Treasury forecasts unemployment rising to 10 per cent in the June quarter and that without the JobKeeper allowance unemployment would be 5 per cent higher at 15 per cent. The Government responded with a series of spending packages with a cumulative total of $193.6 billion. That inevitably means more deficit spending over and the next six months and probably well beyond that.
This paper presents the analysis that shows why we should not fear the likelihood of further debt. To begin with, official interest rates are at record lows and governments around the world have taken advantage of that. The Governor of the Reserve Bank told Four Corners ‘we shouldn’t be worried…our interest rates are as low as they’ve ever been’. Chris Richardson is reported as saying: ‘Never in the 2000 years of recorded history of interest rates has it been cheaper for governments to borrow’.