Business hopes Treasurer Scott Morrison’s new approach to “good” and “bad” debt won’t stop him reducing recurring government expenditure when he hands down his May budget.
But Labor says changing the debt goal posts is an admission of failure.
The government wants to better explain what is “good” and “bad” debt, making it clearer what government expenditure is contributing to investment and increasing productivity, and debt that is incurred in dealing with everyday spending.
“We all need to understand what is driving the growth in our public debt and we need to budget in a way that creates accountability for increasing public debt and the interest rate payments that go with it,” Mr Morrison told an Australian Business Economists lunch on Thursday.
Prime Minister Malcolm Turnbull likened it to a household that has taken on a loan to buy a home, undertaken renovations or bought into another investment, so the debt is matched by an asset.
But if you are running up debt to pay for a holiday, “you’re living beyond your means”.
Opposition Leader Bill Shorten said it was an admission of failure from a coalition that was voted into power in 2013 on the promise it would cut debt and deficit.
“Today, the prime minister and the treasurer are changing the goal posts,” Mr Shorten told reporters in Melbourne.
Shadow treasurer Chris Bowen has no problem with enhanced transparency in budget reporting.
“But if the government thinks their answer to the debt and deficit disaster that they invented is just to change the accounting mechanisms and hope nobody notices … they are not making the tough decisions when it comes to budget repair,” he told reporters in Sydney.
Australian Chamber of Commerce and Industry boss James Pearson welcomed the treasurer’s decision to differentiate the two types of debt.
“We hope this is accompanied by a budget that reduces recurrent expenditure to a sustainable level and no longer adds to Australia’s ‘bad debt,” he told AAP.
“We can achieve this through greater public sector efficiency, tightened eligibility for government programs and greater competition in the provision of government services.”
The treasurer chose his final set-piece speech before the budget to announce Chris Jordan had been re-appointed as the taxation commissioner for another seven years after his strong leadership in implementing new multinational tax avoidance laws.
“As Cronulla Sharks number one ticket holder I know how important it is to keep a winning team together and Chris Jordan has been an important part of that winning team,” Mr Morrison said.