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Former prime minister John Howard rejects the charge that his government spent wastefully, saying that ''the reason Australia dodged the global downturn was due to the strong fiscal position of the Howard government''.

Mr Howard responded through a spokesman to an international study that found Australia's most needlessly wasteful spending took place under the John Howard-led Coalition government rather than under the Whitlam, Rudd or Gillard Labor governments.

Australian Prime Minister John Howard, who 'put the butter knife' through legal aid in 2006.

Denial ... former prime minister John Howard. Photo: Kate Geraghty

The International Monetary Fund examined 200 years of government financial records across 55 leading economies.

It identifies only two periods of Australian "fiscal profligacy" in recent years, both during Mr Howard's term in office - in 2003 at the start of the mining boom and during his final years in office between 2005 and 2007.

Mr Howard defended his record on Friday, saying that government spending as a percentage of GDP declined during his term.

Finance minister Penny Wong says the IMF has endorsed Labor's stimulus spending.

Finance minister Penny Wong says the IMF has endorsed Labor's stimulus spending. Photo: Andrew Meares

''According to none other than the Governor of the Reserve Bank, Australia's fiscal position is the envy of the developed world,'' the former prime minister's spokesman said.

But the Grattan Institute economist, Saul Eslake, argues that Mr Howard's statement about spending declining as a percentage of GDP, while technically true, is irrelevant and misleading.

''The Howard government in its last two terms was rolling in cash,'' Mr Eslake said.

Mr Howard rode two booms - in mining and household spending - and as a result raked in ''extraordinary'' amounts of income during its last two terms.

During that period, Mr Eslake said, the Howard government increased spending ''in real terms'' at a faster rate than any other government since the Whitlam years.

Mr Eslake did say, however, that he was ''gobsmacked'' the IMF did not judge Gough Whitlam's government as profligate.

''That they didn't regard the 40 per cent plus increase in government spending in 1974 to 1975 under the Whitlam government as profligate . . . [that's] far worse than anything the Howard government undertook,'' Mr Eslake said.

The Minister for Finance, Penny Wong, said the IMF study endorsed the current Labor government's ''responsible spending decisions'' while diminishing Mr Howard's record.

''The study shows the Howard government clearly missed opportunities to effectively use the mining boom and strong global economic conditions to invest in Australia's future, and it debunks the myth spouted by Tony Abbott and Joe Hockey that the Howard government exercised spending restraint,'' Ms Wong said.

''Rather than investing in key infrastructure projects like the National Broadband Network, which this government is rolling out . . . the Howard government made spending decisions that made the budget unsustainable''.

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