Obsession with National Debt Misguided
Senior research fellow with The Australian Institute, David Richardson, has claimed that the federal government’s preoccupation with achieving a surplus is ‘inappropriate.’
Richardson argued that media and industry commentary about the amount of government debts and budget deficits is causing undue concern to public sentiment.
He cited the example of comments made by Don Argus, a former chair of the National Australia Bank (NAB) board, who is of the opinion that Australia needs a boost of productivity if it wants to combat the fast growing level of national debt.
Argus argued that if the debt keeps growing then Australia is going to develop the same problems that other world economies are dealing with. However, Richardson claimed that this argument is hypocritical and misguided, and pointed out that the NAB has a total debt of $345 billion, which is well above the level of government debt anticipated to be $162 billion, or 11% of GDP.
As well as this, Richardson claimed that the Westpac Bank - which has existed for almost 200 years - has never seen fit to pay off its debt, which currently stands at $450 billion.
Richardson posited that just as banks and companies borrow prudently, governments should be able to get into deficit for the health of the economy and repay debt if it is needed to offset unhealthy booms.
Source: http://www.yourinvestmentpropertymag.com.au/news/obsession-with-nat ional-debt-hypocritical-says-analyst-176047.aspx