Malcolm Turnbull and his Government now have the dubious honour of presiding over half-a-trillion dollars in gross debt for the first time ever in this country’s history.
That less-than-stellar achievement says enough on its own to call into question their claims to superior economic management.
But that milestone is even more remarkable when you consider just how quickly the Abbott-Turnbull Government got there.
In addition to the total debt, the numbers which detail how quickly that debt has grown – the pace of accumulation – in recent years tell a fascinating and definitive story.
They reveal that both net and gross debt is growing much faster under Abbott and Turnbull than it did during the Rudd-Gillard years.
To be more precise, the Coalition is racking up gross debt $1.66 billion a month faster than Labor and, when it comes to net debt, $511 million a month quicker.
These numbers come from comparing the level of debt from 2007 to 2013 under Labor, and from 2013 to now under the Coalition. Under Rudd-Gillard, gross debt grew by $226 billion in 69 months; under Abbott-Turnbull almost as much ($220 billion) was added in less than two-thirds of the time (44-and-a-half months).
No matter which way you carve it, the numbers don’t lie. Gross debt has grown $381.7 million a week or $54.5 million a day quicker under the Liberals. And the net debt blowout has been $118.2 million a week or $16.9 million a day faster on the Abbott-Turnbull Government’s watch.
These comparisons hold up even when adjusting for inflation.
They make a mockery of the Coalition’s discarded rhetoric about “debt and deficit disasters” and their claim to superior management of the nation’s finances.
That’s especially true when you consider the prevailing global economic conditions during both periods.
There’s no arguing that debt didn’t increase under Labor; it did. But it’s also a fact that Labor’s time in Government coincided with the Global Financial Crisis – the sharpest synchronised downturn in the global economy since the Great Depression.
No developed country was immune from the worldwide devastation that smashed our budgets and made stimulus necessary – to avoid a recession and to keep people in work.
Our targeted response to the crisis prompted the economist and Nobel laureate Joseph Stiglitz to describe Labor’s policies as “probably, the best designed stimulus package of any of the countries, advanced industrial countries, both in size and in design, timing and how it was spent”.
The Coalition has had no such seismic global event to deal with or to rationalise the pace with which they are racking up debt. The global economy is not just stronger than it was during the GFC, but generally in good shape.
The International Monetary Fund has forecast a relatively healthy global growth rate of 3.5 per cent for this year and 3.6 per cent in 2018 – up from 3.1 per cent last year.
Macroeconomic pressures on commodity exporters have improved, including a partial recovery in prices, while growth is expected to remain strong in China and other countries hungry for imported goods and materials.
At the same time, advanced economies like Australia are expected to benefit from higher projected growth in the United States.
Even the Treasurer himself remarked in his Budget speech that “the signs of an improving global economy are there to see”.
But despite these more accommodating global conditions, debt has piled up faster and bigger under the Abbott-Turnbull Government than its Labor predecessors.
They like to pretend they’re the Budget messiahs, that they have all the answers when it comes to debt. But the numbers in their own Budget papers tell a very, very different story.
The debt ceiling has had to be lifted to make room for the record debt which is made worse by their Budget centrepiece – the $65 billion big business tax cut.
Conservative calculations show that it will cost Australians $5.4 billion in extra interest for the Government to borrow the money required to pay for its huge tax handout – the equivalent of $220 for every man, woman and child in the country.
When it comes to debt, the Coalition Government’s fixation on that unaffordable tax cut and other measures that pander to the top end of town show Turnbull and Co are part of the problem, not part of the solution.
This opinion piece was first published by Crikey on 16 June 2017.
