surplus and debt , fact and fiction

With the passing of Gough we hear expressions lauding the ex PM and some not so generous and then adding RIP as if they mean it. I hear and read a lot of things but when I check them out find the facts different from the fiction. Half truths trotted out as fact.

Menzies never had one surplus in 23 years yet is lauded not only as a great PM by the liberals but an example of their brand being money managers. Howard as treasurer under Fraser had high unemploynent and high interest rates together with higher net debt that when they gained office from Whitlam.

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Despite the massive growth in real government spending during the Whitlam years, the level of negative net debt was little changed when Whitlam was sacked in November 1975.  I am not sure whether to use the 1974-75 data which shows negative net debt at 2.7% of GDP or the 1975-76 data which shows negative net debt at 0.4% of GDP due to the timing of the change of government at that time, but either way, it doesn’t really matter other than to show that when the Fraser Government took control of the Treasury benches, net government debt was negative.

The Fraser Government was in power for 7 years.  By 1983-84, the level of net government debt had risen to 7.5% of GDP and would reach 9.3% of GDP in 1984-85 as Treasurer Howard covered up the Budget problems during the 1983 election campaign.  Such were the dynamics of the early 1980s domestic and global recession, that net debt rose a bit more over the next year and it peaked at 10.3% of GDP in 1985-86.

After that, the Hawke / Keating Government slashed government spending in the latter part of the 1980s and in 1989-90, the government spending to GDP ratio fell to 22.9% – a level that has never been matched since.  As a result of the fiscal prudence, net government debt fell to a trivial 4.0% of GDP in 1989-90.

http://www.marketeconomics.com.au/1996-a-short-history-of-government-debt-in-australia

source

It has always bugged me that the Libs managed to sell the furphy "We are the better economic managers" and made it stick. Of course it is not true! 

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