Have you ever been confused about the so called Australian debt? Here is all you need to know!
Happy to answer any question you would have
What is a Public Debt?
Government debt (also known as public debt and national debt) is the debt owed by a central government. It is one method of financing government operations, but it is not the only method.
Who owns the Australian Debt?
About 75 per cent of the nation’s debt is own by overseas investors, specifically official investors such as central banks and sovereign wealth funds in Asia, the Middle East, Europe and Latin America.
Is Public Debt Good or Bad?
National debt is not necessarily financially dangerous or unsustainable. It depends on the wider circumstances and economists use a number of terms to measure and compare debt.
Against these measures, and when compared against both historical and international data, Australia’s economy is relatively strong.
What is the difference between Gross Debt and Net Debt?
Gross debt is the amount of money owed by an organisation. It indicates the amount of debt owed, but it does not show whether an organisation can repay that debt and provides limited detail about the overall financial health of an organisation (including governments).
More often reported, net debt is the sum of all liabilities (gross debt) of an organisation, less their respective financial assets (cash and other liquid assets). Net debt is one of numerous economic indicators which provide a quantitative measure of the financial health of an organisation.
For instance, if I have a mortgage of $1M against my house and $600k sitting on my offset bank account, my gross debt it $1M but my net debt is only $400k.
How do we measure Debt Level?
Debt is often reported as a relative indicator to allow comparison across all years, expressed as a proportion of Gross Domestic Product (GDP).
How do we compare to other countries?
The chart on net debt indicates that, when compared with other advanced economies, Australia’s net debt levels are comparatively low, and have been for some time.
ImageUploadedByThe Bub Hub1400028613.816907.jpg
Show me some numbers?
In the 2014–15 Budget, the Government indicated that net debt will rise to $226.4 billion, or 13.9 per cent of GDP.
They also suggest that net debt will peak at 14.4 per cent of GDP in 2015-16, falling to 14 per cent by 2017-18. This is still well below the average of other major economies.
A few years ago the budget determined that the appropriate size of the bond market would be around 12 to 14 per cent of GDP.
Any more question? Shoot!
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14-05-2014 09:50 #1
Australian Debt 101
14-05-2014 11:52 #2
Thanks for explaining that - I have seen the stats that we have lower debt than other nations but my thoughts turn to the fact that Australia is allot smaller country than the others mentioned and therefore not as many people contributing to the countries income.
Do you have any access to any stats on a population scale? That would personally clear a bit of reservations I have and maybe others??
14-05-2014 11:58 #3
What would it mean for Australians if we were in surplus?
Should we be comparing our debts to other countries? Does it help to compare?
14-05-2014 12:51 #4
@Meld85 that's the whole point of comparing the net debt as a percentage of GDP.
At the moment the net debt represents half a year of federal revenue.
It's like saying that I have $50k left to reimburse on my mortgage and I earn 100k a year.
14-05-2014 13:18 #5
@sweetpeamummy do you mean to not have a debt at all or to have a budget in surplus?
Debt in itself is a useful mechanism and it is nearly impossible not to have any. It would be questionable too to have a country making money? To what end?
The IMF is setting the benchmark at 40% of GDP. We are well below the benchmark.
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