The Federal Coalition is good at manufacturing crises. While in opposition, they continually labelled the former Labor Government as economic vandals, declaring a “budget emergency” and voting against Labor’s bill to increase the Federal Government debt ceiling to $300 billion in May 2012.
Now in Government, the Coalition is once again painting Labor as economic vandals for not agreeing to increase the debt ceiling from $300 billion to $500 billion, with Labor and the Greens rejecting the deal in the Senate yesterday and instead offering a $100 billion increase in the limit to $400 billion.
Instead of accepting the counter offer of a $100 billion increase in the ceiling, the Coalition instead rejected the deal in the House of Representatives yesterday evening, which now means the original bill will be sent back to the Senate when it sits again in early December – only weeks before the December 12 deadline, when the existing ceiling of $300bn will be reached.
If the Senate once again rejects the $500 billion debt ceiling, Australia could face a shutdown of government services similar to that experienced recently in the United States.
Treasurer Joe Hockey is already shifting blame on Labor, claiming that “[they] will wear this like a crown of thorns” and that “Labor trashed the joint when they were in government and now they are trying to stop us from fixing it.”
Ultimately, the debate over increasing the debt ceiling by $100 billion (Labor’s/Green’s proposal) or by $200 billion (the Government’s proposal), is about who “owns” the federal debt. After spending five years lambasting Labor over the deteriorating Budget, and promising to restore order once they took office, the last thing the Coalition wants to do is go cap in hand back to Parliament prior to the next Federal Election and seek another extension. If they do this, the increase in debt will be viewed as their fault, and they will have broken one of their key election pledges.
However, given the opposition from the Coalition each time it sought to increase the debt limit, Labor does not want to hand the Government a free pass. It’s pay back time. Labor were played for fools when they were in Government and do not want to be played for fools again in opposition.
In my view, the Coalition is to blame for the gridlock over the debt ceiling. They acted like children over Budget debt while in opposition – rejecting Labor’s calls to extend the debt ceiling and declaring a “budget emergency” – so they can hardly act all high and mighty now. What goes around, comes around.
Moreover, the Coalition has not acknowledged the holes it has punched in the Budget with its irresponsible paid parental leave scheme, or the cancelling the mining tax and fringe benefits taxes on leased cars. And of course, they refuse to mention the ballooning entitlement spending aimed at middle class families, the aged, and wealthy retirees under the Howard Government, which have arguably contributed much more to Australia’s structural budget deficit than any policies implemented under Labor. Instead, the deteriorating Budget is all Labor’s fault, whereas they are talked-up as responsible fiscal managers.
Put simply, the Coalition’s approach to Federal debt and the Budget has been hypocrisy on a grand scale. And we, the public, are unfortunately being forced to endure this farce.
