Who said that first?

Noodle draws our attention to this Emma Alberici paragraph:

Back to that $96 billion “Labor debt” inherited by the Howard government in 1996 – which actually comprised $40 billion of Fraser government debt that carried through the Hawke-Keating years taking the true level of Labor debt in 1996 to $56 billion. Bringing down that debt wasn’t all about constrained spending and higher taxes, in fact neither of those things were characteristics of the Howard-Costello years. Government asset sales between 1996 and 2007 worth $72 billion wiped the net debt out entirely with $16 billion to spare.

That paragraph is remarkably similar to this one that appeared in the Illawarra Mercury:

$96billion “Labor debt”, comprised of $40 billion carried over from the Fraser government through the Hawke/Keating period, meaning that the true level of Labor debt was $56billion. To pay that off, the Howard Government sold almost $72billion of Government assets (Telstra, DASFLEET, etc), meaning that the move to negative net debt was not really due to any miraculous and bold fiscal settings, but owed everything to a series of asset sales.

That paragraph – and the figures contained in it – was first written by Stephen Koukoulas (AKA The Kouk):

The $96 billion “Labor debt” inherited by the Howard Government in 1996 comprised $39.9 billion of Fraser Government debt that carried through the Hawke/Keating period meaning that the true level of Labor debt in 1996 was $56 billion. To pay that $56 billion off, the Howard Government sold almost $72 billion of Government assets meaning the move to negative net debt was not really due to any miraculous and bold fiscal settings, but owed everything to a series of asset sales.

So how can we be be so sure the paragraph has been taken from The Kouk?

Two things. First the debt that the Howard government ‘inherited’ from the Fraser government, via the Hawke-Keating government, would have been $16 billion and not $39.9 billion. What The Kouk has done is revalue the $16 billion in real terms in 1996 dollars. But the face value of the debt is what gets paid back – $16 billion. At best The Kouk can argue that the Fraser government left the equivalent of nearly half the Hawke-Keating debt to the incoming government. The Kouk explains that point here (emphasis added):

When John Howard was Treasurer, net Government debt rose at a steady pace, hitting 7.5% of GDP when Fraser lost the 1983 election. In 1996 dollar terms, 7.5% of GDP is around $40 billion which is in fact the real level of net government debt “inherited” by the Hawke Government when it won the 1983 election.

I think he over-eggs the story by claiming that is the amount that flows through to the Howard-government era. But whatever he is up to, Alberici and the Illawarra Mercury take that figure at face value.

The next thing that The Kouk has done is gross up the value of the Howard-government asset sales to 2007 dollars and then compare that to the 1996 dollar amount of the ‘inherited’ debt.

To get an accurate indication of the true dollar impact on debt of those asset sales, I have converted them into June 2007 dollar terms. Take the sale of DASFLEET, for example, which was sold for $408 million in July 1997. In June 2007 terms, this was worth $536.8 million. Or perhaps the first tranche of Telstra is interesting. Sold for $17.2 billion in November 1997, that converts to $22.6 billion in June 2007 terms.

That is a mistake. That particular comparison gets the timing wrong. (At the very least he could have grossed up the $96 billion to 2007 dollars). The Kouk’s mistake is exactly the same mistake Alberici makes and the Illawarra Mercury makes. That is after she (and the Illawarra Mercury) have confused the real value of the Fraser government debt in 1996 dollars with the face value of the Fraser government debt (the amount that actually needed to be paid back).

As she says:

In politics, myth, when repeated often enough, has a way of becoming gospel.

It looks like The Kouk’s myth is being repeated often – as is the Alberici claim that the IMF identified the Howard government as being fiscally profligate. We have dealt with that issue before.

Update: Emma Alberici responds in comments below.

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57 Responses to Who said that first?

  1. stackja

    ALP myths will always become fact. ALP/Media says so.

  2. Monkey's Uncle

    Another mistake Kouk makes is in ignoring the budget surpluses accumulated in the Future Fund. If the debt had not been paid off in part through asset sales then obviously these surpluses would have been available to further pay down debt.

    It is more than a bit selective and disingenuous to simply note the assets the government liquidated, while ignoring the other assets the government actually created (i.e. the surpluses they saved in the Future Fund once debt was paid down).

    The Kouk is an ALP hack, not a serious financial commentator.

  3. Samuel J

    The Kouk is going to be appointed as one of the Commissioners of the Productivity Commission (that’s my prediction anyhow).

