Mar 27, 2013

Here’s the real story of Australian debt

The real story of government debt is much more complicated than News Ltd papers claim. And there's a deep irony in their campaign against it, wrote Bernard Keane and Glenn Dyer in March.

Of all the campaigns against Labor in News Limited publications, its latest one on government debt is the most deeply hypocritical.

The “exclusive” today purported to reveal Prime Minister Julia Gillard would be leaving $14,238 in debt to every working Australian (journalists John Rolfe and Gemma Jones used the wrong workforce number and inflated the calculation, but never mind that). Like the Coalition’s version of recent economic history, the piece airbrushes the global financial crisis from its account of events.

Free Trial

Proudly annoying those in power since 2000.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

106 thoughts on “Here’s the real story of Australian debt

  1. smogdownunder

    I think you have a typo in the AUD to USD value. $1.48 would be truly alarming!

  2. littlemaths

    The comparison of national debt to home credit card debt is one of the more idiotic lines to come from News Ltd. The two have little in common, other than the fact that they’re both types of debt. But it’s easier and quicker to say than, for example, a media organisation providing an understanding of how an economy actually works, which sounds terribly time consuming.

  3. Steve777

    Everything is much more complicated than News Limited papers claim.

  4. Myriam Robin

    Great piece Bernard and Glenn. I’m confused by something though:
    “High-quality debt, like that offered by the Australian government, is in short supply…. Australian bonds pay 3% or better, which is more than you can get in the US, Japan or the UK and Europe.”
    If Australian debt is AAA rated, why do our bonds pay more than those offered by the US, Japan, the UK or Europe?

  5. Roy Travis

    I have read some facinating conclusions drawn from a set of facts in my time, but seldom have they reached the height of Bernard Keane in the justification of more debt.
    He defends this government’s borrowings on the grounds that the world needs more AAA debt. Well if that is the case borrow away like there is no tomorrow.
    I wonder if our children will feel the same when they have to repay it

  6. Michael

    The debt is ‘real’, though (not just ‘pump priming’ debt from the central bank, like the QE approach in the USA) – I read somewhere that govt bonds held by foreign govts is around $200bn.

    If it is as real a problem as the Tele suggests, then luckily the debt could be repaid in a decade by (a) halving tax concessions for super, (b) abolishing the health insurance rebate, and (c) reducing private school subsidies for schools charging fees greater than say $10k pa.

    All we’d need is a govt with the guts (and parliamentary majority) to make these pretty straightforward changes.

    Anyone? Anyone?

  7. littlemaths

    Myriam – the higher the quality of the debt, the more likely it is to be repaid, which makes it a safer investment.

    Roy – I don’t think you understand how national debt works. The argument that all debt is bad is ridiculous, and completely unfounded, and leads to the kind of recessions currently brewing in fiscally austere places like Britain, about half of Europe, and Victoria.

  8. drovers cat

    Facts and the Australiar have been strangers for quite some time now.
    Why give them any oxygen?
    In the strictest interpretation of the word, the Australiar has by its own admission not been a ewspaper for some time.
    They have chosen sides – their choice that they must live with – but why people continue to include them among news suppliers is beyond me

  9. extra

    Ah, yes. Gemma Jones. The quality of her News Ltd articles on government debt would appear to be of just as high a quality as her News Ltd articles on climate change.

  10. Myriam Robin

    Hi Littlemaths – that’s the point. If something is more likely to be paid back, it should offer a lower rate of return, not a higher one.

Leave a comment

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details