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Debt burden on future generations

By Julie Bishop - posted Thursday, 10 January 2013


German Chancellor Angela Merkel warned in her New Year address to the nation that “the crisis is far from over” and that “the economic environment will not in fact be easier but rather more difficult next year.”

This warning of more difficult times ahead was contradicted by European Commission president Jose Manuel Barroso who said this week that, “I think we can say that the existential threat against the euro has essentially been overcome.”

There was scepticism about this statement amongst financial market analysts with some predicting that Europe had delayed its “day of reckoning” and that governments faced a grim and difficult task of rekindling economic growth strong enough to stem the rising tide of unemployment.

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The latest jobless rate for Europe has hit a new high of 11.8% with Greece and Spain over 26%. Almost a quarter of young people in the EU are unemployed, with the youth unemployment figures in Greece and Spain at tragic levels of 57.6% and 56.5% respectively.

A telling lesson from these crises is the lack of foresight by governments taking on large amounts of debt without sufficient preparation for future challenges including the budget demands from population ageing.

Presciently, the Howard government paid off all government debt and invested tens of billions in the Future Fund to ensure that future generations were not burdened with the superannuation entitlements of current defence personnel, federal police and public servants.

The commissioning by Treasurer Peter Costello of the Intergenerational Report to analyse the budgetary impact of population ageing up to 40 years hence is evidence that the Coalition well understand the necessity for governments to live within their means.

In contrast, the Rudd/Gillard government has taken Australia down the path of massive spending, funded through the four largest deficits in our nation’s history.

Treasurer Wayne Swan invariably compares Australia’s financial situation to that of nations already in crisis and declares that we have nothing to worry about.

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He is in denial over the impact of Australia's ageing population which will place greater demand on government funding for support services, which in turn will make it much more difficult for a future Coalition Government to repay yet another Labor debt legacy.

There is no escaping the fact that Labor's $260 billion gross debt must be repaid at some point.

The cruelty of Labor's cavalier attitude to repaying debt is the likelihood that the burden of its reckless spending will fall upon future generations

That is why the Coalition is committed to paying off Labor's debt so that the young people of today will not face tomorrow higher taxes, reduced services and lower standards of living.

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About the Author

Julie Bishop is the Federal Member for Curtin, Deputy Leader of the Opposition and Shadow Minister for Foreign Affairs.

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