The Prime Minister has asked Parliament to increase the national debt ceiling by $200 bn and says its necessary in order to clean up the mess from the Labor Government.
We already have a debt ceiling of $300 billion in place.
A Debt Ceiling is an amount of debt that the government can’t spend over. It’s like a credit card for the country. It’s a big thing to ask on the first day of Parliament.
He says that because of current spending levels are expected to grow past the $400 billion mark from its current cap of $300 billion, peaking in 2016. Mr Abbott also cited the previous government’s inability to handle the economic management of the economy for the rise in the debt ceiling.
He has also put plans in place, after the Commission of Audit, to make the government a smaller government. The government is committed to aggressively reduce its spending, and his argument stated that asking for the increase now will avoid asking for another increase in 2016.
Joe Hockey has added fuel to the fire by citing the removal of the carbon tax, mining tax, cutting company tax rates as further evidence for the increase in the debt ceiling.
The Shadow Government has offered a compromise of increasing the debt by $100 billion dollars. This would suggest that the opposition feels that an increase is needed, but maybe the Shadow Government are adopting a miserly approach. Maybe this is for good reason. Or is the increase of $100 billion if adopted allowing the increase to limit the changes the current government can adopt before the next election.
Is this the first signs of following the US Government into increasing debt again and again?
Is this increase an investment into increasing the capacity of the Australian Government to increase our GDP, and Output?
Time will tell.