Photo: Louie Douvis
The general rule with overdrafts is that if your cash flow shows that your peak debt is four then the limit you need is five. The golden rule is stay below your limit and this was a rule that the previous Labor government broke four times going through the $75 billion limit, the $200 billion limit, $250 billion limit and drawing on the budget so that their own projections said they would exceed the $300 billion limit.
When I worked for the Queensland Industry Development Corporation in the mid 1990s the key proficiency in a credit paper was to make sure you created a target and hit it or - as is the case of overdrafts - stayed underneath it. The credit bureau took a dim view of those who kept returning for a minor increase due to seasonal fluctuations.
If you have bad news, do not try to creep over it with several sad news stories, get to the point the first time and prove you understand the client. But the client the Coalition has to deal with has had the unfortunate experience of a massive increase in debt spent on non-productive assets. School halls instead of ports, ceiling insulation instead of bulk commodity freight rail, $900 cheques instead of road freight corridors.
This client lost major customers through decisions such as the live cattle ban and created internal policies such as the carbon tax, which inhibited its capacity to earn an income. This is why the first job of the Coalition is to deal with the legacy of the business management we have been left with now, rather than the one we left them in 2007. We need businesses that earn money and pay their fair share of tax in Australia if we are to repay our debt. We need to invest in the areas that assist the world to buy the products that we have a strategic advantage in selling.
If it is food, we need to build dams, if it is mining, we need ports and rail, if it is services then our competition is determined by the standard of education compared with that of Singapore or Seoul as they are merely one click away on the internet.
The reality of the mess we were left was always going to become apparent the day the previous accountant left the building. The hardest day in the office comes when you go to see the bank manager to sell the deal of the way forward. The next step is to return to the office and explain to the staff the task at hand and ask for their understanding that due to the problems we have been left the priorities have to change.
In Manila, at the regional CWA meeting I see how an organisation can run on what many would say is very frugal means. The cynic will make much at looking at the management practice of the CWA and comparing it to government, but the attitude of doing much with little has to be the process from this point forward.
Large requirements and circumstances unforeseen and beyond our control are still going to happen, but the next limit is probably one of the last before others start asking very serious questions as to where the finances of our nation are heading.
On the farm at times you have to tie things up with wire to keep the show on the road when in better times you buy a new one. That is the essence of internal management, but if you cannot get the stock to the sale yards, or the market for cattle is gone, then no internal management will save you.
As I have said for years in this column, the escalation of our debt is a major problem and it is bitter vindication to find out now that this was correct. As I have often repeated, Canberra is the canary in the coalmine for government debt and Canberra should have the greatest interest in our nation keeping debt under control, as it relies on access to public funds for a large section of its economy.
It would stand to reason that Canberra will be the most pragmatic in making sure that the experience of previous frivolous causes such as the tens of billions of dollars expended on $900 cheques, school halls, green loans, ceiling insulation and the litany of other ill-planned Labor fiascos remain a memory, not a prospect.
Barnaby Joyce is the Minister for Agriculture and the deputy leader of the National Party.