Source: ABC News – Government strikes deal with Greens to scrap debt ceiling
Australia’s debt ceiling will be scrapped altogether after the Greens struck a deal with the Coalition Government to break the impasse over increasing the debt limit.
The Greens had previously backed Labor’s refusal to support the rise, with both saying they wanted to see updated budget figures before granting the Government’s limit.
Greens leader Senator Christine Milne says the deal will force governments to be more transparent.
“This, I think, will return some maturity to the debate around debt and get rid of what has become a phoney debate every time the Government has wanted to raise the debt ceiling,” she said on Wednesday.
The Government had wanted to increase the $300 billion limit to $500 billion, warning that the nation’s debt could have been capped on December 12.
But Labor and the Greens joined forces in the Senate last month to limit the increase to $400 billion instead, arguing that the Coalition should bring forward its Mid-Year Economic and Fiscal Outlook (MYEFO) if it wanted to borrow more.
Treasurer Joe Hockey, who has previously been highly critical of the Greens’ economic policies, has acceded to the Greens requests to increase transparency and to even continue the impact of climate change in future Intergenerational Reports.
“The Greens have engaged in honest discussion with us about dealing with the debt limit that was put into place by the Labor Party in 2008,” he told Parliament.
“There are no side deals, there are no winks and nods about any other issues and the agreement comes down to greater transparency about the debt and how it is used by the Government.
“Now, I have no problems with that at all.”
Under the agreement, the Coalition Government will have to table a statement in Parliament every time the nation’s debt increases by $50 billion, explaining the factors behind the increase.
It will also “enhance” the 10-year, medium-term projections in the budget and MYEFO with a focus on how to fund infrastructure.
Prime Minister Tony Abbott has previously described the Greens as “economic fringe-dwellers” and even repeated the accusation in Question Time on Wednesday.
“Yes, I agree, Madam Speaker that the Greens have been economic fringe dwellers,” he said, adding that Labor was “worse than the Greens when it comes to economic vandalism”.
Manager of Opposition Business Tony Burke says the move goes against the Coalition’s election promise to reduce debt.
“We have here, very clearly, a Government which says one thing before the election [and] does the exact opposite … in the space of seven days beginning with the GrainCorp decision and now moving to unlimited debt,” he said.
“[The Coalition] certainly never claimed that they would want permission for Australia’s debt to be unlimited. To get there through a deal with the Greens just means these are very different people to who they told the Australian people they were.”
Legislation to bring in the concept of a debt ceiling was introduced and passed under former Labor prime minister Kevin Rudd.
MYEFO is expected to be released next week.