The Australian economics correspondent Adam Creighton has written that Australia has the worst debt control worst in G20 ($):
Australia has shown less control over spending than any advanced G20 nation since the global financial crisis eight years ago and has squandered the opportunity offered by superior economic growth to gain control over its budget deficit.
A damning study by the former head of the IMF’s budget division shows the deterioration in Australia’s debt almost matched that of Italy, one of the most troubled European economies, suffering a deep recession and a blowout in interest costs.
Nations that fail to control the growth in their debt are at risk of a crisis when interest rates eventually rise, warns the study published by the Peterson Institute for International Economics, a Washington DC think tank.
Australia’s debt-to-GDP ratio fell 9.8 percentage points in the eight years leading up to the financial crisis but surged 27.1 percentage points over the eight years since the end of 2007, which was only slightly less than the average increase across Japan, Britain, the US, France, Germany, Italy, Canada and South Korea.
In principle, a government that is trying to cut debt should be keeping spending growth to no more than the overall rate of inflation, while revenue should be rising in line with nominal economic growth (the GDP plus inflation). The faster the growth, the quicker debt gets paid off.
However, the study shows Australia had instead used the best growth rate among G20 advanced nations to finance additional spending.
It shows Canberra increased real spending more than any of eight other advanced G20 governments since the end of 2007 — and by almost by double the average increase.