A friend of mine once lent money to his younger brother who took a gap year to travel around Europe.

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My friend wasn't worried. He was confident that as soon as his brother came home, got his act together and got a job, he would pay him back.

Sadly, it didn't quite go to plan. The younger brother did come home, and he did get a job, but he didn't pay him back.

He had the money, but there was always an excuse until, eventually, my friend gave up.

Needless to say, he didn't lend his brother money again.

In a nutshell, this is my concern about Australia.

Australian governments - federal, state, territory - are the little brother.

They have lots of debt which is growing unsustainably with deficits as far as the eye can see.

The big brother (global financial markets) is lending them money on the assumption that, when political and economic circumstances allow, these governments will get their act together and fix their runaway budgets.

But much like my friend and his younger brother, this assumption might now be revealing itself to be misplaced. If global markets reassess this assumption, the consequences could be big.

The reason for this potential reassessment is simple: the federal government and multiple state and territory governments have never been in a better position to undertake tax and spending reform to fix their budgets.

These governments have majorities, often big majorities, in their respective parliaments. Their opposition parties are in disarray and the economic conditions of the day (high inflation) are perfect for budget........

© Canberra Times