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Does Australia have a debt ceiling?
Topic Started: 4 Aug 2011, 09:13 AM (6,719 Views)
Sunder
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genX
14 May 2012, 09:34 PM
To pay for the mistakes of the imbeciles who were in power before them, unfortunately. You would have to be mad to want to follow Howard/Costello into government. I guess our pollies are just mad. Power mad probably.
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Surely you jest?

You do realise that the Liberal government paid off all the debt accrued by the labour government before them, and passed labour a budget surplus, right? What was there to fix?

It's why Labour is so hell bent on returning a budget surplus at a time when economic stimulation, not contraction is required. While they say they're giving room for the RBA to cut, what they're really doing is fighting against the RBA.

Labour has a big chip on their shoulder that they're perceived as the economic incompetents. They want to prove that they're not by running a surplus, but to anyone who knows anything about economics, they know it's not about running surplus or deficit - it's about running the right one at the right time. In effect, they're proving to those in the know that they are actually economic incompetents.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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miw
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Sunder
15 May 2012, 09:22 AM

It's why Labour is so hell bent on returning a budget surplus at a time when economic stimulation, not contraction is required. While they say they're giving room for the RBA to cut, what they're really doing is fighting against the RBA.
You know, half the time I think this, and the other half I think the government is keeping as much powder dry as possible in case the shit really does hit the fan. There's a number of potential shocks out there waiting to happen, and if they all come at once then Wayne Swan is going to look like a genius for havng left heaps of wiggle room.

Of course, if they don't, he'll look like a prat. That's politics. :-) And wiggle room can fund vote-buying next year, of course.

Edited by miw, 15 May 2012, 09:47 AM.
The truth will set you free. But first, it will piss you off.
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Mr Griffin
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miw
15 May 2012, 09:46 AM
You know, half the time I think this, and the other half I think the government is keeping as much powder dry as possible in case the shit really does hit the fan. There's a number of potential shocks out there waiting to happen, and if they all come at once then Wayne Swan is going to look like a genius for havng left heaps of wiggle room.

Of course, if they don't, he'll look like a prat. That's politics. :-) And wiggle room can fund vote-buying next year, of course.
It's completely political....nothing more.

he's sticking to his promised surplus, with one budget left in the term.

Next year, if things are bad he'll say "things have deteriorated so we now need to stimulate again" ie. vote buying

If things are good he'll say "we cut at the right time as things were improving" and I would guess they won't be bagging any big surpluses, and they'll spend any increase in surplus next year...vote buying.

I'm still very confident that we'll have a deficit anyway as expected revenue is going to be so wrong again.
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Joe Hockey and Andrew Robb explain why we shouldn’t raise our debt limit

Tuesday, 15 October 2013 09:29
Bernard Keane and Glenn Dyer

Andrew Robb was Labor’s harshest critic on Australia’s debt ceiling. According to the then-shadow Finance Minister, Labor only needed to raise the debt limit “in order to fund its reckless spending and waste.”

Robb didn’t become Finance Minister when the Coalition won office, though. That honour fell to Mathias Cormann. But Robb had an important colleague who agreed with him — Treasurer Joe Hockey, who was also happy to borrow the Tea Party’s rhetoric about debt.

According to Hockey late last year, “Government debt is about borrowing taxes from future generations that have to pay the principal and interest on those borrowings. The increase in the debt limit to its current limit was simply because of Labor’s “legacy of waste and reckless spending,” he had said about the budget in 2012.

Worse, according to Hockey, government borrowing “crowds out” the private sector. “[D]ebt is placing upward pressure on interest rates domestically and has an effect internationally, making it more difficult for enterprise,” he said in 2011.

(That assumes that the government borrows domestically. What if it borrowed offshore to avoid “crowding out” the domestic private sector then? Well, Hockey was onto that as well, criticising Labor for borrowing from foreigners — even though it never did.)

So, now that the Coalition is in power, they shouldn’t need to raise the debt limit, because it was entirely the consequence of Labor’s incompetence, and raising it would cause domestic interest rates to rise, damaging the private sector. The Coalition surely wouldn’t “crowd out” the private sector now that we’re “open for business”?

Oh, but wait.

“We will have to increase the debt limit to prevent Australia breaching the debt limit before Christmas,” the Treasurer said from the US over the weekend. Legislation to raise the national debt ceiling beyond $300 billion is expected to be introduced when Federal Parliament meets.

