The claim

Labor has released its 10-year economic plan, with Opposition Leader Bill Shorten promising to return the budget to balance in the 2020-21 financial year if elected.

Sorry, this video has expired Watch Mathias Cormann make the claim.

Finance Minister Mathias Cormann responded, saying Labor could not be trusted to fulfil this promise.

"Labor when they came into government in 2007 inherited a $20 billion surplus and turned that into a record deficit," he said.

Was Labor responsible for "a record deficit"? ABC Fact Check runs the numbers.

The verdict

Senator Cormann is wrong.

This fact check is based on research from a previous claim on debt and deficit made by Deputy Liberal Leader Julie Bishop.

Budget figures and historical data show that Labor inherited a surplus close to $20 billion, but the deficit they "turned that into" was far from a record.

Experts told Fact Check that in order to make comparisons over time, deficits must be measured as a share of GDP, and the largest deficit as a share of GDP in Labor's last term was in 2009-2010 at 4.2 per cent.

This pales in comparison with deficits sustained during World War II, which were over 20 per cent of GDP, and World War I, which were over 10 per cent.

The size of Labor's deficits

The issue of comparing deficits over time was explored in a previous fact check, related to a claim made by Deputy Liberal Leader Julie Bishop that the Coalition Government "inherited the largest deficits in Australia's history from Labor".

At that time, experts told Fact Check that the size of a deficit needs to be expressed relative to the size of the economy (gross domestic product, or GDP) to enable comparisons over time.

Sydney University economist Michael Rafferty, Jeff Borland from the University of Melbourne and David Richardson, a senior research fellow at the Australia Institute, said inflation and the increasing size of the economy should be taken into account.

"Looking at the figures without looking at gross domestic product tells you nothing," Mr Richardson said.

"If you go back 40 years, everything you want to measure is going to be roughly 30 times bigger now than it was then."

The historical data in the 2016-17 budget showed that in 2006-07, the last full financial year of the Howard government, the underlying cash surplus was $17.2 billion, or 1.6 per cent of GDP.

Kevin Rudd was elected prime minister in November of the following financial year — the underlying cash surplus for that year was $19.7 billion, or 1.7 per cent of GDP.

As the current Coalition Government was elected to office on September 7, 2013, Fact Check considers Senator Cormann's claim to cover the financial years until 2012-13.

The data shows the largest deficit Labor delivered was in 2009-10, at $54.5 billion in nominal terms.

This equals 4.2 per cent of GDP.

All of Labor's deficits as well as the surpluses from 2006-07 and 2007-08 have been graphed as a share of GDP by Fact Check on the chart below.

Historical deficits

Senator Cormann referred to Labor's deficit as "a record".

In testing Ms Bishop's previous claim on debt and deficit, Fact Check consulted experts and used historical data and research by Ashley Owen, from funds management company Philo Capital Advisers — which was commissioned by financial advisory firm Centric Wealth — to put contemporary budgets into historical context.

Mr Owen's research shows much higher deficits generated by governments in times such as the Great Depression or the two world wars.

Two budgets during World War II generated deficits of over 20 per cent of GDP — more than five times the largest deficit in Labor's last term.

Source: Ashley Owen, Philo Capital Advisers ( ABC Fact Check )

Referring to the deficit the Abbott government inherited from Labor, Professor Borland told Fact Check: "I don't think it's true it's the worst in history."

Editor's note (June 14, 2016): After the publication of this article, Senator Cormann responded to Fact Check's verdict via email. Fact Check has published the response in full. It does not change our verdict.