Don’t worry, Australia isn’t facing a Greek tragedy

Sydney : After some pretty dumb comparisons between Australia and Greece, it’s worth noting that rather than suggest austerity here, the IMF thinks we might be trying to hit surplus too soon, writes Greg Jericho.The past week has seen the International Monetary Fund fighting with Greece over the repayments of its debt.
It brought back memories of when conservative politicians here would suggest our own debt level was in danger of becoming Greece-like. Given in the past week the IMF has also issued an updated assessment of Australia, it is interesting to note that rather than suggest austerity, the IMF actually believes governments here may be trying to return to surplus too soon.Comparing Australia with Greece was always pretty dumb, but that has never stopped members of the LNP when trying to justify their budget position when the topic is debt.Earlier this year, Tony Abbott responded to 2SM’s Grant Goldman’s rather silly comparison of Australia’s debt levels with those of Greece in 1987 by saying, “under the former Labor government we were heading to a Greek-style economic future. But that is off the agenda now”.
The Prime Minister’s protestations that we were headed for a Greek tragedy of debt were based on the laughable Intergenerational Report. The report that was supposed to be apolitical included some ridiculous assumptions that enabled Joe Hockey to suggest that under the ALP we were headed for government debt in 2054-55 of 122 per cent of GDP.Warnings of debt and disaster have a way of coming back to haunt you. Back in 2010 when, for a brief, dulling moment, Barnaby Joyce was the shadow finance minister, he suggested that “we’re going into hock to our eyeballs to people overseas. And you’ve got to ask the question how far in debt do you want to go? We are getting to a point where we can’t repay it”.Given the debt at the time was about 3.3 per cent of GDP and in the May budget Hockey forecast net debt to reach 18 per cent of GDP in 2016-17, poor Joyce must be having constant conniptions about us borrowing even more money from all those awful foreigners.
Of course, it doesn’t seem to matter now that after five years of preaching the evils of debt, that net debt is forecast to rise 1.7 per cent of GDP this financial year and 0.7 per cent of GDP the year after. As far as the Abbott Government is concerned that increase remains the fault of the ALP.
So too does any increased spending.Abbott told the Liberal Party faithful in Melbourne last Saturday that the Opposition was “still addicted to taxes and spending”.It’s apparently not a concern that the spending under this Government of 25.9 per cent of GDP in 2014-15 and 2015-16 is forecast to almost equal the levels reached in 2009-10 of 26.0 per cent of GDP when the ALP embarked on an almighty stimulus program.