By Chris Bowen, Minister for Financial Services, Superannuation & Corporate Law, Minister for Human Services, Member for McMahon
Melbourne: The only consistency from Tony Abbott’s shambolic economic team during this campaign, has been their deceptive scare campaign on debt and deficit.
This scare campaign is both dangerous and misleading.
The fact Tony Abbott astutely obscures on his fear campaign is that Australian Government net debt is less than a tenth of the average for the major advanced economies.
While our net debt will peak at 6 per cent of GDP in 2011-12, the average net debt of the G7 countries – Canada, Germany, France, the UK, Italy, Japan and the US is expected to peak at 94.2 per cent of GDP in 2015.
Let’s make that clear – Australia’s net debt position will be proportionally 15 times less than the G7 average.
Because of this misleading smear campaign we’ve launched a website Facts on Debt where the facts are laid out for all to see.
It might do Tony Abbott good to take a look, but we all know, because Peter Costello told us, he is bored by economics.
There is no coincidence why Australia has a AAA credit rating from international credit agencies.
The irony of course, is that we now know if the Government followed Tony Abbott’s advice at the worst of the Global Financial Crisis, we would have gone into recession, lost hundreds of thousands of Aussie jobs and our debt would be higher as a result. This would have been the direct consequence of Tony Abbott’s course of action.
We did the responsible thing and acted decisively. That is why Australia emerged from the GFC with stronger growth, lower unemployment, and a stronger budget position than any major advanced economy. And we are getting the budget back into surplus in three years time, three years ahead of schedule.
This puts us right out front on international comparisons, with the G20 advanced countries expected to only have halved their deficits by then.
What Tony Abbott won’t tell you is that the most significant driver of government debt across developed nations is lower revenue, not government spending.
For instance, we now know the global financial crisis reduced our budget revenues by around $110 billion over the five years to 2012-13.
That’s because during an economic downturn, companies make less money, meaning they pay less tax, meaning the government acquires less revenue.
That’s been reinforced by the International Monetary Fund (IMF), who have found, across developed nations, ‘discretionary fiscal stimulus combined with support for the financial sector from the crisis only accounted for less than one-fifth of debt increases’ (IMF World Economic Outlook, April 2010).
Federal Labor did everything we could to ensure people did not lose their job during the downturn because we knew, not only is it personally devastating for individuals who lose their income and sense of worth, but because unemployment causes higher government debt through payment of benefits.
That is why debt and deficit would have been higher if the Coalition were in charge. While the economy is growing strongly and underpinned by solid employment growth with 353,000 new jobs added in the past year – we know there are many Australians out there still doing it tough.
That’s why Federal Labor is so opposed to Tony Abbott’s plan to cut the critical health and education services so many Australians depend on.
The Coalition’s misguided rhetoric on debt and plan to cut services not only shows their lack of economic understanding but how out of touch they are from hard working Australians.
Source: ALP Site
One Response
Thought Provoking: In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other. — Voltaire (1764) And on that note all I can say (since 1764) seemingly – not a lot has changed.
http://just-me-in-t.blogspot.com/2010/08/let-us-provoke-thought-or-two.html
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