Where Australia would be if it faced another GFC in 2015 doesn't bear thinking about

Something to think about? Picture: Getty Images

If a GFC hit today, Australia wouldn’t be getting off anywhere near as lightly as it did in 2008.

The Business Council of Australia (BCA) this morning released its 2015-16 Budget submission report.

Among other things, it carried a strong warning to the Federal Government that it had 10 years to take the blame game out of the debate and start implementing proper, grown-up measures so that slower spending growth can be maintained.

It also noted that if those measures weren’t taken, this could happen:

“The GFC triggered a $70 billion deterioration in the budget over just two years. If another GFC hit today our starting point would be a $40 billion deficit and net debt of 15 per cent of GDP, in stark contrast to the $20 billion surplus (and zero debt) in 2008.

A similar shock and response today would leave a deficit of around $110 billion or 7 per cent of GDP, and increase Commonwealth net debt to around 20 per cent of GDP. A deficit of this order of magnitude is nearly twice the Commonwealth’s current health spending and more than half total individual income tax receipts.

It’s about as close to a “just sayin'” as the BCA has delivered.

In a nutshell, it’s possible that Australia could fall from a $20bn surplus and zero debt to a $110bn deficit and a net debt of 20 per cent of GDP in seven short years.

The sad part is the BCA is simply articulating what both sides of politics know – Australia is more fragile now than at any time in the past 23 years of uninterrupted growth.

Thankfully the chances of another GFC are low, but budget repair in a bipartisan fashion is a must if the Australian economy is going to be in the best shape possible to weather any storm that may come its way.

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