IMF Study Supports PM Julia Gillard Statement that Howard Government Squandered Australia’s Resources on Quick Fixes

On the eve of her second trip to China, Prime Minister Julia Gillard blamed on Thursday the former Howard coalition government that lost to Labor in 2007 for squandering the nation's resources by spending government income on quick fixes instead of investing it into the future.

Ms Gillard's contention that the Howard government is to be blamed for using up Australia's resources is backed up by an International Monetary Fund (IMF) study released in January 2013.

"There should be no false nostalgia for the days that preceded the global financial crisis - the days when our household savings ratio hit zero, when easy credit and rapidly rising terms of trade created a sugar hit that could never be sustained," Nine News quoted Ms Gillard.

"Even then, with rivers of gold flowing into federal coffers, a priceless opportunity was squandered," she added.

Ms Gillard will be in China for five days to meet President Xi Jinping and Premier Li Keqiang to discuss deepening defence and security ties and opening new markets for Australian industries.

She also debunked the Coalition's criticism of Labor's strategy to deal with the fallout from the 2008 global financial crisis that resulted in higher government debt.

"Anyone who pretends the debt should not exist is effectively denying the GFC happened ... anyone who pretends the GFC didn't happen should be treated as the same king of amusing curiosity as those who believe the earth is flat.

In an assessment, the IMF said based on a study of 200 years of Australian government financial records it pinpointed to two periods of fiscal profligacy in Australia during Mr Howard's term from 1996 to 2007. The first instance occurred in 2003 at the beginning of the mining boom and the second during his last two years in office between 2005 and 2007.

The IMF said a number of spending decisions beyond $1 billion grew from just one in the first budget to nine in the last year. At the same time, proportion of savings measure dropped to 1.5 per cent at the end of the Howard term from one-third of budget measures at the start of his term.