Australia’s current debt position – update December 2012

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Australia’s current debt position – update December 2012

Posted 18/12/2012 by Alan Payne

In recent times a lot has been spoken about Australia’s debt level. It has been a major political issue since the lead up to the last federal election and at times has dominated the political arena. This article updates data published in earlier FlagPosts which reported on Australia’s current debt position at the time they were published. 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 definitions of gross and net debt the reader is referred to the first FlagPost on Australia’s current debt position.

Chart 1 below presents Australia’s current foreign debt for the September quarter 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 70.5 per cent of Australia’s gross and net foreign debt respectively. Whilst gross debt for the private sector has remained constant since the March 2012 quarter, net debt has decreased 1.4 percentage points.

Chart 1

The top chart Australian gross foreign debt shows Private $1.1 trillion or 75.4% of GDP, Public-non government $93.6 billion or 6.3% of GDP, Public government $213.3 billion or 14.4% of GDP.


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 14.4 and 12.4 per cent of Gross Domestic Product (GDP) respectively, an increase 0.2 percentage points in both gross and net foreign debt since the March quarter 2012. 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 20.7 and 14.9 per cent of GDP respectively, an increase of 0.3 and 0.6 percentage points respectively since the March quarter 2012. 

Although private sector gross foreign debt has remained constant and the net foreign debt has decreased since the March quarter 2012, the public sector gross and net foreign debt have increased. This has resulted in an increase of 1.8 percentage points in the total gross foreign debt (aggregate of the public and private sectors) as a proportion of GDP, which stands at 96.1 per cent of GDP at September 2012. Australia’s total net foreign debt has decreased by 0.5 percentage points as a proportion of GDP, which stands at 50.5 per cent of GDP at September 2012.

Chart 2 presents the national government (the Commonwealth) gross and net debt position for years spanning 1970–71 to 2015–16. Data for 2012–13 and onwards are estimates based on expected GDP and debt growth as outlined in Budget Paper No 1 2012–13 and the Mid-Year Economic and Fiscal Outlook. The national government gross and net debt currently (2011–12) stands at 18.3 and 10.0 per cent of GDP respectively. National government gross and net debts have increased 0.1 and 4.0 percentage points respectively since 2010–11. These debt figures are comprised of all foreign and domestic liabilities, including financial and non-financial corporations, for the national government.

Chart 2
The top chart shows Australian government gross debt, 1971-2016 (Percentage of GPD). The bottom chart shows Australian government net debt, 1971-2016 (Percentage of GPD).
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, Mid-Year Economic and Fiscal Outlook 2012–13 and the Parliamentary Library.

To gain an insight into what this actually means for the national government’s overall financial health, hence the 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 positions were at the end of each term of government, except for the Rudd/Gillard period where the most current data has been reported.

Chart 3
et debt, at the end of successive governments and Gross debt, at the end of successive governments (Whitlam, Fraser, Hawke/Keating, Howard, Rudd/Gillard).
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, Mid-Year Economic and Fiscal Outlook 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 with other countries. The term general government used here is from the International Monetary Fund and includes lower levels of government as well as the national government. Chart 4 clearly shows that Australia’s general government gross and net debt, which currently stand at 24.2 and 8.2 per cent of GDP respectively, are much lower than those of other countries.

Chart 4
International comparison of gross debt, % GDP, 2011 and International comparison of net debt, 2011 (shows a low Australian debt level in comparison to other nations)
Source: International Monetary Fund, World Economic Outlook Database, October 2012.

Combining this with historical data, it is clear that Australia’s current debt position, in both gross and net terms, is still low despite the increases documented above.

Comments

  • 21/01/2014 2:14 PM
    Flabmeister said:

    Is it possible to reproduce chart 4 showing foreign debt for the private sector? Martin

  • 21/01/2014 2:15 PM
    Alan Payne said:

    It would be nice to reproduce chart 4 for the private sector but that would go beyond the scope of the FlagPost.

  • 21/01/2014 2:15 PM
    Anonymous said:

    Would also be nice to see chart 3 against net foreign debt, which is what the Liberals crucified Labour for with the 'debt truck' in 1996.

  • 21/01/2014 2:15 PM
    Alan Payne said:

    The Library has previously published this data in Economic indicators: Whitlam to Rudd/Gillard (April 2011 update). An update to 2012 for this publication is currently being finalised.


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