Debt Crisis !

When the Governor of the Reserve Bank and the Head of Treasury tell Australia that we have a debt crisis, that is something the people of this country should take to heart.   Glenn Stevens and John Frazer briefed cabinet with a twenty page slide show and predict that if we can not reign in our spending we will reach the stage of never being able to achieve a balanced budget - and the consequences of that will deliver misery without relief.

Perhaps we should cast our mind back to the start of the twentieth century.  At that time, the prospects of two countries emerging as future world leaders in trade and prosperity were Argentina and Australia.  Both had the land and the climate to feed the world and both were finding vast mineral wealth to create jobs and prosperity.

Today, the people of Argentina and Australia face very different scenarios.   Argentina had a troubled century that included a civil war and the emergence of a dictator.  It has defaulted on it's national debt several times, and is a pariah in economic circles.  It eventually returned to democracy, but it's leaders sparked a ruinous war when it invaded the Falkland Islands and this venture ended in defeat.   It is facing crippling inflation and it's essential services are crumbling.  The future of Argentina can only be considered "uncertain " !

In comparison, Australia has led a charmed life.   Since Federation we have retained a Westminster form of government and this has been a prosperous nation.   Our way of life is famous and we are high on the list of destinations for those fleeing troubled countries.  The only cloud on our horizon appeared when we entered this twenty first century.  Our spending is out of kilter with our income, and we are borrowing $ 110 million a day to pay our bills.

It must be apparent to even the most basic student of mathematics that we either cut our spending or increase our income - or do a little of each.  Unfortunately, this comes into conflict with the politics that underpin the Westminster system of government

The Westminster system is adversarial.  Whoever has the greater numbers forms government and those with the lesser numbers opposes as "the Opposition ", and this is now fragmented by the appearance of several minor parties and a few independents.  This tussle for power has degraded common sense and we seem to have reached deadlock on passing bills to enable rectification of our fiscal imbalance.

The opposition denies that there is a financial crisis and it seems that whatever is proposed as a solution will automatically be denied passage by the combined votes of the Senators in the upper house.  As a result, the government can not govern and the nation faces a crisis as outlined by Messrs Steven and Frazer.

This is a situation that is fraught with danger.   In other parts of the world, we are seeing the emergence of extremist political parties which quickly gain public support because the citizens have lost faith in those bogged down in trench warfare.   We expect the politicians we send to parliament to work for the common good as opposed to simply playing party politics.  In desperation, it is possible for those with a strange sense of order to come to power and deliver governance that was not the intention of the people when they cast their vote.

Two very senior heads of our economic levers of power have delivered a clear warning.   The answer to our economic problem - is compromise !     Those we have entrusted to represent us in parliament should heed that warning.   The fate that befell Argentina beckons !