The federal government will be able to borrow as much money as it wants after Federal Treasurer Joe Hockey cut a deal with the Greens to dispense with the debt ceiling completely.
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Mr Hockey has just written to the Leader of the Federal Greens, Christine Milne, setting out the details of the agreement.
It means the government will not have to ask the Parliament for permission whenever it wants to borrow money above a certain limit.
“We have agreed to repeal the current legislative limit on the total face value of stock and securities on issue set out in the Commonwealth Inscribed Stock Act 1911,” the letter says.
Mr Hockey has promised the Greens that the debt statement included in the budget, MYEFO and PEFO will include details on the amount of money the government is spending on climate change, and the extent to which that spending is contributing to government debt.
He has also promised that as part of all future Intergenerational Reports the government will have a dedicated section on the environment, including climate change and the effect of these policies and their impact on the Australian economy.
The deal means the government will not have to ask the Parliament for permission to borrow more money on December 12 when the debt surpasses the $300 billion limit.
Despite criticising the former Labor government for cutting a deal with the Greens to remain in power, the Abbott government needs help from the Greens to remove the debt ceiling.
The government had previously said it wanted raise the debt ceiling from 300 billion to $500 billion, but Labor had put a political stumbling block in the way by saying it would only support an increase to $400 billion.
In the House of Representatives on Wednesday, Opposition Leader Bill Shorten asked Mr Abbott why he was considering cutting a deal with the Greens, whom he had previously described as "economic fringe dwellers".
"Bad as the Greens are, it wasn't the Greens that gave us the five biggest deficits in Australia's history, it was members opposite," Mr Abbott replied.
"I agree that the Greens have been economic fringe dwellers and that just means that members opposite are worse - worse than the Greens when it comes to economic vandalism."
The deal requires the government to table debt statements in Parliament within three sitting days of the debt increasing by $50 billion. It also requires the government to set out the reasons why the debt has increased by $50 billion.
Labor’s Jill Hall says the new requirement is not transparent enough.
“I think it does put some transparency back into the system but it's not as transparent as the minister having to come into the Parliament and ask for that ceiling to be lifted,” Ms Hall said on ABC television.
“It can happen and no-one will know anything about it. So I really am not supportive of … what's happened today.”
Greens leader Christine Milne says the deal will make the debate about debt in Australia more mature while also making it more transparent.
“This, I think, will return some maturity to the debate around debt and get rid of what has become a phony debate every time the government has wanted to raise the debt ceiling,” Ms Milne said on Wednesday.
“We have had the imported Tea Party-style debate here in Australia where the focus has been actually on the figure rather than on what the debt is being used to do.”
The deal has been done at arm’s length, without representatives of either party appearing together at a press conference.
Mr Abbott said in August, when criticising the Labor Party, that ‘‘no real friend of the workers of Australia would want to do a deal with the Greens. We can never build a better future by doing cheap and tawdry deals with the Greens.’’
smh.com.au
