Waste in the Howard Years - Really?

I was reading a blog the other day (one particular site that is popular with the Left wing political junkies) and one of the commentators was stating that the Howard years were alot more wasteful than first thought. The reason he claimed that was due to the fact that Howard retired $96 billion in debt by selling off assets worth $240 billion. Hence a wastage of  $144 billion. Is that really true?

Well firstly, lets look at the asset sales. From the www.finance.gov.au website, we can find all asset sales from when Howard was in power (Dec 1996- Jan 2007). This includes three IPO's (Telstra 1,2 and 3) and 20 trade sales of government companies and assets (the airports etc). In Nominal terms, this works out to be 56 billion. However, if you apply real measures to the asset sales (by using 1996 June CPI as the base year, and use the June CPI for subsequent years to calculate the deflator), you do get the total real revenues from asset sales to be $240 billion (most of it came from the Telstra 1 IPO that generated 131.7 billion in real terms, due to the low inflation rate in 1997).

However, it is incorrect to state that as $240 billion is more than $96 billion there is waste. The Left commentator was comparing revenue (from the income statement) with debt level (which is a balance sheet item). What he should be doing is then calculating the real value of the debt repayments each year and then comparing with the incomings.

Using statistics from the MYFE in the budget papers in 2011/2012 (which lists historical net debt levels since 1996) and using the difference in debt levels from year to year as the repayment figure, I calculate debt repayments of 141 billion (in nominal terms) between 1997 and 2007. Applying the real measures, using the same CPI's and base year as previous, I calculate debt repayments of $318 billion.

So really, no major wastage from the Howard years. Just goes to show, be careful what you read on the internet.