Abbott in Greens deal over debt

Treasurer Joe Hockey and Greens leader Christine Milne announce they have reached an agreement on removing the debt ceiling, with the Coalition promising more transparency in the budget

"Economic fringe dwellers" no more ... Greens leader Christine Milne and Deputy Adam Bandt hold a doorstop at Parliament House after agreeing on a deal with the Government on lifting the debt ceiling. Source: News Limited

THE Abbott Government has struck a deal with the Greens to abolish the limit on the nation's credit card.

After once deriding the Australian Greens as extreme and "economic fringe dwellers", Treasurer Joe Hockey praised the Greens for being prepared to solve the problem he said had been caused by the previous Labor government.

Without a deal, the nation's existing $300 billion debt limit would have been reached next week.

"Labor created the debt but they do not want us to fix it," Mr Hockey said.

The new deal scraps the limit which Labor introduced in 2008 and set at $75 billion but has since been increased several times.

Mr Hockey said despite removing the limit, the Government would be "prudent and responsible". He said the deal would mean more information provided to the public about debt.

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Greens leader Christine Milne said it had been a phony limit because "no one has the faintest clue what the debt was actually for" and the new deal would require the government to spell out to people what was "good debt and bad debt".

"Everyone knows there is a big difference between a mortgage to buy a home and a credit card to splurge on luxuries," Senator Milne said.

"The public will now be able to see whether the government is incurring good debt to invest in our future, or bad debt to cover up a shortfall in revenue."

Opposition finance spokesman Tony Burke said the Government were hypocrites because they said before the election the answer to debt was not more debt and they would not do deals with the Greens.

Mr Hockey had wanted to increase the limit to $500 billion but Labor would only allow a rise to $400 billion, which Mr Hockey said was not enough to cover the debt legacy he inherited from the former government.

The debt deal came after the release of the national accounts showed the economy grew by 0.6 per cent in the September quarter and was running at an annual rate of 2.3 per cent.

Mr Hockey said this showed the economy he inherited had rising unemployment, below trend growth and a deteriorating Budget.

"The economy is stuck in second gear," Mr Hockey said.

He warned it was not strong enough to create the jobs the economy needs.

As part of the deal secured with the minor party to scrap the national debt ceiling, the government has agreed to report on the impact of climate change policy in future budgets.

Senator Milne said this would highlight the cost of tackling climate change without a market mechanism like an emissions trading scheme (ETS).

"That is a good improvement, too, so people can clearly see what not going to a market mechanism is going to cost in terms of the budget,'' Senator Milne told reporters in Canberra.

The government's direct action plan will directly fund activities that reduce carbon dioxide emissions, whereas an ETS requires businesses to pay for the greenhouse gases they release.

The Greens have fiercely opposed direct action, and vowed to block the repeal of Labor's carbon pricing mechanism in the Senate.

In his letter to Senator Milne, Mr Hockey said a debt statement with details regarding government spending on climate change would be included in future budgets and key economic reports.

The extent to which this expenditure had contributed to debt would also be included.

All future Intergenerational Reports will retain an extra section on the environment, including climate change and the effect of these policies and their impact on the economy and budget.

"I will consult with the Australian Greens on the scope of what could be included within the section,'' Mr Hockey wrote.

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