Beyond the Australian Debt Dreamtime: Recognising Imbalances

Mark McGovern
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Mark McGovern: Business School, Economics and Finance, Queensland University of Technology, 2 George Street, GPO Box 2434, Brisbane QLD 4001, Australia

Economic Analysis and Policy, 2011, vol. 41, issue 3, 169-194

Abstract: Sadly, all the efforts of a generation of Australian men and women have only made them more indebted to the rest of the world. Australia’s external net wealth is negative, soon passing minus $900b on an accelerating downward trajectory. This ongoing dissipation of national resources is unsustainable. Australians live in a debt dreamtime, one from which the rest of the world has been rudely awakened. After years of inadequate policies, the nation has a large external debt and significant government exposures. Servicing pressures are growing as rising uncertainties permeate global credit markets. Reserve Bank policies are worsening Australia’s external position and needlessly driving up internal costs. Major policy rethinking is warranted. Relevant issues are still little considered, crowded out of dialogues by comforting myths that accompany the Australian Debt Dreamtime. Imbalances need proper recognition with new approaches and strategies developed. Automatic corrections will not occur as history and current overseas experiences demonstrate. A real awakening, improved positioning and a touch of luck are required if Australians are to avoid being seriously impoverished by world events and their own confused Dreaming.

Keywords: balance of payments; monetary policy; open economy; government; Australia (search for similar items in EconPapers)
Date: 2011
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