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The federal government's promise to pay off all government debt - using the proceeds of the sale of Telstra - is creating alarm in the heart of Australia's financial markets.
The Sydney Futures Exchange - which has up to 60 per cent of its business at risk if the $50 billion Commonwealth bond market is shut down - and big bond market operators are lobbying Treasurer Peter Costello to keep the market alive.
Bond market heavyweights Macquarie Bank, Salomon Smith Barney, ABN Amro, AMP, Merrill Lynch and UBS Warburg, the Australian Financial Markets Association and International Banks and Securities Association claim that Australia's ability to withstand the next global economic crisis could be jeopardised if the bond market shrinks into insignificance.
Commonwealth bonds, which the government issues when it borrows money, are the safest of all securities. For many individuals who are labouring to pay off credit cards and mortgages, zero government debt may sound like a good thing. But it could also create a dilemma for big and small investors because it would result in a real shortage of risk-free, safe-haven assets for superannuation savings.
The remaining government bonds on issue would be scarcer and more expensive for investors. Fund managers would be forced to invest in riskier corporate bonds or send the money offshore - at the very time the government has increased to 9 per cent the amount of an individual's salary that must be invested in superannuation.
At the end of one of the worst years for global stockmarkets, this isn't a scenario that most investors will want to hear.
"It's crunch time," says Stephen Halmarick, director of economic research at Salomon Smith Barney. "If the amount of bonds on issue falls much further, global fund managers will stop investing in Australia and local fund managers will be forced to increase the amount of money they send offshore each year simply because there are no assets domestically to buy.
"This has negative implications for the Australian dollar, but it could also force fund managers to purchase lower rated and riskier corporate bonds. Superannuation funds will be denied a risk-free investment."
It could also be another step towards Australia becoming a branch-office economy, one of Costello's big fears.
Says Ken Farrow, chief executive of AFMA: "We run the risk of not being the financial headquarters for the region if we don't have a bond market. There will be further centralisation of financial services, and Australia should be in the thick of it."
One concern is that the Treasurer will dismiss the bond market's case as special-interest pleadings from desk jockeys on big salaries driving flash cars. But the bond market "support group" says much more is at stake than the jobs of bond traders.
Farrow says the implications are enormous. He says that if the bond market no longer existed the job security of 3,000 AFMA-licensed dealers and the 5,000 operations people who support them could be in jeopardy. "On top of that the investment industry employs in excess of 10,000 and that doesn't include the service providers, lawyers, accountants and IT people. Hypothetically they all could be at risk, and do we really want that?"