As Government heads to half a trillion in debt it prepares to spend even more

OUR national debt is nearly half a trillion dollars. But that won’t stop our government from promising huge spending increases in the Budget tomorrow.

The Treasurer Scott Morrison with the Prime Minister Malcolm Turnbull during an Expenditure Review Committee Meeting in the Cabinet Room of Parliament House in Canberra. Picture Gary Ramage

JUST a few weeks after tomorrow night’s Budget the Government’s gross debt will hit an unprecedented half a trillion dollars.

And that’s without any extra borrowing which might be required by the Budget itself.

Remember that spending problem we were told not long ago was plaguing federal finances? Where did it go?

Because it doesn’t appear to loom large in the Budget, with the Government ready to spend big over the next four years and beyond.

After the Budget Treasurer Scott Morrison might have to issue a directive to the Australian Office of Financial Management — which borrows money on the Government’s behalf — giving permission to enlarge the debt.

At present the AOFM reports Government securities on issue, or gross debt, amount to $490 billion. Within four weeks that is expected to rise further.

The Government has acknowledged tomorrow night’s Budget will have big-spending items including a major commitment to capital works spread around the states, $18.6 billion for schools, $350 million to help returned soldiers, and a one-off energy bill payment for pensioners worth $75 for singles and $125 for couples.

This is big money and that spending could be parallel with the abolition of so-called zombie measures worth $10 billion to $12 billion, hangovers from the 2014 Budget which can’t get through Parliament but have a shadowy life on the official Budget bottom line.

The Government has indicated any extra spending would be covered by savings elsewhere.

“I can assure you this is fully funded,” Prime Minister Malcolm Turnbull said today confirming an extra $321 million over four years for the Australian Federal Police, understood to be offset by cuts to foreign aid.

The Prime Minister has promised new money for the AFP in the budget. Picture Kym Smith.

That aim of balanced spending could mean a stack of nasties will be revealed tomorrow night by Treasurer Morrison, although the message is there will be no “unfairness”.

Prime Minister Malcolm Turnbull today indicated the vulnerable would not be hurt: “We are a nation of the fair go. It’s in our DNA and our Budget will reflect that.”

That could mean the targets will be the well-off will, and few are doing better than our biggest banks.

One way to bolster revenue could be to put a levy on those hefty bank profits.

But the speculation is for a fair-go, nation building national security economic statement which covers a variety of spending needs and some political sensitivities hurting the Turnbull government.

“This budget will be committed to fairness, opportunity and security, ensuring that Australians are given the opportunity to get ahead, the economic growth that enables them to get ahead, to get a better job, better-paying job, to start a business, grow a business — to realise their dreams,” said the Prime Minister today.

“And will also deliver the security and assurance — national security, we’ve been talking about this morning, but also the security about essential services and essential government services — education and health.

“Above all, this budget will be a thoroughly fair budget. It is a commitment to fairness, Australians understand that.”

Originally published as As Government heads to half a trillion in debt it prepares to spend even more