We talk about intergenerational equity, but we ignore intergenerational debt

If intergenerational equity is the new black then surely it has no greater enemy than intergenerational debt. And yet, public debt remains largely absent from the rhetoric of the Government, the Opposition and wider budget commentary.

Public debt is the equivalent of eating at a restaurant and making the next customer pay your bill. Their most likely response is to make the customer after them pay for their meal. It’s an insidious cycle that erodes generational trust. At best, we’re borrowing from our future selves. At worst, we’re taking money from future generations.

Perhaps it’s because we see public debt through only economics-coloured glasses. That isn’t incorrect, but it’s incomplete. We need discussions that cultivate not just our economic understanding but our moral imaginations. Take the idea that borrowers are in fact ‘slaves’ to their lenders – the vivid image used by the book of Proverbs, part of the ‘wisdom literature’ of the Bible (and the wisdom inheritance of our culture). Such thinking expands the issue of debt beyond the economic, calling on us to think more deeply about what we’re leaving those who come after us. If slavery is a metaphor for debt, then we are at great risk of enslaving future generations.

For all the worthwhile public debate around housing affordability, tax equity, energy security and defence, perhaps the greatest moral challenge of our time is debt – the sleeper issue that affects every other issue. As Tolkien put it: the one ring to rule them all.

Budget papers suggest that our gross debt will blow past $1 trillion next financial year. The interest bill alone on government debt will soon exceed $45 billion. That’s more than what the federal government spends on hospitals. It’s expected to become the government’s fifth-largest expense by the end of the decade.

Both sides of politics offer some reasonable excuses for their culpability. The Rudd-Gillard government ran into the Global Financial Crisis. The Morrison Government had to navigate the pandemic. And the Albanese Government is dealing with the world’s biggest oil shock in 50 years. It’s not an accident that the word ‘uncertainty’ appears 54 times in the Government’s main budget document. But black swans are not a free pass to reach for our national credit card. Lower than expected deficits – as announced in this year’s budget – help. But the fact that we’ve only had three budget surpluses in 20 years suggests that our debt addiction is structural, not circumstantial.

I was once told by a mentor that there are two types of pleasure: the pleasure you’ve paid for before you get to enjoy it, and the pleasure you pay for afterwards. The first type is usually good, and the second is generally bad.

Applying the biblical to the fiscal once again: the best reaping happens after you sow, not before.

However, these calls to delayed gratification and long-term planning cut against our instincts to think, feel and vote for the short-term. A recent poll reported that more than 75% of Australians are worried about public debt, but most of us still want lower taxes and higher government spending across areas of our choosing. The question before us is uncomfortable, but clear: can we calibrate our short-term voting instincts to match our professed commitment to our children, and their children?

Yes, many are struggling and need help. Yes, aspiration and innovation should be rewarded. But the answer cannot always be to put it on the tab.

In fact, a lower debt burden frees up future governments to target spending on our greatest needs – to build more houses, boost productivity, shore up health and aged care, augment national defence, and support the vulnerable. No matter what the voices from the left and right fringes keep telling us, we can’t have a Scandinavian welfare system alongside a Singaporean tax system. Something needs to give, or the centre won’t hold. 

If, as political theorist Edmund Burke suggested, society is a contract between us—those who came before us, and those who come after us—our debt dishonours our forebears and attacks our descendants.

We must figure out a way to bear our own burdens now, or future generations will be burdened by them. Perhaps the 24-hour media cycle, the 3-year electoral cycle, and the semi-quarterly RBA cycle, make us structurally ignorant of the long game. But we have to play it, or others will pay later.

Max Jeganathan is a Senior Research Fellow at the Centre for Public Christianity. He served as an adviser in the Rudd and Gillard Labor governments, and is undertaking a PhD in law on the ethical foundations of liberalism. This article was first published in Eureka Street.