Government Debt Repaid by 2022

Federal Treasurer Wayne Swan has stated that if the Government were to run surpluses at a little over one per cent of gross domestic product (GDP) outstanding debt could be eliminated by 2022.

Joe Hockey opposition treasury spokesman stated earlier this week that surpluses would need to be two per cent of GDP over eight years to achieve this goal, a rate that had only been achieved three times since the 1970s.

Mr. Swan did not agree.

Mr. Swan informed parliament yesterday that we did not have to run budget surpluses of that order for eight years. What we do need to do is run budget surpluses around one per cent or a little higher for that period and that it is entirely achievable.

Opposition Leader Malcolm Turnbull and Mr. Hockey repeatedly questioned Mr. Swan and Prime Minister Kevin Rudd regarding financial assumptions that back this claim as the budget papers do not extend to 2022.

Mr. Rudd then pointed out that the Government's debt and deficit strategy was the lowest of any advanced economy in the world, and that it had been reaffirmed with a triple - A credit rating by Standard and Poor's.

Mr. Rudd then stated that the Government's strategy for dealing with the return to surplus was outlined in the budget papers, and that the Government stood by that strategy. Mr. Swan then pointed out that all of those financial assumptions were in the budget papers.

Should we pay more to our super funds?

Australians unanimously agree that we want more money to go into super, not less, and most are hoping that the contribution rate will be lifted to 12-15 per cent.

The Rudd Government is trying to draw up a proposal whereby people will only get their superannuation when they reach the new pension age of 67. A recent poll has shown that 69 per cent of workers want the compulsory guarantee amount to be lifted dramatically.

According to investment house Mercer almost half said they would be prepared to put in half of the extra themselves, provided their employer was to match it. The survey has shown overwhelming support for higher super, despite almost two years of poor returns, but 35 per cent felt that any rise should be funded entirely by employers.

Mercer spokesman David Anderson said that this follows the Government's move to downgrade super as the central retirement savings vehicle and moves to link super access with access to the aged pension.

Most people agreed that a 9 per cent contribution is not enough to provide an adequate and sustainable retirement income.

Published on May 5-th, 2009 in Financial Planning
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.