Looking simply at the Budget balance and current accounts in the table, its clear Australia and Canada earn their AAA mainly on the basis of the low level of Government debt – both have current account deficits as well as budget deficits. The rest of the AAA countries have low debt as well as big current account surpluses. That is one reason why bond yields in those big savings countries are still lower than Australia’s. Its also a reason why Treasurer Swan should at least be aiming for surplus in order to stabilise net debt and protect Australia’s AAA rating.
