Federal Treasurer Josh Frydenberg today insinuated Australia could be in debt for a lifetime, even as the government considers fast-forwarding tax cuts which will predominantly benefit the nation’s highest earners.
Pardon my expression, but: lmao.
Appearing on ABC News Breakfast Thursday morning, Frydenberg fielded questions about the upcoming federal budget, which is due on October 6, and the general sense of economic chaos enveloping the country.
His responses gave lie to the idea that we’re cooked, basically.
When asked about the likelihood of Australia’s record-high federal deficit being eliminated in this lifetime, Frydenberg didn’t exactly sound optimistic.
“Well, of course, that is the goal,” he said.
“But we do know that the economic shock has been like no other. Not just for Australia, but also for the rest of the world.
“Australia has fared a lot better than other nations, but there’s still a big hole in the economy.”
.@LisaMillar: Are we ever going to be out of debt in our lifetime?@JoshFrydenberg: Well, of course that’s the goal. But we do know the economic shock has been like no other. pic.twitter.com/We1pPKY7K6
— News Breakfast (@BreakfastNews) September 23, 2020
Frydenberg is expected to address the matter a bit more later on today.
There’s definitely a bit going on here, and our national deficit isn’t as simple as, say, a car loan repayment.
A big chunk of the deficit was caused by the JobKeeper program, which has seen the federal government pump tens of billions of dollars into businesses to keep employees on the books during the coronavirus crisis. I’m no economist, but I’d argue JobKeeper and other pandemic-themed payments have been pretty bloody worthwhile – and could have gone much further.
So, much of the spending has actually benefitted Australians – but it has contributed to the biggest budget deficit since the end of WWII. We should be worried about a lifetime of repayments, right?
Kind of. On Tuesday, Reserve Bank of Australia (RBA) deputy governor Guy Debelle said really low interest rates make our current deficit kinda bearable in the long-term.
“The increase in debt is definitely manageable,” Debelle said.
“Moreover, there is not, in my judgment, a trade-off between debt and supporting the Australian economy in the current circumstance.”
That’s pretty clear, and the RBA has given a big thumbs up to further government spending in next month’s budget. The problem comes down to what the federal government actually wants to spend on, and how it plans to eke that money back.
In terms of spending, we know JobKeeper is tapering off, and JobSeeker’s fortnightly coronavirus supplement will more than halve from tomorrow, to say nothing of other cuts all over the place.
As for the tax cut thing? Frydenberg has toyed with the idea of bringing planned tax cuts forward a couple of years so folks have more money to splash around. But that proposal has been savaged by a former RBA governor and an ex-leader of the Liberal Party, who reckon high-earning Aussies – who stand to benefit the tax cuts – will just pocket the money anyway, increasing inequality.
That’s why you should be worried about the whole ‘lifetime of debt’ thing. There are changes we could make to even that tax burden in the budget, but as I mentioned before: lmao.
