Government debt hits yet another record - $493.8 billion

Fri, 19 May 2017  |  

The Australian Office of Financial Management has updated the data on gross government debt level. Today, it hit a new record at $493.8 billion. See  

Having inherited $273 billion from the Labor government in September 2013, the Coalition’s policies have added a rib-cracking $220 billion in just 3 years and 8 months, and all of this in a climate of decent global economic growth, a lower Aussie dollar and record low interest rates.

Having watched the dust settle from the recent budget, it is clear that the levels of government debt will keep rising, probably at a more rapid rate than Treasurer Scott Morrison projected simply because wages growth is so weak, company profits are fragile and the commodity price outlook has become more fragile on the back of extra global output and huge inventories.

Morrison’s budget strategy was to let government debt rise to a numbing $725 billion by 2026-27, even on the back of his rosy forecasts which propelled the budget to surplus in 2020-21. He’s dreaming.

Either way, Australia is just a few weeks away from having a half a trillion dollar government debt party.

I wonder if Scott Morrison will be holding a press conference when this momentous event happens?

I know I will.

NOTE: Government debt will drop $13.9 billion on 21 July when that government bond matures which means the level of debt will bounce around $500 billion for the next few months before resuming its upward path.

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The downside of the Aussie dollar going up again

Wed, 19 Jul 2017

This article first appeared on the Yahoo7 Finance website at this link: 


The downside of the Aussie dollar going up again

The Australian dollar has powered to a two year high above 78 US cents with the rise mainly driven by a sharp fall in the US dollar, amid signs of weaker economic growth in the US.

For some Australian economists, this rise of the Australian dollar, if sustained, is reckoned to be a restrictive force for the Australian economy which risks snuffing out some of the recent economic news pointing to a moderate pick-up in activity.

While a higher value for the Australian dollar does generally trim the rate of economic growth as lower priced imports take business away from local producers and exporters find it a little harder to compete in the international trade market, there are some good reasons to think the current Australian dollar rise will not be a major problem.

Think of it this way.

If the Australia dollar was in fact ‘over-valued’, how would this show up in the real world or the real economy?

In an environment of a floating exchange rate for the Australian dollar, the answer is rather simple.