Australia’s much-heralded “low” debt-to-GDP ratio statistic appears to be a fraud. Deliberately “adjusted” by the Rudd Government, in order to make their massive debt-funded spending binge appear less than it is.
In the 2009-10 Mid-Year Economic and Fiscal Outlook (MYEFO), the government refers to a change in the methodology used to calculate GDP for the previous 2008-09 year, and for the historical data series. This change results in a “substantial increase” in the published level of GDP.
The flow-on result from this change is obvious. The government’s spending, as a percentage of that artificially increased GDP figure, will appear lower than if the change had not been made.
And because all of its spending is being done using borrowed money, the debt-to-GDP figure will also appear lower too. Perfect cover for a government that needs to defend itself from Opposition attacks, and smooth over public fears, about rising government debt.
But there’s more.
In the 2009-10 MYEFO, the Rudd Government changed the methodology used to “adjust” government spending for inflation. The result is that the government’s “real” spending growth % figure is artificially reduced… by a whopping 30.1% for 2009-10.
How can we know this?
In the fine print – isn’t it always? – on the Rudd Government’s Budget 2009-10 MYEFO website, we read:
…
Barnaby Is Right 
Comments