ABSTRACT
In 1956 Australia government debt outstanding was twice as large as the debt of private-sector entities in Australia (see Table 6.1). Thirty years later that position had been nearly reversed, and private-sector debt as at June 1986 stood at $208.7 billion, while public-sector debt was $112.6 billion (n.b. ‘$’ refers to Australian dollars throughout this chapter). In his evidence to the UK Radcliffe Committee in 1957, Governor Coombs of the Reserve Bank of Australia could record that ‘in Australia … the yield on government securities is generally regarded as the basic rate in the general market structure of interest rates’ (Coombs 1960: para 20). That is also no longer the case. Shortterm money market rates, such as that on ninety day bank bills, rule the roost. Until relatively recently, net issues of Treasury Bonds and Notes were generally believed to augment the liquidity base of the banking sector and hence affect the volume of money and were thus an integral part of monetary policy outcomes. In that respect as well, matters have changed, and following the federal government’s decision in 1984 to fully fund its budget deficit (surplus) over the financial year by primary issues (redemptions) of securities, there is now a separation in Australia – albeit informal – between debt management and monetary policy. Public- and private-sector debt in Australia, 1956–86 https://www.niso.org/standards/z39-96/ns/oasis-exchange/table">
Private-sector debt ($m) a
Public-sector debt ($m)
Public-sector budget deficit b
As at June
Households
Trading enterprises
Total
Central government
State and local authorities
Total
$m
% GDP
1956
3,656
1,710
5,366
9,185
1,795
10,980
290
3.3
1961
5,592
3,336
8,928
9,911
2,517
12,428
275
2.1
1966
8,713
4,770
13,483
11,673
3,705
15,378
564
3.2
1971
14,608
9,100
23,708
14,432
5,450
19,882
738
2.8
1976
31,121
20,424
51,545
21,686
8,850
30,536
1,458
2.4
1981
57,732
43,516
101,248
36,573
18,249
54,822
2,494
2.5
1986
113,900
94,800
208,700
67 500
45,100
112,600
5,076
2.6
Source: Reserve Bank of Australia, Bulletin, February 1987 and ‘Budget-Statement No 6’, Budget Paper No 1, various issues Notes:Excludes financial institutions
Average for the five years ending the year shown
