Australian Economy

Katy Gallagher says the government has inherited the worst set of budget books in history. Is that correct?

The claim

As the Labor Party emerged victorious from the election, the new government quickly turned its attention to the state of the economy.

Six days after being sworn in as Minister for Finance, Katy Gallagher told ABC TV’s Insiders: “We have inherited the worst set of budget books”.

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Watch David Speers interview Senator Gallagher on Insiders

Does Senator Gallagher’s claim stack up? RMIT ABC Fact Check investigates.

The verdict

Senator Gallagher’s claim is wrong.

On two key economic indicators, debt and deficit, previous incoming governments have inherited worse “budget books”.

The only fair way to make historical comparisons is to take into account the size of the economy and measure the indicators as a proportion of GDP.

On this basis, gross debt levels were historically much higher for previous incoming administrations than the figure faced by the new Labor government.

Similarly, the deficit as a percentage of GDP is not the worst on record.

A pile of Australian dollar coins on top of several bank notes
Other incoming governments have inherited higher levels of debt and deficit from their predecessors.(AAP: Joel Carrett)

The claim in context

Senator Gallagher made similar claims during the election campaign which provide additional context.

Responding to a question on RN Drive on April 12 about why the Labor Party had ruled out reviewing the JobSeeker rate she said: “We are going to inherit the worst set of budget books that any incoming government would have ever inherited.”

“We can’t undo all the damage that has been done under this government and we do have to accept that we have a budget with significant deficit and lots of debt that we have to manage going forward if we were fortunate enough to be elected.”

Two days later, she told RN Breakfast that if Labor won the election it would face “the most diabolical set of budget books that any opposition trying to form government would inherit”.

On this basis, Fact Check has assessed her claim on the key economic indicators of debt and deficit and has compared the latest figures with the legacies left to incoming governments since federation in 1901.

A familiar complaint

Senator Gallagher isn’t alone in asserting her predecessors bequeathed an unenviable record.

In 2015 Fact Check assessed a claim by then Liberal deputy leader Julie Bishop that the Coalition had been left with the “worst set of financial accounts inherited by any incoming government in Australia’s history”.

Fact Check found that claim to be wrong.

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