  4. Carpe Jugulum, HenchCritter VRWC, Mighty Thews Inspector

    You couldn’t possibly mean that alberscreechy ripped off someone elses work.

    ‘Our’ alpbc would never do that. I’m sure mediawatch will be all over it.

  5. Gab

    What The Kouk has done is revalue the $16 billion in real terms in 1996 dollars. But the face value of the debt is what gets paid back – $16 billion.

    That’s very dishonest and misleading. So if Mr Kouk borrowed money ten years ago, he thinks he has to pay back the 2003 principal revalued to 2013. Hey, he can borrow money from me anytime, with interest calculated on an annual revalued principal.

  6. Samuel J

    Also, doesn’t this show plagerism. The Don Kelly para is basically identical to the Kouk’s and he hasn’t cited the source.

  7. Samuel J

    The debt ‘inherited’ by Hawke from Fraser is actually driven by Whitlam government policies.

  8. harrys on the boat

    Good work, sinc. Another reason to privatise and put the money towards the NDIS!

  9. lem

    Sinclair Davidson, I shake my head.
    “You are a slow learner, Winston.”
    “How can I help it? How can I help but see what is in front of my eyes? Two and two are four.”
    “Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.”
    ― George Orwell, 1984

  10. H B Bear

    Using The Kouk’s “analysis” surely Gillard’s “John” debt would go down if he didn’t get his promised bonus?

    This Labor economics is pretty straight forward. Problem solved.

  11. Tom

    Great get, Sinc!!! I would love to be able to trace the email chain that gave Alberscreechy that disinformation; I’m 90% sure it would have included the PMO media unit and Jock McSporran. The idea that Alberscreechy’s bullets weren’t loaded for her by a helpful government sycophant in Canberra is laughable. Just like the zombie garbage she used last night to talk over George Brandis.

  12. Tator

    Could one of the economics gurus here explain to me why are we looking at the $16 billion debt at the end of the 83/84 year when Hawke won the election in March 1983 therefore is responsible for the budget for 83/84 as the Budget is normally brought down in mid May.
    Looking at the historical budget data and Hawke increased spending by .9% of GDP when his revenue dropped .6% of GDP so it nearly doubled the deficit and increased the debt to $16 billion

  13. sunshine

    Our small national debt is only a potential problem if we spent the money unwisely . Unwise = welfare for those who dont need it . Wise = infrastructure

  14. lem

    Tator, I refer you to my last post. Sanity will come if you accept the logic.

  15. Splatacrobat

    Sinc, Will you send a copy of this to the newly created fact checking unit at the ALPBC and media watch?

    It would be nice to read their reply.

  16. blogstrop

    Hawke and Keating (and the rest of Labor) were in power from 1983 to 1996, 13 years. They couldn’t pay that back?
    The Howard/Costello machine had more to deal with and were in for only 11 years. They delivered.

  17. dover_beach

    So, it looks like we have prima facie evidence of tendentious lies being disseminated as fact for the furtherance of Leftism. Good to know that soon such utterances will attract a fine and/or a term of imprisonment in short order.

  18. Pedro

    The other thing that shits me, and we’re getting it again about the structural deficit, is the idea that any level of debt is the responsibility of the previous govt when hawke and keating had 13 or so years and budgets to do things about it. After that period they own the debt.

  19. H B Bear

    Kouk “I’d like to repay my mortgage”

    Bank “Certainly. That will be $800,000.”

    Kouk “That’s outrageous. I’ve banked with you for 12 years”

    Bank “Well you borrowed 80% of the house value and we’ve revalued it to 2013 dollars.”

  20. Tom

    Our small national debt is only a potential problem if we spent the money unwisely .

    Sunshine, Australia’s “small national debt” is reckless and unprecedented. The national borrowing limit had to be extended four times to accommodate it. It’s nearly 75% of annual outlays; six years ago it was zero and there was money in the bank. It has effectively destroyed the federal government’s ability to borrow money for the foreseeable future, while every household in the country is being forced to pay around $40 a week just to service the debt. It’s not magic money. It’s ours. You will eventually understand that when you get a job and have to pay tax.

  21. C.L.

    Destroyed.

    Leaving aside the economics beclownment… how does Alberici keep her job after this?

  22. C.L.

    The other thing that shits me, and we’re getting it again about the structural deficit, is the idea that any level of debt is the responsibility of the previous govt when hawke and keating had 13 or so years and budgets to do things about it. After that period they own the debt.

    Yes.

