Citizens Electoral Council of Australia

Media Release Friday, 28 April 2017

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au

The only ‘good’ debt is to a national bank

Only a new Commonwealth National Credit Bank will achieve the objective of differentiating between “good debt” and “bad debt” that Federal Treasurer Scott Morrison announced yesterday for the upcoming Budget. The CEC explains its proposal for a national credit bank in its new brochure “Australia sleepwalking to economic Armageddon”.

Morrison said: “It can be very wise for Governments to borrow, especially while rates are low, to lock in longer term financing and invest in major growth producing infrastructure assets, such as transport or energy infrastructure. But to rack up government debt to pay for welfare payments and other everyday expenses, is not a good idea. This is a critical part of ensuring that Government lives within its means.

“In this Budget we will be making changes to the way we report Government debt and link it to Government spending, by increasing the visibility on good and bad debt.

“These changes will make clearer the share of expenditure that is contributing to investment that increases productive capacity and produces future income and the debt that is being incurred to deal with everyday expenditure.”

Simply changing the way the debt is reported will not solve Australia’s economic crisis. Infrastructure should be financed by a separate institution, rather than from the government’s consolidated revenue or normal borrowing. The institution the government should use is a national bank: a government bank legislated to direct public credit to new rail and road projects, dams, hydro and nuclear power plants, and other nation-building programs. The economic growth those projects drive will generate revenue that can be lent out to new projects over time. The enormous scale of work to be done will create hundreds of thousands of jobs that will quickly reduce the portion of the budget spent on welfare payments, freeing up that revenue for “other everyday expenses”.

Such a national credit bank should be established in conjunction with a Glass-Steagall separation of the private banking system, so that commercial banks with deposits that serve the real economy are split off from any and all forms of financial speculation. This will ensure that as the credit from the national bank flows through the financial system it is only used for productive purposes, and not diverted into financial gambling.

Don’t sit back and expect someone else “more qualified” or “more responsible” to act. If you want these solutions in place, take leadership. Join the CEC in this campaign:

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