Lessons from the past – the Howard and Costello years

Further analysis has been offered by Alan Kohler and News Weekly. But for most of the last ten years this was effectively covered up.

The sixth was squandering the proceeds of asset sales and the vast rivers of revenue from booming industries by handing it out to middle and high income earners as election bribes.

According to a Treasury report in 2008, between 2004 and 2007 the mining boom and a robust economy added $334 billion in windfall gains to the budget surplus. Of this, the Howard Government spent, or gave away in tax cuts, $314 billion, or 94 per cent.

Sales of businesses yielded another $72 billion. And yet Australia's cash in the bank when Howard left office was a low 7.3% of GDP.

Several other countries were much higher: Chile 13.0%, Sweden 17.4%, Finland 72.5%, United Arab Emirates 100.8% and Norway 138.8%.

Constant crowing about the strong surplus Mr Costello left seems inappropriate. Even Algeria [20.9%], Bulgaria [10.2%] and Kazakhstan [14.4%] had better books in 2007 than Australia.

Peter Hartcher summarised the situation succinctly in 2009:

"Yet the truth is that tax revenues were gushing into the Treasury so powerfully that the vaults were bursting - Howard and Costello could deliver surpluses and still spend rashly and irresponsibly.

"Howard spent $4 billion on his own 'cash splash' in his final budget, and promised another $4 billion in his election campaign, in the middle of a boom. In other words, there was no economic rationale whatsoever. On the contrary, Howard's handouts were helping to overheat the economy. These payouts were economic vandalism and political bribes designed to buy votes."

The Coalition will continue to declare, "You can trust us with the economy. We ran things well before."

The evidence, however, suggests they didn't.