Since 1998, our bond yields have usually ranged between 5 and 6 per cent. But in recent days, the Office of Financial Management issued a new 10-year bond at a yield of just 3.15 per cent, a five-year bond at 2.65 per cent, and a three-year bond at just 2.52 per cent. Yields have fallen by half in a year.
Why? Because global investors have flocked in to buy Australian government debt. Their concern is not that we have too much debt, but too little. IMF figures show that of the 34 advanced economies, Australia has the third smallest ratio of gross debt to GDP: including state and municipal debt, it's just 24 per cent of GDP. By comparison, Germany has a debt-to-GDP ratio of 79 per cent, the United States 110 per cent, and Japan 241 per cent.
The Coalition and its allies are like a broken record warning that Australia is swimming in debt and putting itself in danger. That is simply untrue. Ask yourself: if Labor's borrowing has put us in danger, why is Australia one of only eight countries rated AAA by all three global ratings agencies? Sure, ratings agencies make mistakes, as we all do, but are they that incompetent?