“We need to lay down a medium-term path that lifts the growth rate of Australia and inoculates us against what will be a fairly volatile period over the next few months and perhaps the next three to four years,” Hockey said.

It was as though Hockey had been to the black hole that is politics in Washington and recoiled at his own reflection. On fiscal policy, he is now indistinguishable from Wayne Swan, focused on a medium term fiscal strategy that won’t crimp our below-trend economic growth in the face of external problems — like the debt ceiling crisis caused by Mathias Cormann’s mates in the US.

That’s as it should be. But it makes Hockey and his colleagues total hypocrites.

The hypocrisy isn’t purely historical. Hockey was rightly railing against entitlements again on the weekend, suggesting that you “cannot let [them] get away”. That’s while he’s about to launch a budget process that will centre on a new, extraordinarily expensive middle-class entitlement scheme for parents. If Hockey wants a “medium term path” then tearing up his leader’s “signature” Paid Parental Leave scheme would be a good start.

We’re going to continue to play this game of pointing out the myriad ways in which the Coalition is acting in ways completely at odds with its opposition (or for that matter contemporary) rhetoric. Why? Not merely to point out hypocrisy — we know there’s plenty of that to go around on all sides in politics. Labor in opposition during former prime minister John Howard’s term were little better; its pretence that voters were “doing it tough” in 2007 due to the cost of living was every bit as shameless as Tony Abbott’s carbon price scaremongering.

No, we’ll do it because when you speak one way but act another, you raise a question about what you actually believe. Did Hockey really think government borrowing “crowded out” the private sector and drove up interest rates (of course later he began saying interest rates were at “emergency lows”)? If so, did he think that because he doesn’t understand economics (unlikely; he might be a lawyer but he’s a bright bloke)? If he didn’t, did he say it with an intention to deceive voters? Did he just not care? And what does that say about Hockey’s values?

Hockey’s Damascene conversion this year to sensible economic policy has been the subject of several articles by us in the past month. Policies that are sensible now were sensible before the election and deserving of bipartisan support. But Hockey, Robb, Cormann and Abbott all ignored the obvious national interest and plumped for narrow, political self interest.

Perhaps Hockey and Abbott and the rest of the Coalition confuse their self-interest with the national interest. Many people in public life do that, but it seems a particular foible of the Right, which is so closely allied with business, a sector that reflexively and strongly believes that whatever is good for business is good for the country, and who are encouraged to think thus by their media cheerleaders.

Progressive parties have their own foibles, self-interest and hypocrisies, of course. Most particularly they are an instinctive interventionism and a deeply unhealthy obsession with propping up industry sectors with strong unionisation.

But persisting in acting hypocritically invites people to wonder what your motivations are, and how they change over time. Fortunately, no one in the Coalition now appears to believe what Hockey and Robb had to say about debt limits. That’s the difference between the new government and the GOP lunatics in the US Congress. But the questions remain.

Read more: http://www.smartcompany.com.au/politics/057980-joe-hockey-and-andrew-robb-explain-why-we-shouldn-t-raise-our-debt-limit.html
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Hockey’s lenience lies in his debt ceiling

Stephen Koukoulas

While the US has at least temporarily increased its ceiling on the amount of debt the government can accumulate, one of the first things the Abbott government will do when parliament resumes next month, after introducing legislation to repeal the carbon tax, will be to increase the Australian government’s debt ceiling.

The current ceiling in Australia is $300 billion, which is less than 20 per cent of GDP. By way of comparison, the US debt ceiling is around 105 per cent of GDP. People with knowledge on this issue realise that Australia’s gross government debt is tiny, and in fact is so small that Australia has had to get special dispensation from several of the post-global crisis new international banking regulations. These include the Basel III requirements for bank assets and capitalisation because there simply aren’t enough Australian government bonds on issue for the banks and others to hold.

That issue aside, Australia’s gross debt will continue to increase, given the budget is in deficit for a couple of more years and the money to cover that debt needs to be borrowed to make sure the government meets its financial obligations. It is as simple as that. In the US, we just saw a glimpse of the kind of problems that can be incurred when a debt ceiling is not raised.

