Federal Government Debt!

I don't know about everyone else, but I have been struggling to pay my bills over the last couple of years. My head is still above water, but I am paddling pretty hard under the calm exterior surface.

Just out of curiousity, I decided to look into how the primary managers of my currency are doing. From the Treasury's own documents, I discovered a table of nett Federal Government debt over recent years. All the talk of returning the budget to surplus shows as spin, because all it is predicted to do is stop the rot. The forward estimates show little reduction in the actual debt level. And my experience tells me that the forward estimates with this mob are likely to be optimistic and unlikely to be achieved.

Following is a record of Federal Government nett debt expressed as a % of GDP. It makes interesting reading, including showing the serious failures of the Fraser government at financial management. Hawke/Keating had a short period of improvement, but still ended up much worse overall. I think the problem with Hawke/Keating was that they decided to spend the resources boom income in the early nineties before they got it. The Asian melt-down then left them in a mess. Only Howard/Costello made any long term significant improvement in the bottom line.

Fraser/Howard: Roughly zero to 4.8% Debt.

Hawke/Keating: 4.8% to 18.0% Debt.

Howard/Costello: 18.0% Debt to 3.8% Reserve.

Rudd/Swann: 3.8% Reserve to 3.3% Debt.

Gillard/Swann (Projected): 3.3% to 7.2% Debt.

Even by the end of 2015, Treasury projection is still over $100 billion nett federal government debt, a reduction of less than $6 billion from its projected peak. And this at a time of an unprecedented mining boom. If things go pear-shaped, "big sigh". I expect things will be worse in 2015, unless we have a change of government in 2013, and that new government shows financial discipline.

 

That sounds like a bit of relativism there.

You are correct that many other countries are far worse off than us. However, they started off far worse, and don't have a mining boom to prop them up. Should we say, "Well we are doing better, therefore we must be doing okay!"

If we are not putting money away from a rainy day when things are "relatively" so good for us, then we also will be deep in the proverbial if GFC II comes around, or even the current situation extends for a lengthy time.