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.
Tanya Martin Office Manager
Jake Wishart Senior Media Adviser