  23. Warwick

    Similarly, the claim that the practical limit of taxation is 25 per cent of national income is now being attributed to Keynes. I seem to recollect that it was made first by Colin Clark.

  24. MiltonG

    An Alberici/Kouk inconsistency:

    None of the debt inherited by Hawke and “carried through” to Howard was reduced by the Hawke/Keating asset sales. But all Howard asset sales were assigned to reduce debt.

  25. manalive

    The debt ‘inherited’ by Hawke from Fraser is actually driven by Whitlam government policies …

    Quite so, and if it hadn’t been for the Fraser government’s decision to block supply, Whitlam would probably have added $4b ($26b today) to the national debt borrowed from the Middle East via a shady middle man.

  26. sunshine

    Sunshine, Australia’s “small national debt” is reckless and unprecedented.

    Very comprehensive Tom . The American Politifact fact checking service is starting here soon (I think) . I wonder what they will have to say about all this 1 + 1 = 3 stuff.

  27. Tom

    I suspected you were impervious to information, Sunshine.

  28. Neil

    The man is insane. We need more debt according to Kouk

    http://www.abc.net.au/lateline/content/2013/s3751658.htm

    They’re AAA rated they’re as good as gold. The problem with the Australian level of gross debt now and this is the Basel three requirements for looking after banks in the post GFC world is we don’t have enough debt

    How much does debt does Kouk think is enough???

  29. brc

    Surely they realise that all this furious re-authoring of history to try and blame Howard for paying down debt just highlights the fact that they have created unprecedented amounts of National Debt?

    I mean, the argument they are trying to make is that black is white. Howard paid down debt. Hawke and Keating did not. Gillard, Swan and Rudd have massively expanded debt for no apparent purpose.

    No amount of history re-authoring is going to change these basic facts. The fact they are even trying is a damning admission they realise how bad it looks.

  30. lem

    brc, really…

    “He who controls the past controls the future. He who controls the present controls the past.”
    ― George Orwell, 1984

  31. Leigh Lowe

    So ….. If it was all attributable to Hawke/Keating and Fraser, the next time Fraser pontificates about whatever soft-left issue du jour he is on about, I hope the ABC says “Fuck off Malcolm. We can’t afford it because of the money you pissed away”

  32. Leigh Lowe

    The major privatisations that I can recall are ……..

    Qantas ….. 1993 (Keating)
    CBA …. Three tranches between 1991 and 1996 (Keating)
    Telstra ….. Three tranches between 1997 and 2006 (Howard)

    What ere the relative values and why does Kouk not belt Keating for not retiring debt with the proceeds of CBA and Qantas?

  33. Andrew

    The Kouk is a partisan hack. I say we look to put a restraining order on him leaving his house or touching a device with internet.

  34. Andrew

    Many of the asset sales over the Howard Government were actually in part used as expenditure for other projects as well, which should be noted in such a discussion.

  35. lem

    Andrew, now we are talking.
    Restraining orders.

  36. blind freddy

    Leigh
    CSL 1994 IPO $2.3o

  37. Milton von Smith

    If we let these Labor turds keep going they will eventually pin Gillard’s debt on Governor Arthur Phillip

  38. Bazza

    Isn’t there TV political journalists (Speers, Cassidy) who could interview this wood duck and challenge his take on his fiscality and in particular this little gem he has come up with. These two present themselves as the leading electronic political commentators. It would allow them to display their fiscal acumen and their unbiased approach to their job.

  39. Neil

    Many of the asset sales over the Howard Government were actually in part used as expenditure for other projects as well, which should be noted in such a discussion.

    Peter Costello most probably does not agree

    http://www.treasurer.gov.au/DisplayDocs.aspx?pageID=003&doc=../content/pressreleases/2001/020.htm&min=phc

    The Commonwealth accounts do not include the proceeds of financial asset sales, such as Telstra, in the bottom line. They have not included the proceeds of financial asset sales in the bottom line since the defeat of the Labor Government in March 1996…………..The Government uses the proceeds of asset sales to write-down debt…….Even worse is the possibility that Labor, after five years in Opposition has not yet understood how the Commonwealth accounts treat asset sales.

  40. Andrew

    Very good pickup Neil.

  41. What ever it takes

    When the ship is sinking, it’s every man or women on deck! Heck, polishing turds is what Labor’s economics advisers major in.

  42. Pingback: Plagiarism at the ABC … | bobmcgee

  43. Carrie

    I read somewhere that Peter Costello sold off all of Australia’s gold reserve. Is this correct and what has been the result of that with the rate the price of gold has soared? How much was it? Can anyone confirm/comment on this?

