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The Lateral View

Allow me to add my lateral view of things.

Government debt is frequently referred to as “the credit card” by Joe Hockey. This is, of course, a deliberate attempt to make the Labor Party sound like those “hopeless” people who can’t manage and who are paying 22% interest. Of course, in reality, Government debt is more like refinancing your mortgage – a reasonable rate of interest with assets to back it up.

When the Liberals bang on about how THEY didn’t go into debt, and how the GFC is so 2007, I always want to remind them, that they spent a large part of their time in office selling off assets like Telstra. Nobody ever talks about how Costello sold our gold reserves for about a sixth of what gold is worth today. To use the household analogy that the Coalition is so fond of, they paid off our mortgage by selling the house. No debt, but no asset either.

Someone, somewhere has to actually start mounting the perfectly reasonable economic argument that for governments, debt is neither good nor bad; it totally depends what the debt is for. The idea that debt is saddling our future generations with a burden starts to unravel when one looks at the past twenty years. Future generations now have a backlog of infrastructure that requires funding. Putting up taxes to pay for that is still a burden.

HECS is an example of a debt. But I don’t imagine anyone will be saying, “Becoming a doctor will give you a financial burden which’ll take years to repay, better to keep your job at Red Rooster and ask for me shifts so that you’ll be debt free all your life!”

Sadly, when we look at the country as a whole, that’s exactly how some people think. We can’t afford to educate, but we can afford to build jails. We can’t afford to build infrastructure, because we’d be incurring debt for future generations. Let’s wait – let those future generations build it and pay for it.

 

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