Chartered Accountants Australia and New Zealand argues that in the right circumstance, raising public debt can improve outcomes for individuals, businesses and governments – with benefits that could last for generations says Geraldine Magarey, Thought Leadership and Policy Leader.
“We welcome the Government’s initiative to act and move the discussion of debt beyond whether it is a positive or a negative number, it is vital that the nation understands how public debt plays a very important role in Australia’s future prosperity as a nation,
Our recently released research Public Debt & Deficits explores the legacy of policies that are consumed by debt and deficit to the exclusion of all else.
“Not all debt is bad – some debt, if deployed well, can lead to better intergenerational equity outcomes in the future. For example, infrastructure is a good example. In the 1920s debt was incurred to develop the Sydney Harbour Bridge to create an asset that remains critical to today’s economy,
“We call on the Government to use this opportunity to also allow an agency independent of Treasury to define the long-term structural budget balance and to assess the impact of proposed policy measures over a 10 year timeframe,
“The Treasurer is right to increase the visibility of good and bad debt and to concentrate on boosting investment in infrastructure,
For too long we have seen terms of government failing to prosecute long-term Budget pressures, the forward estimates of previous governments failed to capture the full impact of the mining boom and GFC and they continue to place more pressure on the budget of today.
“Chartered Accountants is urging the Government to make the new agency responsible for monitoring and reporting on the long-term pressures on the Budget.
“This would help define the issues facing the nation, set out priorities and provide the community with a greater understanding in the national debate around the budget.
“The move to distinguish good debt from bad is a positive step and provides the perfect opportunity to establish this agency and better long-term planning,” Ms Magarey said.