In an economy that was struggling to create jobs, a sharp rise in the debt-to-GDP ratio is not surprising.
The ratio has risen to a peak of about 160 per cent of gross domestic product, or about $4,700 per Australian.
The Government says this figure is based on an adjustment to the way the Reserve Bank calculates the Government’s debt to GDP ratio, which includes interest payments, repayments and dividends.
The Reserve Bank says the debt is now more than twice as high as it was before the recession, and about 20 per cent higher than it would have been if it hadn’t been for the stimulus measures that the Government announced in December last year.
Photo: Peter Rae “The fact that the ratio is now higher than before the crisis shows the debt that we are borrowing is a direct result of our fiscal response to the crisis,” Mr O’Dwyer said.
“The debt is rising as a direct consequence of our deficit spending and our debt to gross domestic price, which is a reflection of the fact that our economic recovery has stalled and is continuing to stall.”
The Treasury said the debt to GPI ratio was at an all-time high in December.
“Debt-to GPI has increased by $1,600 per Australian per annum in 2016, an increase of more than a quarter since 2008,” it said.
“This is in contrast to the average debt-based ratio of 1.7 per cent in 2015, and more than double the average for the past eight years.”
The Government’s Treasurer said he hoped the increase in the ratio would help slow the growth in the economy and reduce the need for further stimulus measures.
“There’s been an increase in interest payments and repayments in relation to the Government, but that is offset by the Government taking a number of steps to reduce its debt burden,” Mr Morrison said.
Photo/Julie Quinn Mr Morrison added that the rise in debt was not a surprise, but was a result of the “fiscal stimulus package” announced by the Treasurer and announced in January.
“In a recession, people think about how they can pay back their debt.
But that is not the case in this recession.
You can’t just increase interest rates.
That is what has happened,” he said.”
The Government’s fiscal response is to raise interest rates by a quarter and that’s what has led to the increase.”
This increase in debt is also a reflection in part of the Government borrowing, but also of our economic response to that.
“Mr O”s not just going to be talking about this on the macro level, which I’m sure the Treasurer will be.
What I can say is that I think there are going to come a time in the coming weeks when you’ll start to see some of the other factors come in.” “
That is a key part of his analysis, and we’re going to hear a lot more of that this week.”
“What I can say is that I think there are going to come a time in the coming weeks when you’ll start to see some of the other factors come in.”
Federal Treasurer Scott Morrison said the Government had taken a number in response to recent events.
Photo by: Andrew Meares Federal Treasurer, Scott Morrison, said the budget was “a snapshot” of the state of the economy, with the Treasurer looking ahead to a “much better world”.
“It shows a lot of what’s been happening, a lot that’s been achieved,” Mr Abbott said.
Mr Morrison acknowledged the Government needed to be careful not to over-spend, but said it was a “small price to pay” for the economic recovery.
The Treasurer said the government’s budget would “look a lot better” in two to three years.
Labor’s shadow treasurer, Penny Wong, said it would be difficult for the Government to justify the increase given the recent downturn.
Mr Wong said the Federal Budget was the only major Budget that had been balanced in the past 50 years, and Labor’s fiscal strategy would make it difficult for it to do the same.
A “fair bit of the new money that’s coming into the economy from the Reserve will be going to debt repayments, so the deficit will be much bigger than it is now,” he added.
“But that’s the price that we have to pay for the recovery and for the jobs that we’re bringing back.”
A new economic forecast has been released by the Bureau of Statistics.