(Transcript from World News Australia Radio)
Labor and the Greens have agreed to increase Australia's ability to borrow money by $100 billion, to $400 billion.
But the government has warned that without the additional $100 billion, services could well be cut.
Darren Mara reports.
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Treasurer Joe Hockey has warned that government services such as welfare payments and Medicare could be forced to stop if Labor and the Greens refuse to allow him to raise the debt ceiling to $500 billion.
Mr Hockey says Labor's own economic statement, released just before the election campaign, showed that the current $300 billion debt limit would be reached in December and peak at $370 billion in the next financial year.
He says if there has to be a shut down of services because there's no money to pay for them, it will be Labor's fault.
"The Labor Party is now playing a game of Russian roulette. But what they don't understand in relation to debt limits is that the barrel is fully loaded. If they choose to pull the trigger, there's only one outcome for them. But the problem is, there will be ancillary pain for the Australian people."
Mr Hockey says he's seeking advice on what breaching the current debt ceiling would mean for the government.
Labor's finance spokeswoman Penny Wong says Labor is happy to increase the amount by $100 billion.
But she says the government needs to explain why it needs any more.
"Now it may be, it may be there is a very reasonable argument as to why Joe Hockey, the man who hates debt and deficit, wants a $500 billion debt cap. Well perhaps he could present it to the Australian people. Because in this debate just as in the debate about asylum seekers, just as in the discussion about the repeal of the carbon legislation there is a consistent theme. This is a government that doesn't want to be transparent."
Greens Leader Christine Milne says it's wrong of Joe Hockey to blame Labor for the situation, and to threaten yet more budget cuts just because he can't get his own way.
Senator Milne thinks the government is just looking for a way to cover up the fact that next year's budget will be a disaster.
"You can't accuse people who are prepared to increase a debt ceiling by $100 billion of running any kind of interference. That is a completely wrong assertion. And I also think it is important to acknowledge the politics of what's going on in terms of next year's budget. The Coalition know full well that they cannot deliver on the election promises they made to the Australian people and they are now searching around for an excuse so that they can blame anyone other than themselves for the mess they are going to find themselves in in at budget time next year."
But Senator Milne has left the door open for a compromise.
She says the Greens could change their mind if Treasury Department Secretary Martin Parkinson makes a compelling case for an immediate $500 billion ceiling when he appears before a Senate committee next week to answer questions.
Senator Milne says if convinced, the Greens will allow passage of the necessary legislation through the Senate when it resumes sitting on December 2.
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