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Does Australia have a debt ceiling?
Topic Started: 4 Aug 2011, 09:13 AM (6,717 Views)
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Surreal nature of brawl over debt ceiling

November 15, 2013
Malcolm Maiden

It's worth recalling how much things have changed as the government and the opposition confect a debt-ceiling brawl over Treasurer Joe Hockey's plan to raise the government's borrowing limit from $300 billion to $500 billion. In less than a decade, reality has been up-ended.

As Peter Costello prepared his 2003-04 budget, surpluses and privatisation sales had brought the elimination of a debt load that peaked at $107 billion in 1996-97 into sight.

Costello would go on to declare in April 2006 that the government had cut its net debt to zero, but in 2003 he already had a structural problem. The stock of Commonwealth bonds had fallen far enough to put the bond market onto a starvation diet.

Fixed interest market participants were becoming twitchy, because Commonwealth bonds are the Triple A ''risk-free'' benchmark for all debt issues. Costello wasn't personally very worried. Government research said the impact on rates was minor, and the government could always borrow when it needed to.

The lobbying was persistent, however, and in his 2003-04 budget Costello announced that the government would maintain a floor for the amount of Commonwealth bonds on issue - $50 billion.

The government was of course committing to borrow money that it didn't need. ''If you borrow money you do not intend to spend, you have to do something with it,'' Costello observed in his memoirs, and for a while the borrowed money was put on deposit with the Reserve Bank.

During the 2004 election campaign Costello produced a more elegant and rewarding solution, however. The government would finance the Future Fund, and it would invest the money it received to build a kitty that would in time cover unfunded Commonwealth superannuation liabilities. It was a way of marrying two objectives, Costello wrote, ''keeping the bond market alive while eliminating net debt''.

In 2008 the floor that Costello created became a ceiling, as the Rudd government borrowed money to underwrite global crisis spending. A borrowing limit of $75 billion was legislated as an amendment to the Commonwealth Inscribed Stock Act.

A ''special circumstances'' authorisation for another $125 billion was created in 2009. It was absorbed into the general limit in Labor's 2011-12 budget and another $50 billion was added, taking the total to $250 billion. The ceiling was lifted again to $300 billion in Labor's 2012-13 budget, and that was what the Coalition inherited in September.

Hockey wants to boost the ceiling to $500 billion. He pushed an amending bill through the House of Representatives on Wednesday, but Labor and the Greens combined in the Senate on Thursday to lower the ceiling to $400 billion.

Read more: http://www.smh.com.au/business/surreal-nature-of-brawl-over-debt-ceiling-20131114-2xjkh.html
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Debt could rise more than forecast, warns Joe Hockey

December 11, 2013 - 10:09AM
Jonathan Swan

Treasurer Joe Hockey has let slip that the government debt could rise to more than half a trillion dollars - a figure that exceeds previous expectations by some $50 billion.

It comes days after the Coalition resolved its standoff over the debt ceiling, with the Greens voting with the Abbott government to abolish the self-imposed limit on government borrowing.

Mr Hockey is expected to reveal the new peak debt figure of more than $500 billion in next week's Mid Year Economic and Fiscal Outlook, which the Abbott government has framed as an ugly set of financial figures that will be blamed entirely on Labor.

The Treasurer had recently indicated that Australia's debt would peak at about $450 billion.

But in a speech in Parliament on Tuesday, Mr Hockey said the Coalition had inherited from Labor "endless deficits, debt that exceeds half a trillion dollars and . . . an economy with falling terms of trade".

Asked on Wednesday morning whether Mr Hockey stood by his statement that debt would exceed $500 billion, a spokesman said: "The Treasurer is not commenting further. Next week's release of the Mid-Year Economic and Fiscal Outlook will reveal the full extent of Labor's legacy of debt."

Read more: http://www.smh.com.au/federal-politics/political-news/debt-could-rise-more-than-forecast-warns-joe-hockey-20131211-2z4wh.html
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Count du Monet
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Government wants a 200 billion blank cheque the opposition has offered a 100 billion blank cheque. Interesting?
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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mel
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what's a hundred billion between friends? :D

I would love to know what they have in store for us, but to be honest I suspect it will be more of the same..
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Dr Watson
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Treasurer Joe Hockey has let slip that the government debt could rise to more than half a trillion dollars
It is staggering to think that we were (virtually) debt-free just six short years ago. It shows how quickly a good position can deteriorate. The budget deficit is structural so give it another decade and we should crack the trillion.

Edited by Dr Watson, 11 Dec 2013, 02:41 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Count du Monet
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Dr Watson
11 Dec 2013, 02:41 PM
It is staggering to think that we were (virtually) debt-free just six short years ago. It shows how quickly a good position can deteriorate. The budget deficit is structural so give it another decade and we should crack the trillion.
Actually the Howard government position wasn't a clean slate although they did reduce debt. In nominal terms the debt remained but suffered devaluation over time and the Howard government simply didn't add to it. But the Howard government financed itself via asset sales. The result being the income from assets was lost. A bit of Hocus pocus.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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barns
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The Libs have done a deal with the Greens to completely remove the debt ceiling here. It's not 400B or 500B. It's gone.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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zaph
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What is there left for the libs to sell?
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Dr Watson
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zaph
11 Dec 2013, 03:09 PM
What is there left for the libs to sell?
Their wives and daughters.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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mel
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zaph
11 Dec 2013, 03:09 PM
What is there left for the libs to sell?
Sydney and Melbourne :lol :lol
Dr Watson
11 Dec 2013, 03:22 PM
Their wives and daughters.
I found Tonys significant mortgage a bit of an eye opener.. it's all good though, the real money stream begins when he retires
barns
11 Dec 2013, 02:57 PM
The Libs have done a deal with the Greens to completely remove the debt ceiling here. It's not 400B or 500B. It's gone.
That's just what we need. I would post a video of the song 'slow ride' by Foghat if it wasn't so over done...
Edited by mel, 11 Dec 2013, 03:27 PM.
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