What constitutes Australia's net foreign liabilities?

Net foreign liabilities refer to a country's financial obligations to other countries minus the financial obligations that foreigners have to the country. In Australia’s context, this means looking at the total debt and equity investments that Australians have made abroad and comparing them to the debt and equity investments that foreign entities have made in Australia.

When we specifically define net foreign liabilities as financial obligations to the rest of the world net of foreign obligations to Australia, we capture the essence of what net foreign liabilities represent – it is the net amount that a country owes to foreign entities after accounting for what foreign entities owe to it. This definition provides a clear, comprehensive view of a country's position regarding its international financial engagements.

The other options do not accurately reflect the concept of net foreign liabilities. For instance, focusing solely on domestic minus foreign investments does not take into account the complex relationships involving liabilities and claims that exist internationally. Additionally, limiting the definition to just government debt or only focusing on foreign debt without equity misses the broader financial context, which includes both debt and equity investments.