Federal Treasurer Joe Hockey has struck a deal with the Greens that will see the removal of the federal debt ceiling allowing the federal government to borrow as much money as it needs.
The changes are expected to be passed through the Senate today, but the deal did require the Abbott Government to agree to three key demands from the Greens that are expected to increase transparency.
The agreement now means that the Federal Government will deliver a debt statement to the Parliament when borrowings are increased by $50 billion or more and set out the reasons why this increase has occurred. A new report will now be included in the Mid-Year Economic and Fiscal Outlook (MEFO) and the Pre-Election Economic and Fiscal Outlook (PEFO) on how much the government is spending on climate change and the extent to which that spending is contributing to government debt.
The final part of the agreement means that all future Intergenerational Reports will now include a dedicated section on the environment which will include climate change.
In response to the announcement of the deal between the Coalition and the Greens, Labor’s Jill Hall said “I think it does put some transparency back into the system but it’s not as transparent as the minister having to come into the Parliament and ask for that ceiling to be lifted”.
The agreement reached between the Greens and the Coalition will mean future governments, even those with a majority, will have to remain fiscally responsible. I was against a debt ceiling rise to $500 billion last month, but I welcome the newly struck deal which sets in motion new levels of transparency for the Federal Parliament. As the old saying goes, if you give them an inch, they will take a mile, so limiting any increases to $50 billion seems the right course of action for me.
As expected, Shadow Treasurer Chris Bowen wasn’t too happy about the deal. “More transparency is always welcome but the ultimate transparency is seeking parliamentary approval and having to answer questions,” said Mr Bowen.
The deal with the Greens saw Prime Minister Abbott performing another backflip this week as he had said, in August this year, “We can never build a better future by doing cheap and tawdry deals with the Greens.”
In a timely study released yesterday by Transparency International, Australia was ranked as one of just 11 countries around the world to score between 80 and 100 on the Corruption Perceptions Index (CPI). The global average CPI for 2013 was 43, with a lower score indicating a more corrupt government.
Is the removal of the Federal Government’s debt ceiling a responsible move? Has the agreement struck with the Greens made it too easy to draw down more debt? Is Australia racking up too much debt?