Tim, Ian Wishart raised similar concerns about the effects of the Japanese buying up NZ paper back in 2007: in both cases, purchasers are from countries where interest rates have been suppressed to zero or near zero, whereas interest rates in Australia and NZ are healthy. As you have mentioned, Wishart's concern was about what happens when the bonds mature and capital leaves the lending country. Of course, this time around, we have the QE3 ship cruising everyone into greenbacks that are deliberately being depressed by the US govt. Fun times ahead! Sigh.

The Australian government only sells bonds when it needs to increase debt. If we had a budget surplus the government wouldn't need to sell bonds. These figures suggest we are far from a surplus and that the trend is likely to continue.

I'd appreciate a comment on what the long term implications are when the bonds mature.

Increase our migrant intake to reduce wages, reduce house prices, reduce interest rates, reduce the A$, make us more competitive, but overall increase the diversity in our great land. That's how we can reduce the A$!