What the government doesn’t want us to know about “unsustainable” debt 246



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How many times have we heard Tony Abbott, Joe Hockey and various ministers say it? Now a report by free-market think tank the Institute of Public Affairs confirms government spending between 2008 and 2013 created a $129 billion “black hole”.

As a result, the IPA says Australia has a public debt problem that has spiralled out of control – and that this burden is unsustainable.

Between 2008-09 and 2013-14, the Australian government borrowed $266 billion but only $137.3 billion was spent on infrastructure projects, which economists deem essential when it comes to public spending.

The remaining $129 million was spent on welfare, interest payments on borrowed money and other ongoing expenses.

“Federal public debt is in part being used to fund ongoing payments and transfers by the government. That flouts a basic rule of public finance: if you go into debt, you need to spend the borrowing proceeds on capital works and infrastructure,” IPA senior research fellow Dr Mikayla Novak told New Limited.

The Canberra’s debt problem: Where’s the money gone? report also found that, despite the talk of reigning in the debt, today’s Liberal government has not achieved the budget surplus necessary to do so in the long run.

“We have found empirically that Australian federal government debt is unsustainable,”says Dr Mikayla. “It’s unsustainable now, not in 10, 15 or 20 years time, because our economy isn’t growing fast enough.”

The report also finds that political agenda has influenced spending on both sides of the fence.

Former Bank of America Merrill Lynch chief economist Saul Eslake said governments of both parties had shied away from making budget cuts in areas they regarded “politically sensitive”.

“I think it’s fair to say that insufficient attention has been given to reigning in recurrent spending,” he said.

Are you concerned about Australia’s public debt? Do you think the government is spending money on the right things? 

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  1. A much more relevant subject than Mallah and QandA.

    I am concerned at this givernment’s massive increase in Australia’s debt and lack of spending on national infrastructure.

    Too much spending on indulgent pampering of what has become a nation if wimps, requiring constant support. Where’s our resiliance, Aussies ?

    3 REPLY
    • Gee ,I thought the last Govt talked about Infrastructure but never did anything. This one seems to be ” DOING”

    • kevin the debt has increased the present govt is paying for labours nbn ndis and other UN FUNDED SCHEMES ..

    • Why not pay themselves less, have their pensions and,super the,same,as the public and the people will follow

      1 REPLY
      • Wendy, my thoughts exactly. The bigwig politicians live exorbitant lifestyles that most of us don’t. As a result, when they retire, their ‘retirement benefits’ continue to fund said exorbitant lifestyles. Bring them back to earth with the same ‘benefits’ and wages the average person gets, and I think Australia will be well on the way of being out of debt.

  2. If you would like to have what Greece has got then vote green and labor. Howard and Costello left forty billion in the bank, Rudd and Gillard with the greens has left a hole of 129 billion after six years!

    4 REPLY
    • and Costello caused the majority of that amount with FTB A and B, Baby bonus, Child care rebate, private medical rebate and so on

    • The surplas left by Howard was a stated 20 billion which was then transfered to the futures fund to…and i quote”stop the labor party from getting their hsnds on it” a statement made by both Costello and Howard a number of times. So the resul was….NO SURPLUS.

    • Ya right and I suppose the 129 billion debt they left is a lie too!! Come on your got to be smarter than that surely ?

    • Howard and Costello spent over 140 Billion giving tax breaks and Super Concessions to mainly wealthy people. They had the BEST of the mining boom and blew it. THAT was the time for Austerity. Economists at the Comm. OF Audit brought out the facts and laid them out. The GFC was second only to the Great Depression and we had a treasurer who won WORLDWIDE acclaim for keeping our heads above water. NOT like Mr. eleventy. Since the election the deficit has more than doubled and he will never see a return to surplus as long as his arse points groundward

      1 REPLY
      • Why did the Liberal Government, when they achieved Government,
        knowing and complaining that the debt that the Labour left them was so high, give the Reserve Bank, unasked, such an enormous amount of money? I could never understand why! It made the deficit look much worse!

  3. This Liberal Government has more than doubled the debt since coming into office The amount of gross government debt on issue in the form of Commonwealth government securities is forecast to increase to $412bn in 2015-16, before rising to $518bn in 2018-19 and then $573bn in 2025-26 even though the budget in the years leading up to then are forecast to be in surplus. The comparable level of debt at the time of the election in September 2013 was $273bn.

