Parliament has taken the first step to abolish the debt ceiling just three days before the Government said the nation’s books would hit the current cap of $300 billion.
The Coalition and the Greens have voted together in the Senate to scrap the debt ceiling entirely.
The legislation will now be considered by the Lower House where it is certain to pass with the Government’s numbers.
Labor opposed the legislation.
Speaking in the lead-up to the vote, Labor Senator Penny Wong accused the Coalition of hypocrisy for negotiating with the minor party.
“The party that opposed the Australian Greens, who lectured us and the Australian people about how radical the Greens were – that they were watermelons: green on the outside, red on the inside – they’re Senator (Eric) Abetz’s words, the economic fringe-dwellers – well, now the Coalition have done a deal with the economic fringe-dwellers,” she said.
Assistant Treasurer Arthur Sinodinos attacked Labor’s introduction of the debt cap in 1998 and its subsequent handling of the economy.
“They sought to make a political point by creating a limit and then they go and breach the limit – and they breach it three or four times,” he said.
The Coalition wanted to increase the limit to $500 billion, warning that the nation’s debt will hit the current cap on December 12.
But Labor and the Greens joined forces in the Senate last month to limit the increase to $400 billion instead, arguing that the Coalition should bring forward its Mid-Year Economic and Fiscal Outlook (MYEFO) if it wanted more.
Last week Treasurer Joe Hockey, who had previously been highly critical of the Greens’ economic policies, acceded to the Greens’ requests to increase transparency and to even continue monitor to the impact of climate change in future intergenerational reports.