Friday, 21 February 2014

"The biggest debt since Muldoon"

Recently Chris Hipkins claimed that the current government has run up "the biggest debt since Muldoon" referring to the size of the government's deficit. In terms of the absolute size of the debt, he's right. What the government owes today is significantly bigger than what the government owed in 1984 when Muldoon was voted out of office.

But in relative terms as a percentage of the economy, government debt has shrunk since then. Substantially. Here's a chart:

Source: Trading Economics
As you can see, debt was drifting downwards from the early 1990s, but ramped up again as a result of the recession and then Global Financial Crisis from 2007, and of course the Christchurch Earthquakes of 2010 and 2011. It's only recently that it's started to fall again.

While this isn't great news, it does refute the claim that the current government has run up the biggest debt since Muldoon.