Why it is important for the Labor Government to achieve a surplus. Nothing to do with economics, or what voters think. Labor have this paranoia that those that run society are out to crucify them at the drop of a hat, probably true, they have the money and the media power to do it. Labor has to demonstrate that they are 'good n#####' when in Government. Swan has a striking resemblance to Al Jolson, should hear him sing 'mammy' to big business.

I'm not an economic expert and all this talk about
surpluses is not something I can discuss with any
great authority so I'm not sure how important
Wayne Swan's surplus is economically. But politically,
even I can see that it is a big deal indeed. As Ben
Eltham in his article on the 29/11/2011 in New Matilda
points out:

"With its refexive bleating that all deficits everywhere
are always bad, the Opposition has long exploited misconceptions
about economics widely held in the Australian media and
citizenry. Rather than try to educate voters, the
Government has instead staked much of its economic credibility
on returning to surplus next year. It's becoming something of
a milestone around its neck."

The author also tells us that:

"On the other hand, if Swan can get over the magic
plus-minus line, it will blunt one of the Opposition's
best talking points, and buttress the Government's economic
standing leading into the 2013 election year. In the meantime,
the Reserve Bank might even lend a hand by lowering interest
rates another quarter of a percent. I'd say that's exactly
what Wayne Swan is writing away to Santa for."

Of course if events in Europe take a disastrous turn and
we get another global credit crunch, a plunge in world
markets and some serious repercussions in our own economy,
then as Eltham points out
"even draconian governments cuts won't be enough
to keep the budget in the black." But if Europe can
muddle through, as the government is hoping, then according
to the experts, there's every likelihood as Eltham tells
us that "Swan will be able to announce his first surplus on
budget night next year."

With a sovereign currency the deficit (and Federal Government borrowing) is irrelevent whilever there are unemployed resouces in the economy.

The finances of Greece,Italy, Spain etc are a problem because their currency is not a sovereign currency but the Euro.

In Australia at the moment private debt is about 160% of GDP.Why is the government debt considered a problem when that private debt isn't?

The purpose of government borrowing is fund employment generating infrastructure improvment when there is unemployed capacity in the economy or to dry up funds in the economy when inflation is a serious threat or industrial activities and employment have to be directed to a different priority such as occurred during WW2.

One big problem facing Australia is the size of the private borrowing of overseas funds. If The $A drops substantially many private borrowers, including Australian banks will be in trouble. If that happens we should do what Iceland did, let them pay the price of their own stupidity.

Banks have been borrowing overseas to fund an inflation bubble in housing, a policy accepted by the Howard/Costello Government and not choked off since even when it should have been when the GFC hit. That policy has priced housing out of the range of most of the young.

Federal debt is a problem because the opposition says so. Can you imagine the hoo haa if a surplus is not delivered. That would play right into the hands of the coalition, Toni has been on about the surplus for two years, so there aint no deal thanks, like there will not be any stimulus, thanks to the opposition. When times are tough the populous turn toward labor, because they know labour looks after the family and the workers. The opposition has destroyed that for this term of govt; It was never going to be easy with a hung parliament, so keep your head down and no looking side ways.

Foyle:

# Banks have been borrowing overseas to fund an inflation bubble in housing, a policy accepted by the Howard/Costello Government and not choked off since even when it should have been when the GFC hit. That policy has priced housing out of the range of most of the young. #

...That is unlikely to change any time soon, with Australia rated AAA by Fitch, Standard and Poors and Moodys. Banks will continue to rob and plunder…but here is some good news, the bank across the road from me was robbed at 2.30 this morning. What a joy and privilege it was for me to witness the whole glorious event from the upper balcony. (I lacked the nerve to “cheer”).
The country being so devoid of infrastructure, played out beautifully with only two policemen per 500 squre klms; robbing a bank is becoming as simple as a banks ability to rob us: Poetic justice I believe!

Lexi, The treasurers problem is that he promised a surplus for that
2002-2003 year when everyone was saying it was too dependant on China
and the price of iron ore & coal.
He insisted that we would get into surplus by then.
By creative accounting he has managed a waffer thin surplus but if
he had come out and said, we won't make a surplus for these reasons
it would have at least been honest.
Unfortunately political pride got in the way and he fiddled the books.
They shifted expenses out of that year and moved income in.

A deficit is not necessarily a bad thing just as a surplus while nice
to have is not always essential.
I suspect it is a guilty conscience that has brought on the fiddle.
Every since Barnaby Joyce blew the whistle on government borrowing
they have been very touchy about debt.
I think probably Wong and Swann are chewing their fingernails over
the debt but the cabinet keeps throwing money around like a drunken sailor.
We are about to lift the borrowing limit again above $250 billion.