NAB Chief Says Debt Needed To Boost Invesments

The chief executive of the National Australia Bank (NAB) has labelled those debating about the country’s debt as “immature” saying that “Australia has a debt problem: we don’t have enough.”

NAB chief Cameron Clyne is reacting to comments made by the Business Council of Australia (BCA), which has released its action plan that included long-term policies to help an ailing economy. The plan proposed by the group is supposed to keep the economy stable and better performing within the next 10 years.

Mr. Clyne said, “If we continue to have the debate that suggests that all debt is bad, and not a debate on the productive use of debt, we will simply not be able to fund the infrastructure this economy needs to thrive into the future.”

He also cited that Australia sits in a “unique window”. Being an AAA-rated country, the government can issue more debts to fund projects and developments, including infrastructure.

“Dedicated annual funding and a clear policy on the use of debt for infrastructure will ensure that Australia’s stock of infrastructure grows in line with our economic development and population growth.”

Mr. Clyne, however, acknowledges BCA’s action plan as something that should be worth looking into. “Maybe not everything in it is worthy of implementation, but we can’t let it fall to short-term populism.”

“One of the reasons why the Australian currency has possibly been somewhat higher than what the technical or fundamental level would be is there is significant demand for what limited Australian government debt there is.”

“Most investors around the world are up to their eyeballs in northern-hemisphere government paper. We have a unique window, as a AAA nation, with strong demand for AAA debt, to issue that debt and divert it to productive infrastructure.”

The views of Mr. Clyne are supported by his colleagues in the industry.