Treasury Secretary, Martin Parkinson, has today acknowledged that Federal Government debt is likely to peak well above the $370 billion forecast in the previous Budget, also backing the Government’s call for the debt ceiling to be raised to $500 billion:
“A debt limit in excess of $430 billion would be prudent even if we were totally confident about the economic outlook,” Dr Parkinson told a Senate estimates hearing in Canberra.
However, he said since PEFO the outlook for investment in the resources sector continues to be for a sharp downturn, non-resource sector activity has strengthened only slowly, labour force outcomes continue to be weak and wages are growing at the slowest rate since March 2000.
He said it suggests still larger deficits and hence significantly higher peak debt than the $370 billion.
Absolutely. With the once-in-a-century mining boom still to unwind, and Australia’s population ageing (lowering the employment-to-population ratio), I doubt Australia will see a return to budget surplus this decade, resulting in rising Federal Debt.
Still, with the Coalition hammering the former Labor Government so hard for its so-called “reckless spending” and continuously citing a “budget emergency”, as well as opposing previous attempts to raise the debt ceiling, I doubt Labor will graciously agree to raise the limit by $200 billion to $500 billion, continuing to back a $100 billion increase in the ceiling instead.
The question, then, is whether the Greens will side with the Government. Earlier this week, Adam Bandt told reporters that the Greens would “wait and see what Martin Parkinson has to say… we want to have the case made to us”, suggesting they might now be amenable to a $200 billion increase in the debt ceiling.
