Howard denies waste, takes credit for fiscal health

THE former prime minister, John Howard, has rejected the charge that his government spent wastefully, saying ''the reason Australia dodged the global downturn was due to the strong fiscal position of the Howard government''.

Mr Howard was responding to an International Monetary Fund study that found Australia's most needlessly wasteful spending took place under the John Howard-led Coalition government rather than under the Whitlam, Rudd or Gillard Labor governments.

The report examined 200 years of government financial records across 55 leading economies and identified only two periods of Australian ''fiscal profligacy'' - both during Mr Howard's term in office - in 2003 at the start of the mining boom and during his final years in office between 2005 and 2007.

Mr Howard said government spending as a percentage of gross domestic product declined during his term.

''According to none other than the governor of the Reserve Bank, Australia's fiscal position is the envy of the developed world,'' the former prime minister's spokesman said.

But the Grattan Institute economist Saul Eslake said Mr Howard's statement about spending declining as a percentage of GDP, while technically true, was irrelevant and misleading. Mr Howard rode two booms - in mining and household spending - and as a result raked in ''extraordinary'' amounts of income during its last two terms.

During that period the Howard government had increased spending ''in real terms'' at a faster rate than any other government since the Whitlam years.

But Mr Eslake added he was ''gobsmacked'' the IMF did not judge Gough Whitlam's government as profligate.

''That they didn't regard the 40 per cent plus increase in government spending in 1974 to 1975 under the Whitlam government as profligate … [that's] far worse than anything the Howard government undertook,'' he said.

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