Much has been written about the Howard government “inheriting” $96 billion debt from Labor in 1996.
By 2007, Australia had net financial assets of $29 billion. This is a significant turnaround, but if we analyse government debt in the last 30 years, some interesting facts emerge.
Recall from a previous discussion that just under half of the debt was in fact Liberal Party debt that was a hangover from the Fraser era under the Treasury-ship of John Howard.
Asset sales loom large in analysing government debt, which I have summarised as follows : $96billion “Labor debt”, comprised of $40 billion carried over from the Fraser government through the Hawke/Keating period, meaning that the true level of Labor debt was $56billion. To pay that off, the Howard Government sold almost $72billion of Government assets (Telstra, DASFLEET, etc), meaning that the move to negative net debt was not really due to any miraculous and bold fiscal settings, but owed everything to a series of asset sales.
Peter Costello will be remembered for selling two-thirds of Australia’s gold reserves for the rock-bottom price of $US306 per ounce (Today, gold is about $US1590 per ounce).
The International Monetary Fund (IMF) examined 200 years of government financial records across 55 leading economies.
The study found Australia’s most wasteful spending took place under the Howard-led Coalition rather than under Whitlam, Rudd or Gillard Labor governments.
The IMF identifies two periods of Australian “fiscal profligacy”, both during John Howard’s term in office – in 2003, at the start of the mining boom, and during his final years in office between 2005 and 2007.
According to Tony Abbott, these were the “Howard golden years”. Mr Abbott recently said “prudent fiscal management is in the Coalition’s DNA”. The facts suggest otherwise.