Just in from the ABC, Treasurer Joe Hockey, has raised the debt limit for the Federal Government by $200 billion to $500 billion:
“I announce today that the Coalition Government will have to increase the debt limit for Commonwealth Government securities to $500 billion,” he said.
“We are increasing it to that level because I’ve been advised that on December 12, the current debt limit of $300 billion will be hit.”
Mr Hockey said the last Treasury assessment, provided in the pre-election fiscal outlook, predicted debt would peak at $370 billion.
But he said recent trends showed it would instead exceed $400 billion.
Mr Hockey said that the government wanted to put the matter “beyond any doubt”, particularly in the wake of the recent debt limit crisis in the United States.
Meanwhile, the Treasurer has announced the members of the Commission of Audit, which will conduct a root-and-branch review of federal government finances and operations in order to help stop the Government from breaking through the new limit.
BCA president, Tony Shepherd, will lead the Audit and will be joined by former Liberal Senator, Amanda Vanstone, former chief of staff to Peter Costello, Peter Boxhall, former Treasury Secretary Tony Cole, and former executive director of the Western Australian Department of State Development Robert Fisher, and its secretariat will be headed by chief economist and director of policy at the Business Council of Australia Peter Crone.
The Audit is scheduled to provide an initial report to the Government before the end of January, with its final report to feed into next year’s budget process.
In my view, the increase in the debt limit is a good idea, and should help prevent the type of politically motivated shenanigans on the display in the US.
That said, former Treasurer Wayne Swan must be frustrated with the increase, given that he copped so much flak over the past five years over the so-called “budget emergency”.
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