Who owns our nearly $200 billion public debt?
It’s a question we’ve asked before.
Back on the 14th of March last year (“Who Owns Our Debt?“), we discovered that “expert” SMH economic commentator Ross Gittins was wrong. He had claimed -
You thought the pollies had done little else but spar about deficits and debt? Sorry, different debt. They’ve been arguing about the public debt – the amount the federal government owes (mainly to Australians).
A search through the RBA’s Statistics tables easily proved Gittins wrong. We found that at September 2009, an estimated 63.3% of public debt was held by non-residents of Australia.
On April 24th this year (“Who Owns 73% Of Our Debt?“), we checked again. At December 2010, 72.6% of public debt was estimated to be owed to non-residents of Australia.
The RBA’s data has been updated again. According to them, we owed an estimated 73.13% of our $183.794 billion in public debt (at March 2011) to non-residents.
So, just who are these “non-residents”?
Not even the Australian Office of Financial Management. That’s the government department that “manages Australian Government debt, cash and financial assets”.
Apparently, they do not know who owns over 60% of our total public debt. Even though, according to the AOFM’s website:
The [Guarantee of State and Territory Borrowing Appropriation Act 2009] Act requires the AOFM to establish, and publish on its website each quarter, a register recording the beneficial ownership, by country, of all securities issued by the Commonwealth and any securities guaranteed by the Commonwealth that are issued by Australian States or Territories.
What’s the problem then?
In yet another example of incompetent Labor government bungling (or is it?), the Act mentioned …
… contains no provisions to compel the provision of information to the AOFM by the beneficial owners of securities or by persons holding securities on their behalf. This has limited the information available to the AOFM to form an opinion on the beneficial ownership of the securities.
Still, they don’t mind having a guess (emphasis added):
The figures in the tables represent opinions formed by the AOFM based on limited information. The AOFM does not believe that they provide any indication of the likely distribution by country of the beneficial ownership of securities held by custodian and nominee companies, or are representative of the distribution of the beneficial ownership of the total securities on issue.
To ascertain the country of beneficial ownership of the securities covered by the legislation, the AOFM has reviewed where possible the ownership records of the registry or depository systems in which they are held. The AOFM has reviewed the name of the accounts which are registered as holding these securities and from this information and knowledge of the business identified sought to form opinions on the country of domicile of the beneficial owners. However this information is insufficient to ascertain beneficial ownership where securities are listed as held by custodians or nominees.
So, the Guarantee of State and Territory Borrowing Appropriation Act 2009, and the Public Register set up in accordance with it … is utterly useless.
But let us take a look at the Public Register’s most recently updated “information” anyway (click to enlarge):
As you can see, according to the AOFM’s “opinion”, 2.5% of our public debt is held “overseas not identified by country of beneficial ownership”.
And according to their “opinion”, a whopping 58.8 per cent of our public debt is held by “domestic custodian and nominee companies”.
In other words, by locally-registered ‘shelf’ companies with a PO Box address. Companies that exist in name only, and are officially owned by ‘nominees’ on behalf of unnamed, anonymous beneficiaries.
What a joke.
Labor has hocked our nation up to the eyeballs to … God only knows who.
Mind you, it is rather curious that the almighty RBA has somehow managed to “estimate” that 73% of our debt is held by “non-residents”.
How could they know that?
Especially when the AOFM’s official “opinion” (with a big disclaimer) is that they can only identify the country of beneficial ownership of just 38.7% of our debt.
I say that this Labor government, the AOFM, and especially the “independent” RBA, have an awful lot of explaining to do.
An ancient proverb says, “The borrower is the servant to the lender”.
I for one think that the citizens of Australia have the right to know exactly who our government is rendering us as servants to obey.