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Speaker 1: So the Herald this morning and running a nation of

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Speaker 1: debt series, and the bit that's designed to get the

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Speaker 1: clicks is the part that tells us we're nearing a

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Speaker 1: trillion dollars in debt and you're supposed to go, oh, trillion,

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Speaker 1: my word. Currently it's eight hundred and seventy billion. That

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Speaker 1: importantly is across private and public. It's everybody's debt, of course,

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Speaker 1: So what does it actually mean? Sharon Zolna is the

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Speaker 1: ainsed Chief Economist of Courses, back with a Sharon morning,

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Speaker 1: good morning. What am I supposed to make of this?

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Speaker 1: Are we worried? Is the trillion dollars a thing or not?

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Speaker 2: Well, it is a thing, but it's a nominal thing.

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Speaker 2: So yeah, you're quite right. They're just comparing nominal numbers

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Speaker 2: over time, don't It doesn't tell you a lot. You've

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Speaker 2: got to at least inflate it deflated by the price level,

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Speaker 2: or even better, consider it relative to incomes or relative

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Speaker 2: to wealth, and then you start getting some numbers that

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Speaker 2: are a bit more meaningful and less scary.

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Speaker 1: Right, And when you do that, are we in good shape?

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Speaker 1: Reasonable shape? Shocking shape? What sort of shape are week?

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Speaker 2: Well? Things are deteriorated. Over the last ten years or so,

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Speaker 2: our total debt to GDP has gone from about one

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Speaker 2: hundred and ninety percent to two hundred and eight percent,

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Speaker 2: so a bit under double to a bit over double.

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Speaker 2: And if you look at what's caused, that is all

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Speaker 2: government debt. So household debt had a bump with the

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Speaker 2: massive housing bubble we had, but it's actually come back.

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Speaker 2: It's about half the debt, and then corporate debt and

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Speaker 2: government debt each about a quarter of the total. But

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Speaker 2: the big increase has been in government debt, of course

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Speaker 2: with the COVID.

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Speaker 1: Here, see what I worry about if I worry about anything,

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Speaker 1: is that who borrowed it, what did they borrow it for,

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Speaker 1: and are they paying it back? So business debt I

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Speaker 1: don't worry about because I am assuming they're smart enough

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Speaker 1: to borrow some money for expansion. That's a good sign.

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Speaker 1: I look at central government, but they're not even running

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Speaker 1: a surplus on an annual basis, so I worry more

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Speaker 1: about that. Then I look at local government debt up

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Speaker 1: fifteen percent, and all I'm doing is seeing my rates

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Speaker 1: bill go up. So are there sort of different sorts

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Speaker 1: and levels of.

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Speaker 2: Debt absolutely, whether a household affirm or a government. When

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Speaker 2: if you borrow money, then whether that's a good idea

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Speaker 2: depends very much on what you're spending it on. So

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Speaker 2: taking government for example, if you're buying infrastructure that will

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Speaker 2: make your country more productive in the future, great, If

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Speaker 2: you're frittering away, not great. And the same goes for

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Speaker 2: household concerns. The trouble is the course of that massive

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Speaker 2: in trees and government, yet we don't necessarily have a

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Speaker 2: lot to show for it, unfortunately.

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Speaker 1: The student loan, which is at eleven point nine billion,

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Speaker 1: I also think is that going to get paid back?

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Speaker 1: I mean, that's on the books as a debt that

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Speaker 1: will be paid back, but in I mean will it.

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Speaker 2: Good question? Yeah, I think there's obviously question marks around that.

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Speaker 2: The decision to make the first year of study fees

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Speaker 2: free perhaps up the ante a little bit on that score.

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Speaker 2: You had people who were sort of untested in the

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Speaker 2: university and environment. Obviously we've had a lot of young

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Speaker 2: people gone overseas as well. So yeah, we'll wait and see.

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Speaker 2: But I think it's fair to say that it's probably

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Speaker 2: got a higher fault rate than the house. Indeed, I

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Speaker 2: would imagine put it that.

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Speaker 1: Way exactly just while I've got you RB this week

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Speaker 1: twenty five.

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Speaker 2: That's a lock looking like it as much as a

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Speaker 2: lock of these things get. They gave a very strong

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Speaker 2: signal to that extent, and everyone's expecting it, so it

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Speaker 2: certainly would be a big shock if they didn't deliver.

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Speaker 2: Big question, as always is what comes next, So a

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Speaker 2: big focus on the forecast and the.

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Speaker 1: Words they use exactly good to see. Sharon Zona owns

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Speaker 1: in chief Economists. For more from the Mic Asking Breakfast,

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Speaker 1: listen live to news talks that'd be from six am weekdays,

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