Scott Morrison plans to increase 'good debt'

Scott Morrison plans to increase 'good debt'

SBS World News Radio: Scott Morrison plans to increase 'good debt'

The Turnbull Government is preparing for big spending on infrastructure in next month's Budget as it plans to change how national debt is reported.

It wants to differentiate between what it calls "good" and "bad" debt.

But the Opposition has criticised the move as nothing more than a distraction.

As the May Budget inches closer, Treasurer Scott Morrison is preparing Australians for what will be in it.

So far, further debt is an absolute certainty.

"It can be very wise for governments to borrow, especially while rates are low, to lock in longer-term, low-cost financing and invest in major growth-producing infrastructure assets, particularly in transport and energy infrastructure. But to wrack up government debt for welfare payments and other everyday expenses is not a good idea. It cannot be done sustainably."

In this year's Budget, the way that debt is reported will change.

Indeed, so-called bad debt will be linked to borrowing for everyday expenses such as health and welfare.

And so-called good debt will relate to assets that can generate income, like transport or energy infrastructure.

Scott Morrison has likened it to the difference between taking out a mortage or putting expenses on a credit card.

"In the past, people have said all debt is bad. There is some debt that you can acquire that can actually pay for itself over time when you invest it in things that boost productivity, that grow the economy in particular, that have an income stream."

The Turnbull Government hopes the move will reassure voters and credit-ratings agencies by better showing which parts of the budget are to blame for the country's rising debt.

In opposition, the Coalition persisted with attacks on the then Labor Government for racking up a huge amount of debt.

When the Coalition took power in 2013, net debt was just over $200 billion.

Last year, it hit more than $300 billion, and it is projected to peak at more than $360 billion within three years.

Opposition Treasury spokesman Chris Bowen says the Government's move to change how debt is reported is nothing more than a distraction.

"The team that brought you the 'debt-and-deficit disaster' now brings you 'good debt' and 'bad debt.' No accounting changes, no smoke-and-mirrors* exercises will change this Government's record when it comes to debt and deficit."

The Government's plan will allow it to borrow more money for major infrastructure projects.

The spending will show up in the nation's gross debt but will not blow out the deficit, which means the Government can still promote its way as a path back to surplus within a few years.

 

 

 

 

 

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