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.