A huge amount of political capital has been invested and spent on the issue of government debt and deficit. Indeed, the Coalition’s use of propaganda surrounding government debt and deficit was a critical factor helping it to win the 2013 election. But recent data released by the Reserve Bank of Australia show that the private sector in Australia has bank debt totalling just under $2.3 trillion, with a further $450bn or so in corporate bonds which companies borrow direct from fund managers. This overall level of private sector debt is around eight times the level of gross Commonwealth government debt. So it it is pretty clear where the risk is in the issue of private and government sector debt. It is just that you will never hear a Coalition member raise the issue of private sector when they have invested so much political capital in demonising government debt. This is despite the fact that the level of government debt and the servicing of that debt is one of the least risky parts of the Australian economy.
Posted on: Wed, 10 Sep 2014 08:57:10 +0000
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