Powered by MOMENTUM MEDIA
subscribe to our newsletter

Rising government debt ‘worrisome’: HSBC

Australia’s current fiscal policy is “on the wrong path” and changes are needed to ensure public debt remains manageable, according to HSBC.

A new report by the bank authored by chief economist Paul Bloxham and economist Daniel Smith noted that Australia’s public debt has risen from a net asset position of 4 per cent to 18 per cent over the last eight years.

“Although public debt is still much lower than the advanced economy average of around 75 per cent of GDP, it has risen by more than in any of the nine countries with triple-A ratings, despite the Australian economy outperforming the rest,” the study said.

This could be put down partially to budget deficits, with the government debt’s current trajectory becoming “worrisome”.

Additionally, HSBC noted that tax revenues have been consistently lower since the global financial crisis than their pre-2008 levels, adding that public spending has remained high over the same period.

Advertisement
Advertisement

“The fiscal boost following the global financial crisis proved to be more permanent than anticipated and spending on health and other social benefits has increased,” the bank said.

HSBC also pointed to the recent downgrade to Australia’s credit outlook by global ratings agency Standard & Poor’s from ‘stable’ to ‘negative’.

Current government projections indicate an ageing population and subsequently increased public expenditure on health and pensions, and HSBC said reform is needed to support spending and the economy.

“To get back to a sustained budget surplus, policy changes are needed that would deliver more tax revenue or reduce the government’s medium-term spending commitments,” it said.

[Related: Government under pressure to appoint housing minister]

PROMOTED CONTENT


Rising government debt ‘worrisome’: HSBC
mortgagebusiness

Latest News

The chief of Australia’s largest bank has said lenders should act pre-emptively and shift their floor rates for mortgage serviceability am...

Total household wealth reached a high of $13.4 trillion in the June quarter, primarily due to rising property prices, according to the Aust...

The property exchange settlement platform has been granted approval to establish an Electronic Lodgement Network in the ACT.  ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.