Australia’s current debt position – update July 2012

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Australia’s current debt position – update July 2012

Posted 1/08/2012 by Alan Payne


In recent times a lot has been spoken about Australia’s debt level. This was no more evident than in the lead up to the last Federal election where it seemed to dominate debate. This article updates the data published in an earlier FlagPost titled Australia’s current debt position. I therefore intend in this article to report the latest available data on Australia’s level of debt for both the public and private sectors in gross and net terms. For more information on gross and net debt the reader is referred to the earlier FlagPost.

Chart 1 below presents Australia’s current foreign debt for the first quarter of 2012 in gross and net terms for the public and private sectors. From Chart 1 it is clear that the private sector is still the largest contributor to Australia’s foreign debt. The private sector is responsible for 78.4 and 71.9 per cent of Australia’s gross and net foreign debt respectively. This is a decrease of 4.4 and 7.8 percentage points of gross and net foreign debt respectively since December 2010.

Chart1 


General government, as defined by the Australian Bureau of Statistics (ABS), is an aggregate of all levels of government including local, state and national governments. The general government gross and net foreign debt currently stands at 14.2 and 12.2 per cent of Gross Domestic Product (GDP) respectively. This is an increase of 4.2 and 4.5 percentage points in gross and net foreign debt respectively since December 2010. The total Australian public sector (including general government, and financial and non-financial corporations controlled by governments) gross and net foreign debt currently stands at 20.4 and 14.3 per cent of GDP respectively, an increase of 4.3 and 4.5 per cent of GDP respectively since December 2010.

Although private sector gross and net foreign debt has decreased since December 2010, the public sector gross and net foreign debt has increased. This has resulted in Australia’s total gross foreign debt (aggregate of the public and private sectors) as a proportion of GDP increasing by 1.0 percentage points since December 2010 to 94.3 per cent of GDP. Australia’s total net foreign debt as a proportion of GDP has increased 2.6 percentage points since December 2010 to 51.0 per cent of GDP.

Chart 2 presents the national government (the Commonwealth) gross and net debt position for years
spanning 1970–71 to 2015–16. Data for 2011–12 and onwards are estimates based on expected GDP and debt growth as outlined in Budget Paper No 1 2012–13. The national government gross and net debt currently (2010–11) stands at 13.7 and 6.0 per cent of GDP respectively. National government gross and net debt has increased 2.3 and 2.7 percentage points respectively since 2009–10. These debt figures are comprised of all foreign and domestic liabilities, including financial and non-financial corporations, for the national government.

Chart 2

Sources: 1901 to 1982, Wray Vamplew: Australians, Historical Statistics, Tables ANA 119-129, GF 8-14, GF 25-23, Fairfax, Syme and Weldon, Sydney 1987, ABS, National Accounts, National Income, Expenditure and Product, 2011, Cat. No. 5204.0, RBA online statistics database, Table E10, Budget Paper No 1, 2012-13, and the Parliamentary Library.

To gain an insight into what this actually means for the national government’s overall financial health, hence its current debt position, it is helpful to compare these data with previous governments and that of other countries. Chart 3 presents gross and net debt for successive national governments spanning Whitlam to the current Rudd/Gillard Government with red indicating Labor governments and blue representing Coalition governments. The levels of debt recorded in Chart 3 reflect what the gross and net debt position was at the end of each term of government, except for the Rudd/Gillard period where the most current data has been reported.

Chart 3

Sources: 1901 to 1982, Wray Vamplew: Australians, Historical Statistics, Tables ANA 119-129, GF 8-14, GF 25-23, Fairfax, Syme and Weldon, Sydney 1987, ABS, National Accounts, National Income, Expenditure and Product, 2011, Cat. No. 5204.0, RBA online statistics database, Table E10, Budget Paper No 1, 2012-13, and the Parliamentary Library.
In gross and net terms the current Rudd/Gillard government has recorded the second largest debt position of all previous governments over the reporting period with only the Hawke/Keating government experiencing a higher debt position.

Chart 4 presents general government gross and net debt for Australia in 2011 compared to other countries. The term general government used here is from the International Monetary Fund and includes all lower levels of government. Chart 4 clearly shows that Australia’s general government gross and net debt, which currently stand at 22.9 and 7.8 per cent of GDP respectively, are much lower than those of other countries.

Chart 4
Source: International Monetary Fund, World Economic Outlook Database, April 2012.
Combining this with historical data, it becomes clear that Australia’s current debt position, in both gross and net terms, is still very low despite the increases documented above.

Comments

  • 21/01/2014 2:45 PM
    Martin Butterfield said:

    The political "debate" certainly focuses on public debt. However it would be interesting to see charts equivalent to 2,3 and 4 for total debt if that is possible. Martin

  • 21/01/2014 2:45 PM
    Alan Payne said:

    Hi Martin, I agree it would be interesting to collate the data, and reproduce Charts 2, 3 and 4 to show total debt however it was my intention in this brief article to just highlight the central (national) government’s debt position.


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