The Australian government may have difficulty operating unless lawmakers approve an increase to the country’s gross debt ceiling, Treasury Secretary Martin Parkinson said.
“I couldn’t imagine the parliament would be so foolish not to do so,” Parkinson told the Senate Economics estimates committee in Canberra today about approving the laws. “Were that to be the case, it would have serious ramifications for the operations of government and I would imagine the government in those circumstances would be forced to find other ways.”
The government introduced laws to parliament on May 10 to raise the gross debt ceiling to A$250 billion ($277 billion) from the current A$75 billion to deal with budget deficits. The opposition Liberal-National coalition, which is leading opinion polls ahead of an election due in 2013, has accused the government of being addicted to debt and opposes the plan.
Labor Prime Minister Julia Gillard relies on support from four lower house lawmakers that aren’t part of her party or the Liberal-National coalition to pass legislation after the August 2010 election delivered the closest result for 70 years. The debt laws are yet to be debated in parliament.
Australia’s economy shrank in the first quarter by 1.2 percent, the most in 20 years, after rains flooded coal mines, railways and farmland which hurt exports from the world’s biggest coal and iron ore shipper, figures released today showed. That has reduced tax revenue.