sigh......
http://theaimn.com/2014/05/28/maths-is-a-marvellous-thing/
Maths is a marvellous thing
Compared with gross debt, net debt is a better measure of a government’s overall indebtedness as it also captures the amount of debt owed to the government. Which begs the question as to why Hockey and Abbott use net debt when referring to Howard and gross debt (projected in ten years’ time no less) when referring to Labor?
For some historical perspective, gross Australian Government debt increased from around 40 per cent of GDP in 1939 to around 120 per cent of GDP in 1945. By 1974, it had declined to around 8 per cent of GDP.
Net debt reached 10.4 per cent of GDP in 1985-86. It took only three years (from 1986-87 to 1989-90) to reduce net debt by around 6 percentage points of GDP.
Ignoring the war years, net debt peaked at 18.1% of GDP in 1995-96. According to Mr Hockey’s own budget, gross debt in May 2014 was $319 billion and, in 2014-15, net debt for the Australian government is estimated to be $226 billion (13.9 percent of GDP) as opposed to the $667 billion bleep.
Saul Eslake, chief economist at Bank of America Merrill Lynch, says Mr Hockey’s comments “represent only a partial summary of what the IMF actually says in this section of it its report”. He says Mr Hockey omits one important conclusion, “namely that Australia would still have the second-lowest general government net debt as a per cent of GDP among the countries shown by 2018″.
In its generally upbeat assessment of Australia’s economic position, the IMF says “gross debt is expected to peak at around 32 percent of GDP in 2015 and is among the lowest in advanced nations”.
Elsewhere, in the fund’s recommendations for Australia’s fiscal policy, it says “Australia’s modest public debt gives the authorities scope to delay their planned return to surpluses in the event of a sharp deterioration in the economic outlook”.
