It only took 3.5 years.
And demotion, losing his Shadow Finance Minister portfolio.
But in the end, the truth will out.
The worm has begun to turn.
And some economic “experts” are beginning to agree.
Barnaby is right, on his most fundamental and politically courageous warning – the steeply rising “trajectory” (trend) of Australian government debt:
From the Herald Sun (my bold emphasis added):
GILLARD Government debt levels are forecast to blow out by 80 per cent to $165 billion in this term alone – equal to more than $14,000 for every working Australian.
Analysis of Budget documents reveals that between the 2010 election and Federal Treasury’s update in October last year, the 2012-13 net debt estimate rose $54 billion to $144 billion.
With Wayne Swan having junked the Government’s commitment to a surplus this financial year, Bank of America Merrill Lynch now forecasts Treasury will raise the estimate by a further $21 billion in the May budget.
“The government is starting to develop some form when it comes to over-estimating the improvement in its budget balance,” Bank of America Merrill Lynch chief economist Saul Eslake said yesterday…
Mr Swan’s spokesman said the Government had no plans to raise the gross debt limit. Mr Eslake said the increase that had already occurred was “troubling”.
Monash University Professor of Business and Economics Jakob Madsen said the gross debt rise was “disturbing”.
“It’s a dangerous trend and it’s at the wrong time.
Business Council of Australia CEO Jennifer Westacott said spending had grown “out of step” with revenue.
“If that doesn’t change we are going to have serious public debt problem,” Ms Westacott said.
Mr Eslake, Professor Madsen and Ms Westacott all said Australia did not currently have a debt crisis.
But, Ms Westacott said, “we do have a budget management crisis”.
Shame these “experts” did not notice this problem and speak up earlier. Have we not had to endure 5 years of constantly being told that the ALP government have given us “sound economic management”?
Do not be misled by all those who (still) downplay the importance of Australia’s government debt position.
Do not be misled by all those who prefer to pull the wool over your eyes, by talking about government debt using only the “net” figure rather than the gross, because the “net” figure is lower and does not sound so bad – conveniently ignoring the highly important fact that the $13 – $14 billion per year in interest expenses due are payable on the much larger gross figure:
Do not be misled either, by those who – intentionally, or accidentally – distract from and dismiss the importance of ever-rising government debt, when they (quite correctly) point out that an even bigger problem is our world-leading private debt.
As your humble blogger reaffirmed less than a week ago:
“This is the #1 reason why, even though it is true that private debt is much worse than public debt, I believe that Barnaby Is Right in constantly expressing concern over the rapidly rising trajectory of public debt in Australia. Because, regardless of whether or not you agree that our public debt is “low compared to other OECD countries,” the undeniable fact remains that our rapidly rising government debt does represent a weakening of the government’s balance sheet… even before any banking crisis arrives! Foreseeing that our banking system was, just like the rest of the West, our key vulnerability, and that weakening the government balance sheet unnecessarily would only make our future problems far more calamitous, was one of the main reasons why I launched this blog in early 2010. When you hear some distinguished-looking, eminent economic “expert” – or politician – reassuring us that Australia’s public debt is “low”, just keep one word at the front of your mind. Ireland. And remember what happens to the public debt level, when a government with previously “low” public debt suddenly finds itself borrowing to the stratosphere – often from the IMF – in trying to bail out an over-leveraged banking system.”
Australia’s total government debt – using the popular “as a percentage of GDP” measure (which I loathe) – is now worse than where Ireland’s was before their private debt bubble burst. And ours hasn’t. Yet. Note well: the following charts are only current through 2011; our Green-Labor government has piled on an awful lot of additional debt since then –
Australians should never forget that, prior to their real estate (private debt) bubbles bursting, Ireland and Spain were considered the “outstanding” economies of the EU.
From the New York Times, June 2011 (my bold added):
Where Private Borrowing Led To Public Debt
FIVE years ago, a survey of the euro zone would have shown two star countries. They were growing rapidly and running government budget surpluses. Their national debts were low. Other countries sought to emulate their success.
The outstanding countries were Spain and Ireland.
At the time the two economies appeared to be impressive, there was one indication that could have provided a warning. Each country’s private sector was borrowing heavily overseas. Those loans were fueling rapid economic growth that, in turn, produced rising tax collections, allowing national governments to run budget surpluses.
Which is almost exactly the same situation Australia is in.
Minus the government surpluses.
For many years our massive banking sector – now bigger by market cap than all of Europe’s combined – has borrowed heavily overseas to finance our world-leading overpriced housing bubble.
It does not take an “expert” economist to see what the future holds for us.
Just “a little ol’ country accountant”, with the courage to speak up and call it as he sees it.
UPDATE: And yet another expert comes out. To say the same thing Barnaby has been warning of, for the last 3.5 years –
ONE of the nation’s top financiers yesterday joined the debate on the country’s rising debt level – describing it as dangerously high.
AMP chief economist Shane Oliver also urged the government to stop using economic comparisons to countries in Europe and the US to justify a predicted 80 per cent blowout to $165 billion this term.
“It just shouldn’t be this high,” said Mr Oliver, who said the government hadn’t taken advantage of the decade-long resources boom.
“If you take Ireland for example, it has had a similar level of public debt to Australia in 2007 and only six years later, debt is over 100 per cent of GDP.”