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Should the Australian government actually be increasing its debt?

08102019_Australian government debt

Should the Australian government actually be increasing its debt?

As news is emerging that Australian Treasurer, Josh Frydenberg, will soon deliver a balanced budget for the first time since the GFC, one needs to ask if this is even appropriate today. While surpluses are prudent and allow for protection against future downturns, the logical time to build government surpluses is when growth is strong and interest rates are rising.

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Andrew Macken is the Chief Investment Officer of the Montaka funds and the Montgomery Global funds. He established MGIM in 2015 in partnership with Montgomery.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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Comments

  1. No way. Governments are uniformly terrible at borrowing money for ‘investment’. Uncle Milton was right when he made his birthday present analogy, IMO.

    If gummints want to help the economy they’d stop making it so difficult to do business and expensive to employ people. STP reporting is just the latest stupid waste of time that Big Government has inflicted on small businesses, and for what tangible benefit? But I digress. Aimlessly blowing funds on unproductive spending and racking up debt that they will then finance through forcible extraction (in large part) from the productive parts of the economy through higher taxation is no substitute for deregulation and IR reform.

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