Australian Economy

Anthony Albanese says debt and deficit have never been higher. Is that correct?

The claim 

As he vies to become Australia’s next prime minister, Opposition Leader Anthony Albanese has hit out at the Coalition’s economic record.

Speaking on Brisbane radio station 4BC, Mr Albanese claimed the Coalition government “hadn’t been governing in Australia’s interests”.

“People know that debt has never been higher, deficits have never been higher,” he said.

So, what do the history books tell us? RMIT ABC Fact Check investigates.

The verdict

Mr Albanese is wrong.

Historical data shows that debt and deficit, when measured against GDP, were higher in the years following the world wars when compared with current levels.

It is this measure economists use to make comparisons over time for debt and deficit, rather than nominal figures, which do not take into account the size of the economy.

Stack of several thousand dollars of Australian $50 notes showing Edith Cowan
The size of the economy needs to be considered when looking at historical debt and deficit.(ABC News: Nick Haggarty)

Heard it all before

Mr Albanese and his Labor colleagues have repeated variations of this claim many times during the election campaign.

Speaking at a doorstop press conference in Gladstone, Queensland on April 12, Shadow Treasurer Jim Chalmers labelled the economic record of Prime Minister Scott Morrison and Treasurer Josh Frydenberg “indefensible”.

“No government has taken more debt or bigger deficits to an election than this government is,” he said.

On The Guardian’s Australian Politics podcast, Mr Chalmers suggested that if Labor were to win the election, they “would be inheriting, factually, the worst set of books ever taken to an election by any government in the history of the Commonwealth”.

Katy Gallagher looks on as Jim Chalmers speaks at a lectern
Both Shadow Treasurer Jim Chalmers and Shadow Finance Minister Katy Gallagher have been making similar claims during the election campaign.(ABC News: Ian Cutmore)

Katy Gallagher, the Shadow Minister for Finance, similarly claimed Labor would “inherit the worst set of budget books that any incoming government would have ever inherited”.

Previous claims that one party had handed the “worst set” of financial books on record to a new government did not, however, come from Labor.

Back in 2015, Fact Check investigated an almost identical claim from then-minister for foreign affairs and deputy Liberal leader Julie Bishop, who said her government had “inherited the very worst set of financial accounts in Australia’s political history”.

Ms Bishop was found to be wrong.

“Large borrowings to finance Australia’s participation in World War I and World War II and the impact of the Great Depression led to much higher deficits and levels of debt than any government has experienced since,” Fact Check’s verdict on the claim stated.

Assessing the claim

Fact Check has used the same methodology to assess Mr Albanese’s claim as that used when Ms Bishop’s 2015 claim was investigated.

At that time, economists told Fact Check the best way to compare historical financial records was to take into account the size of the economy: in other words, analyse debt and deficit as a proportion of GDP.

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