Since the Abbott government came to power in September 2013 on a platform of “reducing debt” and “paying down debt” with the end point of “eliminating debt”, it has borrowed, in gross terms, over $93 billion. That is about $2 billion a week.
The borrowings are in the form of government bonds and T-Notes and the debt is issued to cover the usual running costs of government when revenue is not sufficient to cover the cost of things like defence, aged pensions, other social security, health, giving money to the RBA and roads and the like.
The gross borrowings include a lot of short term debt (3 to 6 month T-Notes) and debt issued in years gone by that has matured over that time has had to be covered by new borrowing. The issue of financial management of government finances has been this way for many, many decades and it is entirely appropriate.
This means that the $93 billion or so of borrowing has not all added to the overall level of gross government debt which, according to the Australian Office of Financial Management, has increased to $333.5 billion as of today, which is some $53.2 billion above the level of gross debt at the September 2013 election.
The government has, to date, done nothing to suggest this $2 billion a week gross debt binge is going to end as it promised when in opposition. Losing the revenue from the abolition of the carbon and mining taxes, the cut to company tax, the $8.8 billion spending on the RBA reserves in addition to the paid parental leave scheme, roads, defence and the medical research future fund are all big ticket items that have to be covered.
With evidence building that the economy is stuck in a growth rate at or even a little below trend, the revenue from other sources will not see the budget deficit narrow much over the next few years.
Get set for a lot more borrowing from the Abbott government in the years ahead.