    8 REPLY
    • You can see why they do no want to talk about the economy.
      A complete disaster since the day they were elected.
      They just have no idea of how to run a country.
      Just put the blame on someone else and change the subject.
      Bring on an election before we go bankrupt

    • Yes we know all this but it’s simple, get the politicians wages, super etc to fall into line with the citizens and the normal people will follow The so called leaders need to be people not feather their own nests first

    • well said Wendy Dellow, but I am afraid they seem to feel that the rest of Australia should suffer while they flourish

    • Yes, your right Leanna Stephenson but until they bring themselves to the people level and pay themselves,accordingly how can anyone take them serious

    • No idea, they are the law makers, they award themselves high pay rises and we can only look on in horror

    • Take for example the refurbishing of politicians offices costing thousand of dollars. How on earth can that be justified? When we are in so much debt. Apparently the politicians have got no say in the matter. One of the independents didn’t approve, I think it was Nick ? I Can’t spell his name.

  4. Who would believe anything the IPA says, they have an agenda to push, right wing born to rule bastards. No word on the massive blow out of debt by this government.

  5. Politicians of all persuasions rave on about the importance of cutting spending. Especially attacking any welfare recipients. Those that can in the main least afford any cuts. Wouldn’t it be refreshing to see the politicians lead by example and cut their incomes, pensions, leeks and perks. Not just place the burden on the weakest that can’t defend themselves. Australia’s debt situation is the envy of the world and even that obnoxious Hockey has stopped saying “budget crisis.” Once again political crap from out of touch academics

  6. This is why we had so much scaremonger and fear directed our way, this Liberal Government is doing anything it can to avoid revealing is has doubled the debt, way to much waste, mismanagement and rorting

  7. Well the coalition tried to rein it in and look where that got them! A hostile senate and opposition made sure the budget changes never saw the light of day. People are unbelievable, with expectations high but not willing to do the hard yards. I don,t know why any one bothers.

    8 REPLY
    • When the government are serious and fall into line with their own personal lurks and perks, super, etc then all would follow

    • When I see the IPA come up with a suggestion on how the rich and business can contribute more they will have some credibility, to only take from those who are already doing it tough is just not acceptable.

    • Well said Lee. People have to understand that business’s have to be profitable to be able to employ people so governments cannot keep penalising them with extra taxes. Without profitable businesses then this increases unemployment which then becomes a burden on our budget. A major problem in reigning in the budget is the ever huge welfare debt that increases every year with built in increases. This ultimately falls back on the tax payer to pay. Greece had a left wing government that handed out money to an ageing population like lollies and now the country is basically bankrupt. If everybody contributed to making small sacrifices then we would all benefit in the future and especially our children and grandchildren

      1 REPLY
      • Susan, the tax breaks on Superannuation are about the same as the cost of the age pension, and getting larger faster.
        So better to reduce the super tax breaks – but do it gently.

    • Tell me why did they try to rein it in by penalising the poor and middle class taxpayer…why did the remove twoo taxes that formed a large part of the tax revenue of the country from tge very wealthy mining fraternity the same fraternity that has manipulated the price of mining commodities so that for the time being the mining boom is over. I do not consider any of the above to be good fiscal management in fact i give it ab -f for failure. When they start to take a reasoned common sense approach that sees all large eaning companies and muktinationals pay there correct share of tax then i will be happy to tighten my belt another notch tighter.

    • I notice the IPA don’t recognise the fact that during our mining boom before 2008 Howard and Costello heaped money onto wealthy Superannuants and this policy hasn’t changed. A person with $10 million in Super and earning $500,000 a year on that Super doesn’t pay a cent in tax. When Abbott says it’s their money he’s dead wrong. Someone has to pay for THEY”RE lack of tax…Liberals look after their wealthy friends and still believe in trickle down which certainly does not work!!

    • OMG Susan drink the coolaide much!! People who have businesses don’t have them if their are no consumers. Most low to middle income earners use all of their income to buy food pay rent or mortgages petrol electricity etc etc etc this in turn helps the economy and businesses boom. When the reserve bank is keeping interest rates low it’s to encourage consumers to buy but what is happening at the moment because of the uncertainty that the LNP have created people are being frugal not heating houses and living (if that’s what you call it) minimally trying to put aside what little they have ready for Abbott attack hence businesses not thriving and the large increase in job losses its economics 101!

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