Surplus was due to Howard selling assets

After carefully considering Jack Lyons’ letter “Gillard and Swan have country drowning in debt” and comment from Allen Dillon, I wish to write about facts as they are known to me.

Firstly, the cited $96 billion dollar Labor debt inherited by Howard in 1996 comprised 

$40 billion of Fraser government debt, carried through the Hawke/Keating period. 

This means that the true Labor debt was $56 billion. 

To pay off this debt the Howard government sold $72 billion of government assets. Hence, the move to “negative debt” or surplus if you like ($72 billion – $56 billion = $16 billion) was not due to “careful and responsible” budget management. 

Far from it – it was created by irresponsible selling of public assets, the stuff that was created using our taxes over decades. 

I have a list of 75 assets sold under Coalition governments and let me cite just a few substantial ones: Jan 1997 – $1.5 million + annual lease payments Avalon Airport Geelong Ltd; May 1997 – $3.337 billion Melbourne-Brisbane-Perth airports; July 1997 – $408 million DASFLEET; April 1988 – $730 million Phase 2 Airports; March 1999 – $650 million National Transmission Network; November 1999 – $347 million ADI Ltd; June 2002 – $4.2 billion Sydney Kingsford Smith Airport (plus SACL debt of $1.35 billion); November 1997 – $14.2 billion Telstra 1; October 1999 – $16 billion Telstra 2; November 2006  – $15.4 billion Telstra 3.

There is nothing much left to sell, so that easy way is now about gone. Reality check anyone? 

Here’s another sobering thought; In 1990 government debt was $52 billion, which climbed to $175 billion in 2010-11, about threefold. 

In 1990 private debt was $329 billion, which rocketed to two trillion in 2010-11, about sixfold (sources: www.finance.gov.au/property/asset-sales/past-sales.html and www.australiandebtclock.com.au)

The surplus argument is irrational – we have had government debt since 1990 ($52 billion) rising to 2010 ($174 billion). 

Surplus is only a budgetary factor and not a holy grail. It can suffer from creative accounting (on both sides) and asset sale distortion. 

Hope you now have some idea where Howard’s budget surplus(es) came from.

David Klein,

Golden Square

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