(Austrailia): Abbott has given up on debt and deficit reduction, but few have noticed

[unhappycamper]

http://www.theguardian.com/commentisfree/2015/jun/26/abbott-has-given-up-on-debt-and-deficit-reduction-but-few-have-noticed

The Abbott government has abjectly failed to act on its pre-election concerns to reduce the size of a debt problem that, in reality, was non-existent

Abbott has given up on debt and deficit reduction, but few have noticed
Stephen Koukoulas
Thursday 25 June 2015 23.42 EDT

In less than two years in office, the Abbott government has added almost $100bn to the level of Commonwealth government debt. This is a 35% increase from the $273bn level of gross government debt at the time of the September 2013 election. This increase flies in the face of the Coalition’s pledge prior to the election – and occasionally since – of reducing debt and at some stage, paying it off.

By the time the next election is held, most likely in the latter part of 2016, the Budget papers indicate the Abbott government will have increased government debt by around $150bn in its three years in power and three years of implementing its economic policy objectives.

The current debt binge is despite a generally positive economic environment, with growth in Australia’s major trading partners estimated by the Reserve Bank of Australia to be robust in the whole period between 2014 and 2016. Helping this positive backdrop is increasing evidence that the industrialised economies are gaining some positive momentum as they emerge from the malaise of the global recession sparked by the banking and financial crisis.

To be sure, there are some important constraints on the Australian economy – commodity prices have fallen sharply and the mining investment boom is in sharp retreat. These significant negative factors have, it must be noted, been offset to a large extent by a significant weakening in the Australian dollar exchange rate and super-stimulatory monetary policy settings from the RBA, which has set the official interest rate at just 2%, a record low.