We’ll be dead before the national debt is paid off, former Treasurer Peter Costello told 7.30 host Leigh Sales on Monday night.
“The probabilities are we will never get back to where we were; you and I will die before that happens.”
Australia’s longest-serving Treasurer said national debt as a proportion of the GDP, 19 per cent, was at about the same level as when he became treasurer in 1996.
“It took us 10 surplus budgets to pay it off last time. You’d be doing well to pay it off in 10 surplus budgets this time,” he said while calling for spending to be slashed by at least $18 billion a year to fix the problem.
“We’ve now had 10 years of deficit. Cumulatively, that means to cover that we have had to borrow about $370 billion. We went from having no net debt to borrowing about $370 billion. That money doesn’t go away. It’s going to be there, we’re going to be paying interest on it, until somebody pays it back.”
He said future generations would be paying interest on the debt that has accumulated in the past decade, and would probably be paying it for the rest of their lives.
The chairman of Nine Entertainment and the Government’s Future Fund Mr Costello backed Treasurer Scott Morrison’s pledge to restrict the overall tax take as a share of GDP to 23.9 per cent.
However, he said the same figure should apply to federal spending, which is running at about 25 per cent of GDP.
“You’ve got to get your expenses down to about 24 per cent. We should try and have a cap on that as well and if we could get them down to about 24 per cent, we could start balancing budgets and we could pay off debt but we are a long way away from that,” he said.
“It might just sound like … not that much. It’s [actually] about $18 billion, and until we get our spending under control we are never going to be in a position to pay back our debts.”
Are you concerned about the spending measures forecast in tonight’s Federal Budget? Should paying off debt be a priority?