The use of measuring government debt against the Gross Domestic Product (GDP) makes sense to me. While not an economist, so there are bound to be other benefits that I don't find obvious, to me it provides for benchmarking against other countries and gives an indicator for how easily or difficult it is to pay off. But the whole GDP is not available to pay off the government debt. When Prime Minister Gillard gave the analogy over the weekend that the current net debt is like someone on $100k pa having a loan of $6k, it gave the impression that the whole GDP was available.
Using the current debt, taxation and GDP figures from the Australian Bureau of Statistics I'd like to complete the analogy started by Ms Gillard.
This person on $100k runs a business, works with charities / social programs and a has a family to provide for. The $100k is the total revenue(???) from the business.
Without intending to accumulated debt for charities / social programs he/she has made investments in the names of these social programs. This is important work so this person has been willing to carry some debt for the social work. Currently the debt is $6k more than the investments.
The business this person runs can be debt intensive. The current debt held by the business in excess of any investments in the business's name is HOLD.
This person also needs to provide shelter for their family. The mortgage on the family home is currently HOLD.
So the hypothetical GDP person has debt HOLD times their income. Probably not as stretched as the typical Aussie with a mortgage at the moment. But still not able to wipe the net government debt out by living cheaply for a month as implied by PM Gillard over the weekend.
