Australia’s gross sovereign (Government borrowing) debt during that Estimates hearing was $123.11 billion but by Friday 19^th it had climbed to $125.483 billion. If we keep borrowing at this rate Australia, and all who rely on the Government to provide a basic service of health, defence, subsidised medicine, childcare, unemployment benefits, pensions, are all going to arrive at a point of reckoning. Stresses will be placed on the Government budget because we did not manage the debt, at a point where it was manageable. If you do not manage debt, debt manages you.

As Harvard Professor Niall Ferguson has pointed out in the latest Weekend Australian “explosion of public debt hurts economies in the following way, as numerous empirical studies have shown. By raising fears of default and /or currency depreciation ahead of actual inflation, they push up real interest rates”. This is not what Dr Henry told me at Senate Estimates when he said, “No disrespect Senator, but that is a gross oversimplification of economic understanding”. I was very interested to read further what Professor Ferguson had to say. "Higher real rates, in turn, act as a drag on growth, especially when the private sector is also heavily indebted”. From the information tabled in Estimates that is us. A further interesting insight into debt can be seen by reading leading US economist and ex-chief economist at the International Monetary Fund Kenneth Rogoff’s "This Time is Different". Not much comfort in this literature for Lindsay Tanner and Wayne Swan, another word of severe caution for those countries with high domestic debt and a high domestic house price. We tick both those boxes. A Treasury paper from winter in 2002 also confirmed that deficits put upward pressure on interest rates and I also note that concerns have been raised by Ross Garnaut in regard to our current account position. That treasury is saying something different now is surprising.

It is a statement of the bleeding obvious that we cannot have Government debt growing the way it is growing.   The Labor Party do not want to grasp the nettle to manage the debt. The latest tactic of avoidance is that Mr Tanner talks about “net “debt but generally leaves out the word “sovereign”. Let’s talk about the difference between gross sovereign debt and net sovereign debt.

Net sovereign debt is gross sovereign debt less money that is identifiable in such places as, but not the entirety of, the Future Fund. So Mr Tanner must presume we can get money out of the Future Fund to pay our gross sovereign debt. But the Future Fund covers the public servants superannuation liability, so we have slight problem when they retire. Net sovereign debt also relies on the payment of HECS debt. All I can say about immediately collecting this liability, if required, is good luck.

Mr Tanner says that we, the Coalition, do not tell the community about the debt at the change of government. I‘ve got no problem with telling them. Senator Sherry said in Estimates it was about $58 billion gross.

Treasury states the gross sovereign debt will hit $245 billion under the Labor Party. Mr Tanner’s analogy that we all have a debt problem is like saying we all have a weight problem and the person who weighs 58 kilograms is in the same category as the person who weighs 245 kilograms.  

The second strand of Mr Tanner’s argument is that there are other countries in a worse position than we are. Once more, this is a case of ‘I only had 5 beers at breakfast so I’m in a much better place than the person who had a bottle of scotch with his wheaties.’

Debt is lesser of a problem when it is backed by an asset which is readily exchangeable to restore the wealth of the public coffers. However, I do not know how exchangeable the ceiling insulation will be when we need to repay the debt. I’m not quite certain what the international market is like for second hand school halls if we need to send them back. I suppose we could have a crack at getting the $900 cheques off the public, but I don’t like your chances.

We have, approximately, a $90 billion package of eclectic economic trinkets, noted as stimulus, that would look good hanging from any rear vision mirror in a car doing hot laps on a Friday night in downtown Dubbo.

Did we ever get something substantial, clearly identifiable in the form of the Snowy Mountains Scheme, or Inland Rail or massive water infrastructure to alleviate the problems of future droughts? Did we invest in a method to encourage people in a growing population to settle away from the crowded capitals of Sydney, Melbourne and Brisbane? No we didn’t.

What we did get, were big contracts to big firms with big price tags, to make big statements about things that really didn’t deliver big outcomes. What we got was appalling management of programs and costs as seen in the ceiling insulation fiasco. It was a big day out for our Prime Minister Kevin Rudd and now we have big problems, huge debts and huge pressure on our future budgets.

Let’s us put aside the absolute fiasco that is the ceiling insulation program. Let’s just take it as given that it is the biggest flop since the Leyland P76. Let’s take Mr Tanner at his word that he “didn’t dot the i’s and cross the t’s” as he stated to David Speers on Sky News. Let’s just file the ceiling insulation under R for Res ipsa loquitur.

 Let’s see what other little weeds have been delivered in this fiscal bouquet. We had the $850 million blow-out in the solar panel program; very interesting, when it was only going to be a $150 million program. We had the $17 million that went west with the NBN tender program. There was the $450,000, plus super, a year job for the ALP mate Mike Kaiser. Not a bad job if you can get it and you won’t, because applications from the subset of the Australian populace, which was everybody but Mike Kaiser, were not accepted. No one else need apply, just Senator Conroy’s mate, Mike.

Let’s talk about the $5 billon blow-out in the interest expense in the forward projections. Let’s talk about the $1 billion blow-out in the computer thing for the schools and also let’s talk about the fact that only about half of the children will get these computers and even some of them won’t be able to use them because they can’t get on line.

Let’s talk about the abundance of faith exhibited by Labor when they tell us of the eight consecutive $19 billion surpluses that are required to bring the budget back into orbit when it’s clear and evident of the continued stresses on the international economy especially in Europe .Let’s talk about all these things and then stick them to wall with a piece a Blu-Tac and then compare them to the more   salient and expected outcomes back here on planet earth.

The Labor Party have marked out their territory. There is nothing to be concerned about. You can trust them. They are economic conservatives.

Well, the three great lies that we always talked about when dealing in business are these-

I’m from the government I’m here to help.

 The cheque is in the mail.

Trust them, they are not like that.