  44. Pingback: Who said that first? at Catallaxy Files | Cranky Old Crow

  45. Jazza

    So what is the gullible female’s real point? Is it that debt can be attributed to whatever Conservative PM comes along even if it “skips” a period of a Labour PM?
    As I read it she makes no mention–nor do the others using Kouk’s lines–of the Labour PMs who set up the debt or added to it along the way, she just takes “debt”,that largely came from the Whitlam years, from the time of Fraser’s election loss and skips it over Hawke to lob it on Howard’s shoulders,but somehow it manages to be added to or subtracted from to make any Conservative pay down seem easy.
    True leftie sycophancy gone haywire and all done with a straight face!

  46. The other myth is that Howard/Costello would have left their policies unchanged when a deficit loomed,which of course they wouldn’t.

  47. Monkey's Uncle

    It has already been mentioned, but the kouk also ignores the asset sales that occurred during the Hawke and Keating governments. So he criticises the Howard government for paying down debt with asset sales. But he ignores the fact that during the life of the Hawke and Keating governments they managed to both sell assets and increase debt.

    What a tosser!

  48. dover_beach

    The other myth is that Howard/Costello would have left their policies unchanged when a deficit loomed,which of course they wouldn’t.

    But its even worse than that. This government is adding massively to spending even as their income prospects are deteriorating drastically before their eyes.

  49. Monkey's Uncle

    If he is going to subtract a portion of the Keating government debt that was inherited from the Fraser government, surely it would also be fair and consistent to subtract from the Fraser government debt the proportion of that debt that was inherited from the Whitlam government.

    According to the Kouk, when a Coalition government inherits debt from a Labor government the entire debt becomes the Coalition’s responsibility. But if a Labor government inherits debt from a Coalition government, it remains the Coalition’s responsibility even after 13 years of Labor government. This bloke is a damn genius!

    It is hard to believe that people would pay good money for advice from a clown like this.

  50. Jamus

    This Politifact worries me. Who is in control of it – the ABC? Can’t see it being used to check out the ALP, but sure as hell it will be used to constantly hit TA over the head?

  51. JohnA

    lem, Gilbert & Sullivan did it long before Orwell

    ““Sometimes, Winston. Sometimes they are five. Sometimes they are three.”

    Princess Ida:

    In Mathematics, Woman leads the way;
    The narrow-minded pedant still believes
    That two and two make four! Why, we can prove,
    We women – household drudges as we are –
    That two and two make five – or three – or seven;
    Or five-and-twenty, if the case demands!

    Which could be why women do so well in accounting and economics…
    :-)

  52. Craig Mc

    He wasn’t any smarter in 2009.

    I know economics is the dismal science, but how dismal do you have to be at it before people treat you like Thomas Bouch?

  53. James

    I think someone is also forgetting the $22.8bn in cash surplus and $60bn in the Future Fund. So that’s an extra $84.8bn which wasn’t accounted for in the sloppy Kouks numbers!

  54. Emma Alberici

    I’m happy to explain the numbers for you. Firstly, see here to understand what is, a fairly simple calculation:

    http://www.budget.gov.au/2012-13/content/bp1/html/bp1_bst10-04.htm

    In 1983 when Bob Hawke took office, net Govt debt stood at $16 billion. This is what I and others refer accurately as debt inherited from the Fraser Government. GDP in 1983 was $58.5 billion which made the debt, as a proportion of GDP, equal 7.5%. When John Howard won the election in 1996, net Government debt stood at $96 billion. If we take that original $16b from the Fraser years as a proportion of the size of the economy in 1996 we come to the figure of $41 billion (which I rounded down to $40b)

    $556b x 7.5% = $41b

    This is how I (and others) arrive at the “inherited debt” figure.

    My piece tried to bring context to the economic debate. It is important that figures, when compared between years, are given their proper context, that is, translated in to current dollar terms. Afterall, debt is paid back using current income.

  55. Neil

    The scary thing Emma is that you and others believe that your analysis is correct when clearly the amount of debt you inherit is a total amount rather than a % of GDP figure.

    Indeed the best evidence that you don’t actually want to bring “context” to the economic debate is that if you did you would have converted the 96bill of debt the Howard government inherited into 2007 dollar terms and compared it to the value of asset sales in 2007 dollar terms. Of course this analysis would also have been flawed but at least it would have been consistent.

    Of course I understand you and the others who sourced this figure didn’t do that though as it didn’t suit your political ends.

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