Government debt under the Howard government

Wed, 30 Apr 2014  |  

This article first appeared on 17 May 2013, at my old blog. In the lead into the budget, I thought it worth circulating again.

The Howard government went to capital markets on no fewer than 400 occasions to borrow money.

Between March 1996 and November 2007, there were 135 lines of bonds that were taken to market in various bond tenders which were issued with a face value of $51 billion, while there were over 280 T-Note tenders with a face value of over $220 billion.

Indeed, in the three months before the November 2007 election, the Howard government went to the bond market on 8 separate occasions to borrow money with a series of bond tenders. Even during the election campaign, just 11 days from polling day, it borrowed an additional $300 million in bond tender number 236. In the final term of the Howard government, from October 2004 to November 2007, there were 43 bond tenders or times the government borrowed money.

This was prudent financial management that rightly drew no political criticism although there were howls of protest from the capital markets that debt was too low and the lack of liquidity was scaring away global investors. That argument has been made before and I will not go to that point here.

The lowest level the amount of gross government debt fell to under the Howard government was $47 billion.

Which means that for the likes of Liberal Party Deputy Leader Julie Bishop and Senator Cormann to refer to zero gross debt under the Howard government when trying to compare it to whatever their estimate of gross debt is now, is plainly wrong.

The Howard government never eliminated gross government, and never once since Federation has any government eliminated gross government debt. Nor should it and no government ever will.

Any effort to compare net debt, which did fall below zero under the Howard government, with some made up and as yet unsubstantiated guess for gross debt of "$400 billion" under the current government is a contempable distortion and should be called out as such.

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