Joyce on debts

From the ABC today:

Opposition finance spokesman Barnaby Joyce is courting controversy again, warning that Australia is getting to the point where it will not be able to repay its overseas debt.

That’s a big call, which I don’t think is actually true. But how close are we? In the news at the moment is Greece, which is currently on the verge of bankruptcy with a 300 billion euro debt. (And if nations defaulting wasn’t hard enough, this is harder because it’s not just Greece’s problem to deal with, but the EU’s too)

But compare that to Queensland’s debt, which according to the last budget was $57.7 billion AUD and is expected to continue to rise each year until 2017. That’s about 36.6B euros at current rates, or about 12% of Greece’s debt. Though given Greece has a population of about 11M and Queensland only 4.4M, on a per-capita basis that brings it up to about 30% of Greece’s debt.

I can’t actually seem to find any simple summary of what NSW’s government debt is like to compare, but NSW Treasury seems to be claiming (pdf) “net financial liabilities” of about $50B at the moment (with a population of about 7M to service that debt), which would put it at about 16% of a Greece-esque basket case. Victoria’s apparently recently jumped from only a few billion in total public sector debt to an expected $23B, for its 5.4M people to pay back (just under 10% of Greece-esque craziness).

The Federal Government, meanwhile, has lost it’s brief run of being a net creditor (2005-2008, RIP), and according to the budget is currently around $53B in debt, and expected to hit $188B in 2013. Over 22M people, that’s currently 5.6% of Greece, or 20% of Greece by 2013. Given Queensland’s debt’s expected to be $85.5B by then, that puts us folks in the Smart State with 66.8% of Greece’s burden in the next couple of years.

That isn’t quite as bad as it seems — we’ve got a higher per-capita GDP than Greece, and plenty of resources to dig out of the ground and sell to China, and there might still be some room to have those debts conveniently vanish depending on how the Global Financial Crisis continues to play out, and Rudd apparently thinks it will all be paid off by 2022 anyway. So yeah… Barnaby aside, we haven’t hit the point of no return, but a little less of the “just think of it as an investment” excuse for borrowing more might still be a good idea…

Oh, and wow. Also via the ABC:

Brendan Flynn, who analyses sovereign risk for Standard and Poor’s, gives the Federal Government the highest triple-A credit rating.

“With the triple-A rating, that’s indicative of the extremely strong ability to meet financial obligations and therefore in our opinion, very little chance of defaulting on debt,” Mr Flynn said.

That’d be the same AAA rating from the same firms that those CDS and CDO things were getting just a few years ago, right?

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