Peter Costello was back in the Parliament pushing the big lie yesterday – that the Commonwealth under John Howard “reduced its debt from $96 billion to zero”.

Check out the transcript on pages 44 and 45 of Hansard and then ask yourself how that tallies with this chart from the budget showing the Federal government still owes almost $50 billion.

Then again, at least he has exposed the even bigger lie by the various state governments which all claim they are in surplus when in fact $70 billion of new debt will be taken on over the next five years. The states seem to pretend infrastructure spending isn’t a budget item.

Costello produced some interesting figures on state debt yesterday, claiming that between 1996 and 2005 the states reduced their collective debt from $48 billion to just $10 billion.

The Treasurer is being very generous using this measure because once again he is allowing the states to net off financial assets that are set aside for other obligations, such as superannuation and insurance liabilities. Then again, this is the same accounting rort that he uses to claim that Future Fund cash can somehow be netted off against superannuation liabilities and debt at the same time.

So, just how much debt do our various state governments have right now? Victorian Premier John Brumby was back using Cain-Kirner rhetoric this week by citing debt figures as a percentage of GDP, which is disingenuous to say the least given that the Kennett Government flogged almost $40 billion of assets.

That said Victoria’s $13 billion in outstanding debt pales in comparison with NSW which will already owes more than $25 billion and will borrow a staggering $10.4 billion in 2007-08, including $6.4 billion in new debt, as this link from the Tcorp website explains.

Whilst Queensland will borrow more than $20 billion over the next five years, the latest budget claims it will boost net worth by $5.3 billion to $120 billion over the 2007-08 financial year. Contrast that with the negative $10 billion worth of the federal government.

If John Howard really believes the states are to blame he should name the areas where spending should be cut or taxes increased. A majority of state spending still goes on labour costs for teachers, nurses and coppers and the PM told Parliament earlier this year that he believes Australian nurses are underpaid by our state governments.

Truth be known, our states are operating off an incredibly narrow revenue base, which explains why they’ve embraced gambling to the point where Australians spend more per capita on the punt than any other people in the world.