Okay. So. What the frig is happening with Australia’s money and why is everyone talking about it right now? Why do I keep hearing words like ‘crisis’ and ‘massive debt’ being thrown around like we’re on the verge of some kind of financial apocalypse? Should I withdraw all my money (not much) and hide it in a shoebox under my bed? Do I need to start saving now so I can afford to eat the brand-name jelly when I’m in a nursing home?
WHAT IS GOING ON?!?
For those of us whose eyes glaze over whenever we hear the word ‘budget’, it can be difficult to know what’s what. But this is our money the government is spending, so it’s probably important to have a basic understanding of what everyone is yelling about – especially when Tony and Joe keep insisting we’re completely stuffed.
So I selflessly tore my eyes away from the television and spent some time trying to understand what you need to know, so you can understand what the hell everyone is taking about right now.
Here we go…
What’s the situation?
Basically, the current government is saying we are in a DEBT CRISIS ARRGGHHH because Labor screwed things up so bad when they were in power. The Liberal government would like a budget surplus. We currently have a budget deficit. And they no likey.
Screwed up how?
So, whatever government that’s in power takes everybody’s taxes and pools it all together to make it ‘Australia’s Money’. That government then spends Australia’s Money on stuff for Australians. Everybody knows this. A large part of why people vote for a certain government is based on what that government promises they’ll spend your taxes on.
But, even after taking taxes from everybody every year, the government still doesn’t always have enough money to pay for the things we need (like Medicare and education and roads and things). This happened during the Global Financial Crisis and the Labor government needed to borrow a whole lot of cash to make sure we didn’t completely fall apart and spiral into a scary, Greece-like ‘whoops we aint got no money left’ situation.
And now, the Liberal government is saying that the Labor government screwed up by borrowing too much.
What does Labor say about that?
Labor is all like, “Um, beg to differ you guys, we did what we had to do to help Australia get through a totes difficult time. And we actually came out of the GFC in a better position than most other countries on earth. So SUCK IT.”
Do Tony and Joe believe them?
Nup. PM Tony Abbott and Treasurer Joe Hockey are all like “Naaah, don’t believe you. CRISIS CRISIS. AUSTRALIA IS IN FINANCIAL CRISIS. TOO MUCH DEBT. You guys screwed EVERYTHING UP and now we have to fix it etc etc etc.”
So, what did Tony and Joe do next?
Tony and Joe were so convinced that Labor screwed up so bad that they decided to get some financial experts to come in and look at Australia’s Bank Account to see what’s needed to be done to fix it. Kind of like that MyBudget lady you see on TV in the middle of the day, but for the whole country. Those super-smart experts presented their findings last week in what was called the Commission of Audit.
What did the Commission of Audit say we needed to do?
Those experts were like, “Yeah, Australia could do a bunch of stuff to fix its money probs in the long term. You guys need to like, plan for your old people and be stricter with your welfare payments etc etc.”
But, those experts didn’t say that we need to be freaking out about the current level of national debt. They were all like, “You guys are fine right now – your inflation is low, unemployment is low. Yeah, you have some debt but you totally don’t need to freak out. So maybe settle down Tony and Joe.”
Do any other experts think we should be freaking out about our debt?
Not really. Most economists have been like “Huh? Why are Tony and Joe freaking out about this debt so much? There’s more important things we could be concentrating on than getting the debt down you psychos.”
So what are Tony and Joe going to do now?
Tony and Joe are still not convinced. Even though they asked for the Commission of Audit, they don’t have to actually do anything it recommended. So, even after the Commission of Audit and a bunch of economists told them to settle the frig down about the frigging budget deficit, they were still all “Lol no. We’re FREAKING OUT. Debt crisis debt crisis etc etc.”
So, to get rid of our debt, they’ve proposed making everyone pay a one-off extra tax, to help pay all this money back. They want anyone earning over $80,000 a year to pay a ‘Debt Levy’, which is basically just code for ‘pay extra taxes until Australia no longer has a budget deficit’.
We have to pay extra money? Are people pissed about that?
Yeah. A lot of people are pissed about this plan because they’re like: “Hold on. If this audit thingy said our debts aren’t that bad and economists are saying our debts aren’t that bad, then why are Tony and Joe freaking out and saying that they’re going to force me to pay extra money to get rid of our debt?”
So that’s basically where we’re at right now.
Yep. People are pretty much split into two camps: Those who think we should do whatever we can (including pay extra taxes) to get rid of our national debt and those who think our national debt isn’t that bad and we should be focusing on other things.
We’ll know what the government has officially decided to do when they announce their budget next week. (Fun fact: The budget is always announced in May on a Tuesday night. So there you go.) But hopefully, if you were looking for a very basic understanding of what’s going on with our moulah right now, this has helped.
My head hurts and I would like to lie down.
My editor (who used to work in politics and thinks it’s crazy that I don’t get this stuff) would like me to point out that we have a more… sophisticated post on the Commission of Audit and proposed debt levy right here.