The federal agency managing the government's bond portfolio says a buffer beyond what is expected to be the peak in commonwealth debt is needed to cope with unforeseen events in any one year.
The federal agency managing the government's bond portfolio says a buffer beyond what is expected to be the peak in commonwealth debt is needed to cope with unforeseen events in any one year.
The Australian Office of Financial Management said it told former Labor treasurer Wayne Swan that a buffer of $40-$60 billion was prudent, and that advice still stood.
CEO Rob Nicholl told a Senate estimates hearing in Canberra on Thursday there were events that could occur during the year which could require the raising of further debt.
"If we look back, history suggests the within-year peak can be up to $30 billion above the end of the year outcome," he said.
The Abbott government is seeking parliamentary approval to increase the debt ceiling from $300 billion to $500 billion.
The move is being opposed by Labor and the Australian Greens who want the cap set at $400 billion limit, insisting they see the detail of the mid-year budget review which the government intends to release in mid-December.
The current ceiling of $300 billion is expected to be reached on December 12.
Treasury's pre-election economic and fiscal outlook forecasts peak debt to reach $370 billion in 2015/16.
However, Treasury officials have said the budget position has deteriorated since that update.
Mr Nicholl agreed that based on current information a $500 billion limit would be prudent given it suggests a peak of $470 billion.
This would include the government's decision to give the Reserve Bank $8.8 billion to replenish its reserves.
Mr Nicholl said financial markets would be looking for certainty as a legislated limit was approached.
"Until that certainty is provided you will have the potential to create speculation about what could or couldn't happen," he said.
"We could momentarily be seen as more risky."
That could result in the government having to pay higher interest rates.
Treasury parliamentary secretary Steve Ciobo said Labor was steadfastly ignoring the reality of the situation, especially after Treasury secretary Martin Parkinson backed the government's request.
"Labor needs to stop playing games," he told reporters in Canberra.
"Labor needs to realise they're sending the wrong messages to the international community."
Shadow assistant treasurer Andrew Leigh said Labor still wanted to see documented evidence on what had changed since the pre-election fiscal outlook.
Deputy Opposition Leader Tanya Plibersek agreed, saying if the government want more than an extra $100 billion, "maybe they should say why".
Australian Greens deputy leader Adam Bandt said there needed to be a more sensible discussion about debt.
If there was a good case for increasing the debt limit, it had to be proved.
