Labor has asked the auditor general to look into the management of commonwealth debt, in a bid to shame the Coalition for doubling gross debt since it took office in 2013.
The shadow finance minister, Katy Gallagher, has written to the Australian National Audit Office asking for a review and noting the “financial implications” of debt and earlier Coalition rhetoric about the burden on future generations.
Labor is walking a fine line in criticising the government’s handling of the budget before the Covid-19 economic contraction, on track to be the worst since the Great Depression, at the same time as it calls for expansion of support programs, such as the $130bn jobkeeper wage subsidy.
On Thursday the Senate committee inquiring into the government’s Covid-19 response, chaired by Gallagher, will examine Treasury officials as well as the Australian Taxation Office and Australian Federal Police, both of which are responsible for any fraud against stimulus programs.
At a hearing on 28 April Labor targeted Treasury over the fact more money had been withdrawn from retirement savings by workers than had been spent by the government on stimulus at that time.
On Thursday officials will be asked about the underspend in the $1,500 fortnightly jobkeeper wage subsidy, which has reached 4.7 million out of a total capacity of 6 million workers.
Since March, the federal government has announced $214bn of direct stimulus and economic support in addition to $90bn of lending by the Reserve Bank and separate packages in each state and territory.
In her letter to the ANAO, Gallagher requested an audit into the effectiveness of debt management “given the significant and rapidly increasing commonwealth government debt levels as a result of the Covid-19 pandemic”.
Gallagher noted the government had raised the debt ceiling from $600bn to $850bn to finance the stimulus packages and since changes in 2013 there is less parliamentary oversight of raising the ceiling.
Gallagher said that debt was “already historically high by national standards prior to the Covid-19 pandemic”.
Net debt was $403bn in December, and has risen to $430bn at the end of March, while gross debt was $562bn in December, rising to $607bn at 1 May.
Gallagher told Guardian Australia that gross debt is now “more than double the level of debt inherited by the government when they took office in September 2013”.
“Labor acknowledges that additional borrowing was required in order to support Australians through this crisis, but we do believe that independent scrutiny of how the government’s increasing debt bill is being managed as required,” she said.
In the letter, Gallagher said debt management will “have financial implications for years to come” and argued taxpayers wanted reassurance about how debt is being managed.
The treasurer, Josh Frydenberg, has indicated the Coalition will aim to shrink debt over time by growing the economy rather than increasing taxes.
In fact, the Coalition has suggested cutting company tax rates and using industrial relations reforms to restart the Australian economy, prompting the shadow treasurer, Jim Chalmers, to accuse it of using Covid-19 to “dust off its ideological obsessions”.
Chalmers has said Labor’s highest priority is to “save as many jobs and communities as possible”, and questioned whether the government has learned the lessons of the 2014 budget and the need to avoid austerity measures.
But on 29 April, Chalmers told an Australia Institute videoconference about post-crisis economics that he still believes “debt matters” although it is not the most important factor in the depths of the crisis.
He said that “over time” the commonwealth should pay the debt back. “Even before this crisis, the commonwealth was paying $17bn on servicing that debt, and I think all of us can come up with better uses of $17bn of taxpayer money.”
