McGowan figures just don’t add up

May 8, 2022 | State News, Steve Thomas MLC

The Shadow Treasurer Dr Steve Thomas has today called into question comments attributed to the Premier and Treasurer Mark McGowan in the media today.

“Apparently Mark McGowan stated that “since coming to power in 2017, his Government has saved $2.5 billion in interest payments by reducing debt”” Dr Thomas said.

“It’s a bold claim in black and white in today’s state-wide newspaper”.

“When McGowan became premier in 2017 General Government net debt – that is that attributed only to Government departments and not trading enterprises like Water Corp and Western Power – was $19.35 billion in the February 2017 Pre-election Financial Projections Statement .”

“Under the same document he inherited Total Public net debt of $33.25 billion.”

“In the most recent economic data we have, the December Quarterly Financial Results Report, at the 31st of December 2021 General Government net debt is listed as $21.6 billion and Total Public Service net debt is listed as $32.6 billion.”

“So if you don’t include Government trading enterprises debt has gone up by $2 billion under Premier McGowan, but if you do it has gone down by $0.6 billion.”

This means any reduction on interest payments is purely down to interest rate reductions, over which Mr McGowan has no control.”

“Under either measurement debt has barely changed since 2017, making claims of massive interest savings an absolute nonsense!”

Dr Thomas then examined the forward projected debt level of the Pre-election financial statements released in February 2017, which indicates forward estimates to 2020 that suggested General Government net debt would reach $26.8 billion by 2020 and Total Public Sector net debt would hit $41.1 billion.

“That suggests that Total Public sector debt in the forward estimates might potentially have risen by $9 billion over the three years to 2020, but obviously with a massive iron ore boom, higher state taxes, and the GST fix additional debt was not needed.”

“The only one of those I am prepared to give Mr McGowan credit for are increased taxes” Dr Thomas said.
“However, even with this fake accounting, Mr McGowan’s claim is questionable.”

“To make the claim by the Premier who is also the Treasurer add up properly he would have to claim fake interest savings of 3% on the extra imaginary $9 billion he didn’t have to borrow for another decade without repaying any of the principal of it.”

“3% of $9 billion is $270 million, so it would take ten years of interest only payments to add up to his $2.5 billion savings claim, and that would be paying interest only.”

Budget papers and Treasury Corp show Mr McGowan is paying between 2% and 3%.

Gross state debt, whether General Government or Total Public Service has gone up $6 billion under the watch of Premier McGowan, but this new total is $5 billion less than the highest level predicted on the settings of the previous Government in the 2017 Pre-election financial statements.

“If the Premier/Treasurer is using those figures his claim is even more ridiculous!”

“His claim just does not add up” Dr Thomas said.

“Perhaps he worked it out using the high interest rates we will be paying in years to come” Dr Thomas said. “Perhaps he projected interest savings ten years into the future on money he didn’t have to borrow!”

“In the spirit of sportsmanship, I am prepared to acknowledge that debt under the McGowan Government has not gone up, and one measure is slightly though not significantly down.”

“But that is thanks to massive revenue increases, especially iron ore royalties, not fiscal management or reductions in spending.”

“Seriously, you wouldn’t think you could make this stuff up. Or could you?”