Australia’s Fiscal Stimulus
Here in Australia the government has announced a $42 billion stimulus package. But the question is – where is the money coming from? The stimuls is expected to push the budget into deficit by as much as $35 billion over the next two years. The previous government paid off the net government debt of $96 billion. Now the government will issue new debt of $24 billion in the next 5 months. The cupboard is now bare – we are going into debt as a nation.
Who is going to buy the bonds? US & UK are also desparately seeking purchases of their debt. So it would seem that a significant portion will be purchased by Australian investors eg your superannuation fund. It would seem our super is funding the spending spree.
There are estimates by the major banks that the outstanding government debt could move to $161 billion in the next three years.
I hope this stimulus achieves something as it seems that we will be paying for it for some time to come.
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