Former political heavyweights John Howard and Peter Costello have lambasted the Albanese government’s financial incompetence as the country faces an enduring cost-of-living issue.

Speaking on the release of their government’s Cabinet files from 2004, the former prime minister and federal treasurer awarded the country’s current leaders – on both sides of the aisle – a poor report card on how they handled the national purse strings. Former Prime Minister John Howard expressed worry about the growing budgetary situation, saying the budget was ‘out of control’. He warned that, while Australia’s credit rating was not in jeopardy, investors would become increasingly concerned. ‘Your credit rating may not be at jeopardy right now, but it will be eventually,’ Mr Howard told The Australian newspaper.

Howard observed that the current administration’s acceptance of a long-term debt future contrasted with former Labour Prime Minister Bob Hawke’s emphasis on budget surpluses and reduced government spending. Australia’s longest-serving treasurer, Peter Costello, who generated 11 consecutive budget surpluses, has accused the current Treasury department of disregarding taxpayers. ‘You can no longer rely on the Treasury to defend taxpayers,’ Mr Costello said.

They’ve placed their support behind this large government, big spend. So, I believe this approach has demeaned the Treasury as an institution. Mr Howard criticized Anthony Albanese, his Labour successor, and federal treasurer Jim Chalmers’ economic management. ‘The current government made a catastrophic economic and political error by delivering a few of surpluses and then failing to say, “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 stated. ‘Perhaps the administration believes the people doesn’t care. I think they’re mistaken. Mr Costello concurred, blaming both parties for Australia’s poor balance condition. Advertisement

He stated that the budget should have returned to surplus after the required stimulus spending during the 2008 financial crisis and the 2020-21 pandemic. ‘What’s going on in Australia is that tax per capita is rising but spending per capita is rising even faster,’ Mr Costello said. ‘We are becoming a less productive country as we raise taxes, spend more, and incur more debt.

‘If you want to recover productivity, you must address the mounting tax and spending burdens. There are many factors that have led to Australia’s declining productivity, but this is a major one. Mr Costello stated that while other countries have already decreased interest rates, Australia was yet to follow suit. He ascribed the delay on a government known for high spending and taxation, which has caused the budget to revert to a deficit. ‘The rest of the world is in an easing cycle – the British, Europeans, Americans, and New Zealanders,’ he stated. ‘Australia has not seen any easing yet.’ Mr Costello placed the blame on government spending. ‘There is no doubt about the 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 administration negotiated a free trade agreement with the US two decades ago, both expressed alarm over incoming US President Donald Trump’s intentions to impose 60% tariffs on China and 25% duties on imports from Canada and Mexico.

‘I am disturbed, to say the least, by Trump’s discussion about tariffs,’ Mr Howard added. ‘Trade has lifted millions of people from poverty. Tariffs of that magnitude imposed unilaterally on countries are just harmful for global trade and the global economy. Mr Costello stated that he was opposed to tariffs and that they would be detrimental to Australia, which received an exemption on steel and aluminium in 2018 under Trump’s first presidency. ‘It is obviously not in the spirit, if not the text, of the free-trade agreement, and we should do everything we can to persuade the Americans of that,’ he said. The Albanese government generated two consecutive surpluses.

The Quad members added that their fundamental commitment to humanitarian assistance and disaster relief remained strong. “We continue to collaborate to prepare for and respond to disasters throughout the region in a timely and effective manner.” In 2024, our four countries collaborated to boost disaster preparedness and life-saving relief efforts in the Indo-Pacific, and we continue to expand on those efforts to identify new ways to respond quickly to humanitarian emergencies and disasters,” the statement stated.