What about the debt now?

The Government’s leadership question has been decided for the time being. The result of the spill motion to declare the leadership positions vacant failed 39 votes to 61.

Interesting result that. The 39 who voted for the spill were likely those who will lose their seats at the next election. When the rest of them see no improvement in the polls in the months ahead, this little wave will likely grow to something much larger as it crashes in to shore.

But for now, there’s another matter that they will want to consider. If there was a debt and deficit disaster in 2013 under Labor, what do we call it now?

When Tony Abbott, Joe Hockey and probably every member of the Coalition were out on the hustings in 2013 arguing Labor’s fiscal mismanagement, did they really know what they were talking about?

Of course they did. Labor was running up unsustainable debt and if it was allowed to continue, it would bankrupt the country. It was unequivocal.

Joe Hockey promised an end to the reckless spending. He promised he would have a surplus budget in his first year and every year thereafter.

A compliant media were with him all the way. Yes, Labor may have shown they couldn’t govern themselves after two leadership changes but the state of the economy was the central issue . . . wasn’t it?

They even had this big truck travelling around the country with the national debt displayed in big red letters just so those with poor eyesight could not miss it. It was a good story and easy to understand.

But what was the debt? As at the end of August 2013 gross Commonwealth debt as expressed by the Australian Office of Financial Management was $284 billion.

Today, in February 2015, 17 months later that same office shows gross debt at $354.5 billion, an increase of $70.5 billion, up 24.6%. If there was a debt and deficit disaster in 2013, what do we call it now?

Clearly, something is not right.

Now that the leadership question has been set aside for the time being, they might want to re-think that stale old mantra.

I’m sure after the gloomy news delivered to them by Glen Stevens recently, they will want to address the question of debt differently. So what do we call it now? And how will the same old team explain the ballooning debt?

Could we see a change in direction and a new approach to the subject of debt? After all, by the time the Prime Minister (whoever that might be) is due to call an election, debt will, on current trends, have passed $430 billion.

If you recall Treasurer Joe Jockey’s first MYEFO, it contained the startling claim that Commonwealth debt, left unchecked, would surpass $600 billion in ten years.
But if the Coalition continue to spend as they are now and we factor in the Reserve Bank’s latest estimates on growth, we will have annual deficits of $50 billion per year for the foreseeable future.

That means Joe Hockey’s original claim of a $600 billion debt by 2025 will actually be reached by 2019. Which really doesn’t say much for his economic management, does it.

So watch out for some pretty fancy new words to explain debt in the near future. I suspect debt is about to become a good thing, something that will enhance our quality of life, provide greater employment opportunities etc. etc.

Gosh! We might even be told that debt is really just the issue of bonds offsetting excess reserves in the banking system; to ensure the Reserve bank controls the overnight cash rate.

Wouldn’t that be something coming, as it will, from a neo liberal conservative mindset?