Yes, The Daily Telegraph's front-page splash on February 12 was a doozy. "This is our frightening future – a Commonwealth government debt burden with 12 zeros in two decades and interest repayments of $180 million a day," it began. Was John Howard's favourite newspaper suddenly turning on the Coalition, angered by its decision to dump taxes and hence blow out the deficit? No – this was "Labor's ticking debt bomb", the Telegraph explained. In an accompanying editorial, the paper even compared the "crisis" with climate change. "The difference between so-called climate deniers and our new group of debt deniers is that the latter are standing in opposition to basic mathematics ... Left unchecked, those millions and billions could grow into a figure most people are unable to fully comprehend."

That may sound like satire. Indeed, the Telegraph itself seemed "unable to fully comprehend" the numbers it reported (I'll get to that in a moment).

But we need to get used to talking about debt, because we'll be hearing a lot more about it. It's no coincidence the Telegraph is running this campaign. This week, the Treasury will publish its latest Intergenerational report. The main political message to come from it will be the urgent need to craft a structural surplus, before the growing costs of our ageing population overwhelm the federal budget. Last week, the Treasury's new secretary, John Fraser, told Senate estimates: "I am old-fashioned ... I do not like public debt because I saw what happened in earlier decades, in the '80s, when we worked assiduously to get rid of it." Earlier in the month, Finance Department secretary Jane Halton was among several others saying much the same. "There is wide recognition of the need to return the Commonwealth budget to surplus and to a structurally sound and sustainable position." Debt, and deficit, are the panics of the moment.

As for those numbers in the Telegraph report, which tried to convey that federal debt would quadruple in just over two decades, they came from PricewaterhouseCoopers. It modelled what might be expected to happen to government debt if federal fiscal policy settings remained as they are today (i.e. if many of the 2014-15 budget measures – such as changes to Medicare rebates, university fees and welfare payments – remained in legislative limbo). This, of course, won't happen: governments don't just go into deep freeze for decades; when lacking a Senate majority, they negotiate and shift policies. Still, PwC's hypothetical exercise was worthwhile; a pity, though, about the reporting, which failed entirely to grasp the effects of inflation and economic growth.

So what did PwC's data actually show? In a worst-case scenario, in which none of the current Senate impasses are resolved, yes, federal debt would exceed $1 trillion in 2037-38. However, using the consultancy firm's CPI assumptions, $1 trillion then would be worth only $567 billion in today's dollars. A more useful measure – government debt relative to the size of the economy – shows federal debt growing from 15.6 per cent of gross domestic product now to 21.9 per cent in 2037-38. In other words, PwC's hypothetical (and unlikely) scenario shows the Australian government's debt shifting from being almost the lowest in the developed world to being, well, in all likelihood, still almost the lowest in the developed world in two decades' time.

Call me a "debt denier" but I struggle to worry about that. Yes, we clearly have a structural deficit, which was explained well by a Parliamentary Budget Office report in 2013. That report also said the federal budget was heading in the right direction and a structural surplus should be, or, more accurately, could have been, within reach in a handful of years. Since then, however, commodity prices have fallen, the government has junked revenue – the carbon and mining taxes – and the projected costs of healthcare and welfare have grown.

PwC tax partner Paul Abbey tells the Informant he agrees that "the level of debt right now is not the issue" but says there is a serious structural problem. "Our message is all about the trajectory. If you were in circumstances where, say, your debt as a percentage of GDP sat at about 20 per cent and did so over a long-term basis, and your debt was being recycled through infrastructure projects and sensible capital investments, it'd be hard to criticise."

Yet sensible investment is not what is taking place. State governments, the main builders of infrastructure, are falling far more quickly into debt than is the Commonwealth (not that the Telegraph made that clear, with its bizarre focus on federal Labor). However, as Abbey says, state debt is growing not necessarily as a result of capital projects but because they face growing demand for services. He points to last year's federal budget, when the Abbott government told the states that, beyond the forward estimates, it would cut their health and education payments by $80 billion. "That puts state budgets under substantial pressure," Abbey says.

So we may have a state debt problem, if not a federal debt problem. And we undeniably have a deficit problem. How do we solve it? Unpopular decisions to reduce the scope of some government services and payments can help – to an extent. But Abbey says the missing fix is tax reform. (He's far from alone.) The first step, he says, is for politicians to start talking about it.

"We need to recognise that doing no one thing is the perfect panacea and, equally, there is no sacred cow that we shouldn't consider," he says. "Superannuation can't be a sacred cow, negative gearing can't be a sacred cow, GST can't be a sacred cow. Everything should be considered and every stakeholder group ... is going to have some give and take."

The irony is that those newspapers seen as the voice of conservative politics, particularly the Telegraph, have been the chief opponents of this type of tax reform for decades. Fewer, for example, railed more strongly against a carbon price, or fairer land taxes in NSW, than did the Sydney tabloid. Nor do politicians in general have much of a stomach for these discussions. It says much that, when then prime minister Kevin Rudd released the impressive research carried out by the Henry tax review, which he commissioned, his first comment was to rule out one of its recommendations – capital gains tax on the family home – and to warn that he would rule out many more. In the five years since, almost none of the proposals it endorsed have been implemented; those that were – a carbon price and a minerals rent tax – were abolished swiftly by the Coalition.

Yet any disinterested review of taxes – and one hopes that includes Joe Hockey's forthcoming white paper – is bound to repeat Ken Henry's findings. We need efficient, broad-based taxes; fewer exemptions; fewer fiddly, state-administered fees and duties; and we need to charge fair rents on natural resources, including a price on carbon pollution.

Perhaps the difference this time around will be that the Telegraph is now, finally, a believer in what it calls "basic mathematics". We'll see.