In his budget speech tonight Treasurer Josh Frydenberg announced that under a Coalition government we will see a decade of surpluses that will “continue to build toward 1% of GDP within a decade”.
He went on: “we climb the mountain and reach our goal of eliminating Commonwealth net debt by 2030 or sooner.”
But a funny thing happened on the way to paying off the debt.
As the budget papers point out, net debt as a proportion of Gross Domestic Product (GDP) is predicted in the budget to peak at 19.2%.
You might ask, then, how do we get from 19% to 0% debt/GDP in ten years if we’re generating a surplus of 1% per annum?
- ^ Iron ore dollars repurposed to keep the economy afloat in Budget 2019 (theconversation.com)
Authors: Richard Holden, Professor of Economics, UNSW