I wonder what my bank would say if I asked them to have more patience with my ‘good’ debt?
The Treasurer said it’s “wise” for governments to borrow when rates are low to lock in longer-term financing for investments which will provide major growth.
He said federal budgets in the past do not “make the distinction between good and bad debt”.
“All debt is lumped in together, whether it is for capital or recurrent purposes,” Treasurer Morrison said.
For the benefit of those actually thinking that Morrison might have a point given that we’re in a ‘low interest economy’ (PS: it’s never a good sign when the Guardian thinks you’ve done something good), allow me to put things another way before I ask you to take one more step to your left…
What would you say if I told you that:
- our federal credit rating is under threat,
- the annual interest repayments on the debt are $16.6 billion (and rising) and amount to the 5th largest expense in the budget (yes, you read that right; no, I’m not going to count the federal government giving the states their own GST back as a spending item like the government has; and yes, there’s a cool chart on this below);
- the $16.6 billion spent on annual interest repayments is:
- almost as much as what is being spent on assistance to states for public hospitals;
- more than what is spent on disability support;
- three times as much as what we’re spending on the navy, more than twice as much as we’re spending on the army – and comfortably more than both put together; and
- more than what is spent (by the federal government) on public and private schools put together.
For some fun at home, have a go at making your own outrageous ‘where could the money have gone!?’ combo using the table below:
AND (yes, I’m saving the best for last)…
- in the 10 years since our federal government started borrowing money to egregiously fund the junk it has blown our money on (be sure to have a stiff drink or some sedatives on hand before you click that link), the total interest paid has amounted to about $105 billion (rising to well over $150 billion in the next four years alone). Or, in other words, about twice as much as the NBN, nearly twice as much as the increased welfare spending in the same time and five times as much as spent on federal road projects; and
- the $105 billion spent (so far) on interest repayments is the biggest contributor to our federal debt?
Yes, that’s right: the biggest contributor to our $490 billion debt is the $105 billion of interest paid on it. By miles – and the gap is getting bigger by the day.
I’m sorry Mr Treasurer, I’m confused: is that good debt or bad debt?
Obviously, if the federal government had no debt, or very little debt, then it would have the luxury of choosing whether to acquire so called ‘good debt’. However, Rudd, Gillard and Swan sailed that ship away, built some fiber-ready school halls on it and set the thing on fire years ago. Since then, the Liberal government has done nothing of substance to retrieve the situation (there’s plenty that could have been cut from the budget without needing legislation passed in the Senate).
The fact is that we only have one kind of debt right now: catastrophic and negligently acquired debt.
As for the ‘low interest rate economy’ nonsense, remember that interest rates are volatile. Does anyone care to guess what they might be by the time we pay the debt back? Or what the average interest rate and total interest paid will have been over the repayment period? Did any of our insipid Press Club journalists bother to ask Morrison or Turnbull about this?
What trust has this government or Labor’s financial goons and grunts earned such that we should now suddenly trust them to start spending money on ‘good’ things and not boondoggles such as the NBN, the Education Revolution, battery farms or – my recent favourite – pumping water up a hill just to watch it trickle back down again (because any time you get the opportunity to blow at least $2 billion and literally take energy out of our electricity grid without a feasibility study, then you absolutely must do it before the chance passes you by).
And to think this is merely the entree to next week’s main course.