Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

our interest payments are effectively zero because there is no deficit. The great difference between the two periods that you referred to—then and now—is the complete eradication of government debt, the complete eradication of government deficits. So we have a situation where the current account deficit is a function of decisions made in the private sector entirely, and the size of the current account deficit and the interest payments we make are a function largely of (a) banks borrowing to finance housing loans and (b) investment by the private sector.

To the extent that the borrowings are by the private sector for productive investment, that is good for the economy. The investment is what will produce future income. It is the investment that you see through the current account deficit that is enabling Australia to meet the inexorable resource demands of China in particular and India to a lesser extent that our great private sector mining industry is now meeting. That is why you have a current account deficit at the moment. So you have to look at the structural composition of the current account deficit, note that it is a function of the investment borrowing by the private sector that is contributing to the long-term strength of this economy and note the fact that we have completely eradicated government debt and deficits in this country.