Sunday, 11 May 2014

Mum! Mr. Eleventy is trying to scare me again!

This was Australian Treasurer Joe Hockey tweeting at 3.41pm on 6 May 2014:

Sixteen per cent! *shock, horror, gasp* Must agree with every funding cut, tax increase or punitive welfare measure in the Abbott Government's first federal budget!

Or do I?

What is this 6-year projection up to 2018 actually telling me about the state of national economies in those countries included on this graph.

Take the USA for instance, which Joe Mr Eleventy Hockey appears to be saying is doing so much better than Australia.

In 2013 in US dollar terms federal government spending totalled $3,454.6 billion, federal debt reached $16,719.4 billion and its gross domestic product (GDP) was $6,618.6 billion. Therefore US federal government spending was 52.1% of GDP and gross debt was 100.6% of the country's GDP. Based on White House data, US net debt was 28.5% of GDP and the federal deficit was 6% of GDP in that year.

While in Australia in 2013-14 federal government spending totalled $409 billion, gross commonwealth government debt reached $311 billion (on 31 March 2014) and our gross domestic product (GDP) was $1,577 billion. Therefore federal government spending in 2013-14 was 25.9% of GDP and gross debt was an est.19.7% of GDP (as of 31 March 2014)According to the current Minister for Finance, federal net debt will be an est. 12.4 % of GDP and Treasurer Hockey's own MYEFO projects a federal 
deficit of 2.98% of GDP for the 2013-14 financial year.

Clearly Mr, Hockey's tweeted graph means little when one compares the word's largest economy with Australia's better economic profile. 

Muuuum! Make him stop!

Note: Australian data drawn from The Treasury, Dept. of Finance, Australian Office of Financial Management and Australian Bureau of Statistics.

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