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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.

2 comments:

  1. This is a great example of why New Zealand needs an impartial fact checking service. I know one is being set up, but there's some skepticism about how impartial it will be given that its founder is a Green Party member (though he is trying to be open about that affiliation).

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    1. Unfortunately this is the sort of silly claim that will catch on. Not because it's true or anything, but it's memorable. It plays to people's fears (the government being unable to pay off its debts), it contains a memorable person (Muldoon) and lays the blame on the incumbents...

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