A promise of prudence

The Government committed itself in its March Budget policy statement to the long-term policy of keeping its net debt below 20 per cent of gross domestic product.

The obvious reason for cutting Government debt is that less revenue goes to servicing it - now about 7c in the tax dollar.

Another reason is that fiscal prudence by the Government stands in contrast to the balance of payments deficit.

The 20 per cent target is a retreat from the goal of 15 per cent set by the previous Government, which cut the ratio from about 50 per cent in 1991 to 22 per cent last year.

But it is still a respectable level by international standards. The average level for members of the OECD is expected to be 43 per cent next year.

Australia is aiming to eliminate net Government debt altogether by 2003-04.

The net debt figure is arrived at by subtracting the Government's financial assets, such as foreign currency reserves, from its gross debt, presently about $35 billion.

Budget 2000 feature

Minister's budget statement

Budget speech