Day of reckoning upon us, but just how bad is our debt?
TONIGHT'S the night when all the doom and gloom that media speculation has recently settled on Australian workers and families is fed oxygen, starved of oxygen, or a bit of both.
Talking about media, in the past few weeks I have read a volume of speculative articles bigger than Tolstoy's War and Peace.
The thing that has struck me is how politicised most economics journalists are, invariably right wing.
One very prominent commentator wrote last Saturday week that if the government brings in a deficit levy, it won't be a broken promise because Abbott's pre-election promise was "no new taxes" and a deficit levy would simply be an increased tax. Got that?
The thing that struck me most about these commentators is that they tacitly accept the government line that the country is in crisis, that the ethos of middle-class entitlement begun by the Howard government and continued by the Rudd and Gillard governments is sending us broke.
This, they argue, is fanned by the fall in tax receipts and the imminence of a great big asset-rich baby boomer cohort bludging on fewer and fewer tax-paying workers.
Armageddon is due around 2035, apparently, as Generation X begins sticking their noses in the social security trough.
A few weeks back I wrote that all this hysteria seems to have ignored one very important point.
The Keating government in 1983 began the process of workers contributing to their own retirement needs by installing compulsory superannuation.
Since I wrote that, I found that the average super savings of a 30-year-old are $22,000 and that will grow to $750,000 in today's dollars by the time they retire.
Takes a bit of oxygen out of the Armageddon argument, doesn't it?
But just how bad are Australia's debt problems?
In my view one of the least politicised economics writers in Australia is Paul Syvret.
In a recent article Syvret turned to statistics supplied by the OECD in making his observation that "if Australia's economy is in crisis, the rest of the world is doomed".
Australia's gross government debt is 33.7% of gross domestic product.
Compare this with these: UK and US 109.1% of GDP; Greece 183.7%; Japan 228.4%.
Sure ours is too high, particularly if we accept that Australia is in crying need of infrastructure improvements, but need I say more?
Bob Lamont is director of Corporate Accountants situated at the Night Owl centre. He can be emailed at email@example.com.