Australian government bids to raise debt ceiling to avoid ‘US-style crisis’

The conservative government, elected last month, said the latest data showed debt was on track to reach the current $300bn (£180bn) ceiling in December.

While the previous centre-left Labor Party government had forecast debt to peak at $370bn (£222bn) in 2015-16, new data showed it would exceed $400bn (£240bn) that year due to falling tax revenues.

“We are not going to allow ourselves to get into the position that the United States is in where there’s tremendous uncertainty about the capacity of a country to live within its means,” Treasurer Joe Hockey told Australian Broadcasting Corporation.

A 16-day partial US government shutdown ended last week when Congress approved a budget that keeps the government running to January 15 and lets the treasury continue to pay its bills until February 7. But a repeat of the economically-damaging political stalemate and the threat of a default on the national debt could be repeated in the new year.

“The thing that undermines market confidence and business confidence is when the government says, ‘we will not exceed a certain level of debt’ and then keeps going back to the parliament or back to the congress to get it lifted,” Mr Hockey said.

“What we want to do is be in a position where we only do this once to fix up the mess that we inherited and then get on with the job of making sure that we start to live within our means.”

A bill to increase the borrowing limit will go to parliament when it sits for the first time since elections on November 12.