Boring! Government Debt and Generation Next
Should young Australians be concerned about their government debt? The answer is yes, according to Sean Jacobs and Jordan Shopov.
Sean Jacobs and Jordan Shopov, Onya Magazine, 13 November 2013
“If the next generation knew what was good for them,” the economic historian Niall Ferguson recently stated, “then they would all be in the Tea Party.” Concerns over fiscal responsibility, economic growth and jobs clearly do little to mobilise ‘gen next’ compared to outrage over inequality and causes like the Occupy Movement.
But government debt, in particular, reserves a special place in drawing yawns from younger generations who will eventually have to pick up the tab. The global public debt clock, maintained by the Economist Intelligence Unit, shows combined public debt expanding unabated at USD $50 trillion. Australia’s contribution to this is relatively small, but should young Australians be concerned about their government debt? The answer is yes.
A government that spends more than it collects in revenue must borrow money. It does so by selling bonds or securities that, over time, are paid back to whoever has bought them. Since 2007, Australia has accrued government debt of over AUD $280 billion. This means that, each year since 2007, the federal government has consistently borrowed in the tens of billions to finance spending.