Government debt is low, but private debt is high
By historical standards, Australia’s debt is still very low. The problem is private debt. As government debt drops, the private sector has to pay for more stuff, so we go into more debt.
Especially household debt
And when I say “we”, I mean households.
Especially in the lower income brackets
And guess what? Although the rich have more debt, proportionally, debt is worse the poorer you get. Take credit card debt, for instance. It’s higher as a % of income the less you earn.
Same story when you look at total debt (not just credit card). The following chart shows households with debt 3 x their income. See that it’s worse for the 2nd and 3rd quintiles than the 4th and 5th.
Sure, when debt is higher, tax tends to be higher too
Yes, if the government pays for more stuff, there tends to be higher tax:
But the rich pay more of it
Both in absolute terms…
Which is exactly how tax is designed to work.
In other words, when the government talks about reducing debt, it’s the poor and middle classes that pick up the tab.
Remember that on Saturday, and don’t vote for a party that’s spinning tales about debt.