John Howard and Peter Costello unleash on current crop of leaders on both sides of the political divide as Australia struggles through cost of living crisis
Former political heavyweights John Howard and Peter Costello have slammed the financial mismanagement of the Albanese government as the nation battles through an ongoing cost-of-living crisis.
Speaking on the release of their government’s Cabinet papers from 2004, the one-time prime minister and federal treasurer gave the country’s current leaders – on both sides of the aisle – a bleak report card when it came to their handling of the national purse strings.
Former prime minister John Howard expressed concern over the deteriorating fiscal situation, stating the Budget was ‘out of control’.
He warned that, while there may not be an eminent risk to Australia’s credit rating, investors would be increasingly wary.
‘There may be no immediate risk to your credit rating, but eventually it will be,’ Mr Howard told The Australian newspaper.
Mr Howard noted the current government’s acceptance of a long-term debt future contrasted with former Labor PM Bob Hawke prioritising Budget surpluses and reducing government spending.
Australia’s longest-serving treasurer Peter Costello, who delivered 11 consecutive Budget surpluses, criticised the current Treasury department for ignoring taxpayers.
‘You cannot rely on the Treasury any more to try and defend taxpayers,’ Mr Costello said.
Mr Howard (pictured left) and Mr Costello (pictured right) gave a bleak report card on the current government’s handling of the nation’s purse strings
Prime Minister Anthony Albanese was singled out for harsh criticism
‘They’ve thrown in their lot with this big government, big spend. So, even the Treasury as an institution, I think, has been demeaned by this process.’
Mr Howard criticised the economic management of his Labor successor Anthony Albanese and federal treasurer Jim Chalmers.
‘The current government made a terrible economic and also political error in having delivered a couple of surpluses and then not said, “We are going to do everything we can to keep it that way because we can’t afford (not to) at this difficult time for our economy”,’ Mr Howard said.
‘Maybe the government thinks the public don’t care. I think they are wrong.’
Mr Costello agreed and blamed both parties for the dire state of Australia’s balance sheet.
He said the Budget should have been returned to surplus following the required stimulus spending in 2008 and 2009 during the Global Financial Crisis and the 2020-21 pandemic.
‘What’s happening in Australia is that tax per capita is rising and spending per capita is rising even faster,’ Mr Costello said.
‘We are progressing to a higher-tax, higher-spend, higher-debt country and this is at the same time that we are becoming a less productive country.
Treasurer Jim Chalmers has been urged to encourage the nation’s productivity
‘If you ever want to recover productivity, you have got to do something about the growing tax burden and the growing spending burden. There are a lot of things that have contributed to the falling productivity in Australia, but that’s a big one.’
Mr Costello said while other nations had already lowered interest rates, Australia was yet to follow suit.
He attributed this delay to a government characterised by high spending and taxation, which has allowed the budget to revert to a deficit.
‘The rest of the world is in an easing cycle – the British, the Europeans, the Americans, the New Zealanders,’ he said.
‘Australia has not had any easing yet.’
Mr Costello laid the blame on government expenditure.
‘There is no doubt that the government expenditure has kept interest rates higher longer in Australia. If they had tightened spending in the last budget, or the one before it, we would be in an easing cycle now,’ he said.
Mr Howard and Mr Costello, whose government brokered a free trade deal with the US two decades ago, also expressed concern about incoming US president Donald Trump’s plans for 60 per cent tariffs on China and 25 per cent tariffs on goods from Canada and Mexico.
‘I am concerned to put it mildly, very concerned, about Trump’s talk about tariffs,’ Mr Howard said.
‘Trade has delivered millions of people out of poverty. Unilaterally imposing tariffs of that order of magnitude on countries willy-nilly is just bad for world trade and it’s bad for the world economy.’.
Mr Costello said he was not in favour of tariffs and they would not be good for Australia, which was given an exemption in 2018 on steel and aluminum during Trump’s first presidency.
‘It’s certainly, in my view, not in the spirit, if not the letter, of the free-trade agreement, and we should be doing everything we can to try and convince the Americans of that,’ he said.
The Albanese Government delivered two consecutive surpluses, the first since 2007 and the first for a federal Labor government since 1989.
But Treasury’s Mid-Year Economic and Fiscal Outlook forecast deficits from 2024-25 as falling iron ore prices reduced federal company tax revenue and saw gross government debt surpass $1trillion in coming years.
Reserve Bank of Australia Governor Michele Bullock has noted federal and state government spending, linked to transport infrastructure, was adding to inflation, which could delay the next interest rate cut.
