Chris Richardson

So the feds are close to a trillion dollars, as you note, in debt.

But net debt, once you allow for the money they've got stashed away in various places, is about $600 billion.

Second thought is, you know, well, whether I've got a big housing loan and whether or not I've got money in the bank, what's also relevant is my wage, how much I'm earning.

And the same is true for governments, right?

You look at the nation as a whole and you look at that $600 billion in federal debt, you kind of need to compare it to national income.

And I suspect this will come as a surprise to you and to many people.

If you're looking at net federal debt as a share of Australian national income, that is below where it was before COVID.

Yes, COVID was expensive, but it was temporary.

And our national income has grown a lot.

And we've had a burst of inflation, which has boosted the size of national income, but it hasn't boosted the debt.

So I am less worried about federal debt than a bunch of people are.

What has changed over the past decade, and you mentioned it, you know, Victoria with its $200 billion debt, a bunch of other states have also got debt.

They also have less financial assets so that the reduction to net is more of an issue for them.

To the extent that Australia has a public sector debt problem, it is more the states than the feds these days.

Yeah, and the distinction is a different one.

So if there's a given measure of the budget that the media and analysts concentrate on, then the politicians have an incentive to put money that it doesn't show up in a measure that's been concentrated on.

And until that Charter of Budget Honesty back in 1998, we used to look at a number that was made better when governments sold an asset, when they privatised.

Yeah.

And indeed, you saw a lot of privatizations at the state level.

And just before a change of government from Keating to Howard, Geoff Kennett was privatizing some things that let him pay back some debt to the feds.