Then we're set to get another
TREASURY Secretary Ken Henry has declared that the government stands ready to introduce a second fiscal stimulus package if needed in order to avoid a recession while warning against the possibility of taking ourselves into one.
Defending himself and his department against attacks by Opposition frontbenchers, Ken Henry said its forecasts were produced "with no political manipulation" and that Australia could avoid even one quarter of negative economic growth.
"We can talk ourselves into worse outcomes, of course we can. People do, it wouldn't be the first time, but we don't have to," he told the National Press Club.
As the Finance Minister Lindsay Tanner accused the Opposition of an "orchestrated assault" on the Treasury, Dr Henry said its comments had the potential to "undermine the integrity of the Australian public service"...
Coalition frontbencher Helen Coonan Tuesday described the Treasury's economic growth forecast of 2.0% economic growth forecast as "suspicious". Her colleague Andrew Robb said it had a "smell of manipulation" about it. "I think they were required to get a '2' in front of the forecast so the prime minister wasn't embarrassed," he said.
Dr Henry said it "would have been better had the comments not been made".
"Have I been hurt by them? No, I've not personally been hurt by
them. But I don't think it's helpful when comments like that are made which have the potential of undermining the integrity of the Australian public service.
"If that was their intention, it will not work."
Mr Tanner told parliament that "the suggestion that the Australian Treasury has been involved in cooking the books, in publishing false forecasts and the suggestion that the Australian independent Reserve Bank has taken political decisions with respect to interest rates" undermined international confidence in Australian regulators".
"This is an orchestrated plan on the part of the Liberal Party, because the Liberal Party now represents the shonks, the spivs and the sharks who have all crawled out from under rocks as a result of the global financial crisis."
Dr Henry said that his forecasts were "the government’s forecasts, that is the fact. But they are also the forecasts of the Australian Treasury. These forecasts were produced by the Treasury with no political manipulation, with no manipulation from the government."
Most if not all of the difference between the Treasury's forecast of 2.0% economic growth this financial year and the Reserve Bank's 1.5% could be explained by differences in methodology.
Asked whether it was possible that Australia could avoid even one quarter of negative growth, an outcome predicted by both Westpac and JP Morgan, Dr Henry said he was confident that it could, and that the Treasury and the government were "trying our hardest to make sure that happens".
Should there be a need for further fiscal stimulus beyond the $10.4 billion package due to hit wallets from December the government stood "ready to consider further action".
Speaking from Washington the Treasurer Wayne Swan backed up Dr Henry.
``We will do everything responsibly we can, and if that does require future stimuls to the economy that will be done,'' he told the ABC. He conceded the measures might push the budget into deficit.
Asked to speculate about a deficit, Mr Swan replied, "we are projecting modest growth and modest surpluses, but if the situation were to deteriorate significantly it would have an impact on our surpluses and it may well be the case that we could end up in the area that you're speculating about".
But pressed to use the word 'deficit' the Treasurer said he would not, because he was "projecting modest surpluses".
Dr Henry said the biggest problem globally was "fractured confidence".
"Anything that can be done to help restore confidence in real growth, in the strength of the economic, right at the moment is valuable," he added.
The Westpac Melbourne Institute consumer confidence index bounced 4.3% in November after diving 11% in October.