Australia’s deficit and debt

The news media are reporting in gloomy terms of Australia’s budget deficit of $50 BILLION. But what does that mean? What percentage is that? How does that compare to other western economies? 

In terms of percentage Australia’s budget deficit as reported by Wayne Swan is 3.6 per cent of GDP. Compared to other countries? 

So compared to other members of the OECD (Organisation for Economic Co-Operation and Development) we are doing quiet well… What about Norway? Well Norway solve their budget problems by having one the highest individual tax rates in the world and a 24% sales tax! 

But we have debt to pay down right? We need a surplus, right?

Well Australia has a debt, according to the OECD, of about 26% of nominal GDP. How does this compare? 

So that’s even better. Australia has remarkably low debt for a triple AAA rated western economy. Even surplus champions Norway have twice the debt that Australia does. The OECD even note on their data that countries calculate debt in different ways and Australia’s (among others) debt position “overstated relative to countries that have large unfunded liabilities…”. 

So what is going on? Why are we focused on deficit and debt when by all standards we have little to be worried about?

It’s the mining boom, it won’t last. Well if that’s the case maybe we should look a raising the corporate tax rates (i.e. “Super-profits mining tax”) which are lower than the notoriously tax phobic USA. And maybe spend some money on the future.

Soures: OECD, http://www.oecd.org

1 year ago  /  1 note