Why Scott Morrison wants you to ignore him
When it comes to public debt, the Morrison government desperately wants you to keep your eyes and ears closed and ignore the facts.
These facts are likely to be defined by Prime Minister Morrison as being “in the Canberra bubble” and therefore not worth discussing, explaining or substantiating.
Current state of affairs
So what’s going on with the public debt? You know the government debt which, when the Liberal Party was in opposition and Labor was in power, was “a disaster”, which “undermined our child’s future” and threatened to “ruin the economy.” “.
When in opposition, the Liberal Party promised to go back to the surplus budget and “pay off Labor debt”.
It was a promise that created and then reinforced a perception, at least in the minds of some voters, that the Liberal Party is a better economic manager than the Labor Party. This perception was a critical factor in the Coalition’s victory in the last three elections in 2013, 2016 and more recently in 2019.
Last week, updated public debt data was released, allowing for a minute-to-minute assessment of the progress of these debt reduction promises.
In terms of gross public debt, data from the Australian Office of Financial Management shows that it reached a record high of $ 565 billion as of October 11, 2019. At the time of the September 2013 election, gross public debt did not was that $ 273 billion.
This means that in just over six years, with six budgets and countless policy changes and reforms on the part of the Coalition, gross debt has increased by $ 292 billion or 107%.
When Mr. Morrison talks about “strong growth” I assumed he wasn’t referring to public debt!
According to data from the Ministry of Finance, the government’s net debt reached a record $ 399 billion at the end of August 2019. At the time of the September 2013 election, when the Coalition was brought to power, the government net debt was $ 161 billion.
Net public debt has increased by $ 238 billion or 148 percent in the six years the Coalition has controlled spending and tax policies.
This $ 238 billion addition to net debt over the six years under the coalition government compares with the $ 215 billion increase in net debt under the Labor Party over the six-year period from 2007 to 2013 during his last term.
The rise in workers’ debt occurred when the world economy was slipping into the deepest recession since the Great Depression of the 1930s and was due to both fiscal stimulus and a loss of income then. that economic growth was slowing.
How has the debt increased?
What is extraordinary about the explosion in debt over the past six years under the current coalition government is that it occurred when the global economy got strong and commodity prices. firsts have skyrocketed.
The coalition government is counting on a surplus budget this fiscal year and thus hopes to stem the rise in debt.
In the last budget, tabled in April, the 2019-2020 budget forecast a surplus of $ 7 billion.
It is too early to be absolutely certain that a $ 7 billion surplus is still on track.
The still high level of commodity prices, especially iron ore, constitutes a massive revenue windfall for the government, but this is offset by the chronic collapse in demand from the private sector which reduces wage growth and consumer spending.
Data from the finance ministry last week shows that for the first two months of the fiscal year (July and August), the underlying budget balance is $ 664 million below the assumed budget execution rate.
Monthly budget figures are extremely volatile (for example, corporate tax is paid on the 1st of the month rather than the 31st of the previous month) but if this trend continues, the $ 7 billion surplus will be threatened and this will have repercussions on the level of public debt.
Either way, the Coalition failed to deliver on its promise to reduce public debt and that could still be a problem in the 2022 election.
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