According to some media reports, Treasurer Hockey wants to increase our debt ceiling by $100 billion, to $400 billion. While judging what limit to use is always open to debate, Hockey is erring on the side of having some leeway given the published Treasury projections have gross debt peaking at $370 billion over the next four years. It seems Hockey wants to make the ceiling so high that he covers for the risk of loose fiscal policy – or at least so he will not have to revisit the issue during this parliament.

For gross debt to hit the $400 billion level, the budget deficit position would have to get worse than the position presented under the Labor government’s policies, which were summed up in the Pre-Election Fiscal and Economic Outlook document.

To be sure, the limit has to take account of within-year variations in the budget balance – revenue and spending patterns for the government are very lumpy, as are maturing bonds, so some wriggle room is essential. But by looking to increase the ceiling so dramatically, Hockey is not imposing the kind of fiscal disciple he was advocating when in opposition.

It needn’t be that way for Hockey. He could, if he saw fit, fast-track some spending cuts or tax increases, including them in an economic statement or mini-budget before year end. Some six weeks after the election and there is no sign of that. Indeed, there have not been any policies from the new government aimed at changing the budget bottom line.

An early cut in an entitlement here, a tax hike there, and Hockey could be knocking off a few billion dollars a year on the size of government and therefore the required lift in the debt ceiling. Maybe he is secretly working on such a plan, but for now, he seems content to let the fiscal policy settings run on the same trajectory as those left by Labor.

For Labor and the Greens, when the legislation to increase the government debt ceiling goes to the Senate, presumably next month, they should pass it without question. The debt ceiling is a functioning-of-government issue, not a policy matter. We have just seen the consequences of the tomfoolery of the unhinged Republicans in the US as they have preferred to stop the economy than to let the government function and argue to point in the battling of electioneering. Let’s hope Labor sides with the government and lets the debt ceiling increase go through the Senate.

Many were (rightly) very critical of Hockey earlier this year, when in opposition he left open the possibility of the Coalition blocking Labor’s plan to lift the debt ceiling. It was misguided then and it would be misguided now.

In the end, it probably matters little whether the debt ceiling is raised to $350 billion or $400 billion. Australia’s government debt is very low. What is important is that the debt ceiling is raised to allow the government to function and that the driver of the debt, namely the budget balance, remains on a trajectory that firstly is alert to the growth rate in the economy, and secondly, holds to a balanced budget over the course of the business cycle.

Read more: http://www.businessspectator.com.au/article/2013/10/18/australian-news/hockeys-lenience-lies-his-debt-ceiling
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dave
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Anyone heard of any new developments on this front?
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Perthite
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dave
13 Nov 2013, 04:47 PM
Anyone heard of any new developments on this front?
Gov't want 500 billion. Labour says 400.
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Debt ceiling fights ramps up

November 14, 2013 - 11:29AM

Treasurer Joe Hockey has warned of ''massive'' government spending cuts if parliament does not approve legislation to increase the debt ceiling to $500 billion, as the legislation comes before the Senate on Thursday.

The Coalition government may receive its first knockback, with the Greens and Labor both opposing the amount, arguing instead for a more modest increase of $400 billion. The government rushed legislation through parliament's lower house on Wednesday, but its passage through the Senate is uncertain.

Mr Hockey has turned up the pressure on Labor and the Greens telling ABC radio on Thursday that threats to limit any increase to the debt ceiling were irresponsible.

But shadow treasurer Chris Bowen says the government has come ''nowhere near close'' to justifying such an increase and should publicly release advice from Treasury.

Prime Minister Tony Abbott has offered to provide Opposition Leader Bill Shorten with a confidential briefing of the debt position.

The current ceiling of 300 billion will be breached in mid-December.

Read more: http://www.smh.com.au/federal-politics/political-news/debt-ceiling-fights-ramps-up-20131114-2xht5.html
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dave
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Perthite
13 Nov 2013, 09:46 PM
Gov't want 500 billion. Labour says 400.
That won't do at all.
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karneth
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The Coalition is directly responsible for importing the debt ceiling rhetoric from the US Congress, simply because it was politically convenient at the time..

Time to reap what you sow. Short minded politics is exactly that.

All of this, over an irrelevant point.

Seriously, who cares about debt ‘ceilings’.

It’s a pointless administrative issue that only exists so that politicians to glaze over the underlying issues, giving the plebs the belief that they’re doing something important for this country.

Fucking idiots.
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