Tuesday, May 19, 2009

From Ken Henry's speech today, attacking reporting of the Budget

Not yet up on the web:

"Consider, for example, the reporting of the budget in the Wall Street Journal Asia last week.

According to that reporting, in all of the decisions taken by the Government in response to the global recession, the only ones that will have any stimulatory impact on the economy are the ‘tiny’ personal income tax cuts announced in the 2008‑09 Budget.

The journal also informs its unfortunate readers that revenue downgrades alone would not have driven the Australian budget into deficit.

And to cap it off, readers were told, in what is surely one of the most ironic sentences ever uttered in macroeconomic analysis, that ‘(t)his Keynesian revival comes at a particularly bad time, given that tax revenues are falling as the economy slows, a normal feature of economic downturns’.

Apparently, the right time for a ‘Keynesian revival’, involving the spending of large amounts of public money, is when tax revenue is strong and rising, a normal feature of economic boom times.

As you know, I don’t always agree with Australian commentators. But our newspaper readers can be thankful that they don’t often have to confront material that is quite that bad."

UPDATE: The WSJ defends its accuracy.  And describes Dr Henry as Mr Henry.