Money Minute – May 3 2017 Good Debt, Bad Debt

Good Debt, Bad Debt Badgerys Creek Airport

Good morning to you all. Is it?  I’m not sure about you, but this morning as I wake up I kind of asked myself where’s all the money coming from? The government’s going to spend six billion dollars building Badgerys Creek Airport, that’s up to Sydney Airport who walked away from its option to build it. Where’s the money? Sydney Airport’s boss, Kerrie Mather, well ahead of statement was “the risks associated with the development of operating this Western Sydney Airport are considerable and endure for many decades without commensurate returns for our investors”. Well that’s pretty definitive isn’t.

Second Airport

But, the second Airport is vital for Western Sydney, by 2060 it will serve around four million people.  That’s the same number that Sydney Airport serves now. Note also the Labour Party that’s Anthony Albanese, said it’ll support the government in a rare display of bipartisanship. But I keep asking where is that money coming from?

Malcolm Turnbull

There’s also Malcolm Turnbull, he’s about to turn on education funding,  so-called Gonski 2.0 launched with David Gonski author of Julia Gillard’s 2013 blueprint. Now this will sideswipe labour and doubles education funding to more than 30 billion dollars over the next decade. 2.2 billions dollars has been understood has been put aside in next week’s budget. Where’s the money coming from? Well of course it’s going to be borrowed,  the latest stats show the government already has four hundred and ninety billion dollars worth of gross debt and it’s rising fast now.

I suspect this is all going to be part of the treasurer’s line about good debt and bad debt, but  the government should use low interest rates to invest in infrastructure that can be sold or recycled off to the private sector. That explains Badgerys Creek, after all our major airports in the cities once owned by government have been sold the private enterprises,  in many cases to your super fund.

Education

But it doesn’t kind of explain education. Education is important because it sets up future generations of taxpayers, but this I have to tell you is a massive pun, pouring more money into education that delivers better outcomes, better students, who pay more tax. But I kind of don’t buy it. The Reg-occasion is something you should pay for as you go along, because the outcomes are not guaranteed

Markets

Dow Jones up by 36

Source: Today  Money Minute/Ross Greenwood

China reports growth of 6.9% in the first quarter

Leave a Reply

Your email address will not be published. Required fields are marked *

56 More posts in Money Minute category
Recommended for you
Money Minute – May 29 2017 “Benefits Shake-Up”

May 29 2017 - "Benefits shake-up" Ross Greenwood: A new report this morning shows that...