Is Australia’s public debt really that big? > Check the facts
Who: “The path back to surpluses, debt reduction and a strong, prosperous economy must be through cutting wasteful spending, rather than on increasing taxes or introducing new ones.”
“Australia must live within its means.” Tony Abbott and Joe Hockey.
The Claim: The government needs to cut back its spending and get the budget into surplus otherwise Australia’s national debt will spiral out of control.
The Facts: Australia’s net debt as a percentage of GDP ratio is estimated to be 11.6 per cent in 2012, according to the International Monetary Fund (IMF). Those levels are low by international standards, and have been that way for a long time.
Discussion of evidence: Claims that Australia is a high debt country are regularly spouted by politicians, especially around May in the lead up to the annual Federal Budget and during election campaigns. The claim is seldom challenged for the fact that relative to most developed economies Australia is a low debt country.
Australia has the third lowest gross debt to GDP of countries in the OECD. The latest data from the IMF shows that Australia’s government net debt as a percentage of GDP sees it ranked toward the bottom of comparable advanced countries. Compared with the advanced country average Australia’s debt (in 2010) was one seventh of the average debt amongst advanced countries (77.4 per cent), and less than half New Zealand’s debt, 34 per cent of Canada’s debt and 14 per cent of the UK’s debt.
Spain and Canada are used for comparison as their respective GDPs are similar to Australia.
Whichever way you look at it; compared to other advanced countries, Australia is a low debt country.
With all of those countries in debt, who do they owe the money to?
That’s what I always think.
China
I think the issue is more that after the largest commodity boom in history that we have any govt debt at all. Both Howard and Labour did not stuff enough mattresses in the good times.
The statements listed above do not lead to the claim.
Statement – The path to a strong economy is through cutting wasteful spending/etc.
Claim – The government needs to cut spending and get back to surplus or the economy will spiral out of control.
I accept that the statement is true, but I can’t see how that claim is derived from those statements. The claim commits the Appeal to Fear logical fallacy, whereas the statements do not.
Not so, Jess – the statement is that the path ‘back’ to a strong economy is… The emphasis is on ‘back’, here, implying that our once strong economy has been let slide by the current administration. The point is, our economy is no weaker now than it was 20 years ago. No country is debt-free, that’s the nature of money – it is created as debt. Australia’s national debt, as a percentage of gdp, is really very low. Our focus shouldn’t be on economic growth, though – we should be focusing on providing a high standard of living for all (including education, healthcare, housing, healthy food etc) and doing so in a sustainable manner. Economic growth, by its very defintion, is not sustainable.
Debt does not create money (GDP). Investment does, sometimes debt is used but it does not have to be. The point of Australia’s current position is what has all that debt achieved? Basicly nothing! Our GDP is only $250B more than in 2007 and our net debt is about the same. Some say they saved us from the gfc but in reality we all know it was the china boom.
Labor lost the election for a reason. You can fool some of the people some of the time but not all of the people all of the time!
Also, just because Australia has less debt than average doesnt mean that the economy couldn’t be stronger than it is.
[…] Australia’s net government debt is 11% of GDP while the average for advanced countries is 77.4%. Australia’s budget deficit for 2012-13 was only 1.3% of GDP while the US, UK, Ireland and […]
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All tony abbott has in his eyes is cutting debt(cutting jobs) by giving people the redundancy packages when they did the last government job cuts they put australia into more debt and now they are paying contracts to come in and do the work which is still costing them money!! However by doing this they have put people out of their homes as they cant afford to pay them and have had to go bankrupt as their are not enough jobs out their to pick up the slack from campbell Newmans great all mighty plan of getting Australia out of debt!!! Instead of cutting other people jobs they should start by cutting their own pay and cutting the pay to previous parliment members which still get payed even though they are no longer a part of it anymore instead of cutting the workers jobs!!! If you dont think its such a big problem that the cut peoples jobs then ask the families that have lost their loved ones to suicide when they did the last cuts in the government sector? This is stuff that they wont put on the news but needs to be made public!!! People rely on their jobs to pay the bills, some people had nothing else and felt that suicide was the only thing that was going to work as there are not enough jobs out there to replace the jobs that has been lost!! The only thing campbell newman has done is make it harder for families to live as there are no longer secure jobs everything in contracts and casual!!!!
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