Friday, October 09, 2009

Ken Henry's devastating question to Senators

"Is 7 per cent unemployment too low?"

Crikey's Bernard Keane:

That was Ken Henry’s response to critics of stimulus spending as he fronted this morning’s hearing of the Senate Economics Committee inquiry into the Government’s stimulus spending.

Henry acknowledged that the Australian economy had performed better than forecast by Treasury, but warned that the withdrawal of stimulus spending would cost 100,000 jobs and 1.5 percentage points in GDP growth in 2010.

“Treasury’s view is that unemployment has yet to peak,” he told the committee, and suggested that the IMF’s recent forecast of a peak of 7% might be “reasonable”.

“The question for policymakers is whether 7% unemployment is too low. I think Treasury’s view is that that is not the case.”