross borrowing by the Abbott government

Fri, 21 Mar 2014  |  

The week ends with the Abbott government borrowing a further $700 million today, which brings the total of gross borrowing since 9 September 2013 to $61.15 billion.

$61.15 billion of bond and T-Notes that have been issued in just over six months as the government funds the budget deficit, covers maturing bonds and T-Notes and prepares to fund a range of its policy expenditure items.

As I have noted at nausium on the issue of government debt over recent years, the Australian government's debt level remains trivial, chicken feed, small beer and the campaign of the Coalition Parties to suggest otherwise was factually flawed and it still is.

Even in government, the Coalition bemoan the level of debt and pretend it is a major factor threatening to undermine Australian sovereign risk or some similar nonsense.

The credit ratings agencies, all which rank Australia triple-A with a stable outlook and have since 2011, suggest the level of government is low. So do foreign investors who own close to three-quarters of the government bond market and a huge proportion of the stocks listed on the ASX as well as an increasingly large holding of property. They do so comfortable in the knowledge that a government debt problem that would hurt the Australian dollar or bond yields is very unlikely.

The cumulative effect of the new borrowing means that gross government debt now stands at $310.1 billion, some $36 billion higher than when Mr Abbott convincingly won the 2013 election.

It was always obvious the promise to stop the borrowing and repay Labor's debt were false. The facts confirm this.

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The Small Government Myth

Tue, 02 Feb 2016

This article first appeared on The Adelaide Review website at this address: 


The Small Government Myth

There is a common perception that the Liberal and National Coalition parties have an ethos of small government. That is, they pursue policies that encompass low levels of government spending and low taxation versus big spending and high tax from the Labor Party. 

That is the perception.

Treasurer Scott Morrison has provided facts that prove otherwise. In December, with the release of the Mid-Year Economic and Fiscal Outlook, Morrison confirmed that the Coalition is high taxing and big spending and that, for many decades, Labor has been the side of politics that delivers small government.

The MYEFO documents show that government spending was 25.6 percent of GDP during the first two years of the current Coalition Government and it will remain above 25.3 percent of GDP out to 2018-19. The Rudd/Gillard Government delivered only one budget that saw the government spending to GDP ratio above 25.1 per cent and that was in 2009-10 during the height of the global depression risks – where a raft of temporary stimulus measures saw spending hit 26 percent. In every other year of the Labor administration, government spending was below 25 percent of GDP.

The key to Australia's economic success: locking in low inflation

Tue, 02 Feb 2016

This article first appeared on The Guardian website at this address: 


The key to Australia's economic success: locking in low inflation

When Paul Keating “snapped the inflation stick” in the early 1990s, he delivered one of the most valuable, potent and lasting reforms to the Australian economy. Sustained low inflation with a specific target was, in many ways, as important as the decision to float the Australian dollar.

Decades on from this economic fracture, Australia has one of the highest standards of living in the world and has not had a recession in a generation. Last week’s December quarter consumer price index confirmed annual inflation running at just 1.7%, meaning that, over the past 25 years, inflation has averaged 2.5%, which is in stark contrast with the 1970s and 1980s, when annual inflation averaged a destructive 9.2 per cent.

Low inflation is important for many reasons but the boost to living standards for low and middle-income earners is among the strongest. When an economy can lock in low inflation over an extended time frame, as Australia has, it means that those who receive even modest increases in wages and pensions have the purchasing power of their incomes at least maintained, if not improved.