Australia facing debt crisis

Australian flag

Australia’s upper house rejected a proposal to raise the debt ceiling to AU$500 billion ($465 billion), which if not resolved by December 12, could send the country into a US shutdown scenario.

Australian Prime Minister Tony Abbott has promised he will lift the debt ceiling of the world’s 12th-largest economy to AU$500 billion, but is facing opposition from the Labor Party and Greens, who want to cap the limit at AU$400 billion (about$373 billion).

The current limit stands at AU$300billion, which is expected to be reached by December 12, according to the Liberal-National coalition.

Abbott’s coalition has a majority in the lower house, but not the upper house Senate, which has the power to block legislation.

If no deal is reached, they would enter a US-style government shutdown, closing ‘non-essential’ arms of the government and laying off state employees until a debt limit is agreed.

Federal Treasurer Joe Hockey has stoked the idea of a government shutdown, and has warned of “massive” spending cuts if the ceiling isn’t extended.

“If Labor prevents an increase in the debt limit, there is no choice but to have massive cuts to government expenditure,” Treasurer Hockey said on Australian television on November 13, Bloomberg reports.

“The government is running on borrowed money,” Hockey said.

The negotiations in Australia show the government’s slippery stance on its budget, Nomura Holdings Inc. interest-rate strategist Martin Whetton told Bloomberg.

Australia day Sydney

“It’s not a good look for Australia,” said Sydney-based Whetton. “We’ve seen with the US example how disruptive these sorts of political disputes over debt can be. The bigger picture is that budget revenue expectations are poor for the government over the next four years because of high spending and an economy growing sub-trend.”

The US government was forced into a shutdown when Congress failed to negotiate on a budget deal amid nearly $17 trillion in debt.

National Australia Bank chief executive Cameron Clyne recommends Australia expands its deficit in order to grow.

Australia’s AAA credit rating, according to the bank’s chief, provides it a unique opportunity to issue more government debt in order to fund domestic infrastructure and growth.

Australia’s $1.5 trillion economy has a very gloomy forecast- unemployment isn’t expected to drop until 2015, a budget deficit over $30 billion is expected for the 2013 fiscal year, and free trade talks with neighbors are breaking down over spy revelations.

After winning office on September 7, Abbott announced he wanted to expand Australia’s duty-free trade relationship with China, Japan, India, Indonesia, and 8 other countries by singing the Trans-Pacific Partnership.

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Source: http://rt.com/business/australia-senate-rejects-debt-718/


7 comments

  1. what domestic infrastructure….another football stadium perhaps, barracks for US Army – ahh
    there’s something to cut….all spending on military foreign and domestic! There you go, no
    need to raise debt ceiling! Of course the National Australia Bank wants more debt, no problem, as Australia prepares for bail-in!!

  2. Actually it’s not at all the same as the US because if Australia gets deadlocked the queen just sends everyone back to the polls.
    More over, the opposition has agreed to raise the debt ceiling to the amount needed this year with a large factor of safety, but if the coalition want more than that they’re going to need to show some kind of justification, and the coalition refuses to do that.
    It’s not an economic matter it’s a political one. The coalition was elected on a promise to reverse the debt and fix the economy. They want to raise the debt ceiling to the point where they know there’s no chance they’d have to raise it (and discuss their increased debt) again in their entire term.

  3. The country is most likely overrun by government employees like Canada. If nobody stops them from wanting ever more money we will all go broke

  4. people should think of Australia more as a subsidiary of the US as apposed to a sovereign nation.
    its run by the same criminals and has the same central banking setup.
    Australia’s time in the sun will end with the rest of the west.

  5. How does a country with such extraordinary mineral wealth find itself in such debt?

  6. Australians are enslaved to the same Zionist central banking cartel as the rest of the world. Only humanity could be deceived in to believing paper and ink have more value than human life, food, and water; and that infinite debt can somehow be repaid.

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