Page 2962 - Week 08 - Thursday, 25 June 2009
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The World Bank has downgraded its forecast for economic growth, warning the global recovery will be more subdued than previously expected.
And I note the conclusion from the Australian Financial Review editorial on 17 June, which is Wednesday last week:
None of the states—
I think you can read “territories” in that as well—
has any credible plan to repay debt if everything fails to go according to schedule, and chipping away at the public service doesn’t deliver the required savings. They need a contingency plan …
I do not think it could have been summarised any better than that. With respect to the ACT fiscal status, we truly are on a wing and a prayer. Again, with apologies in this case to Ross Peake writing in the Canberra Times on 13 May in regard to the federal budget:
Wayne Swan’s second budget floats on a bubble of hope and an ocean of debt.
You could say that was equally applicable to this jurisdiction where we have got a Treasurer saying we may have to borrow up to $550 million “but we can’t tell you what savings will be made, we can’t tell you where they will be made, we can’t tell you when they will be made”. Yes, there are numbers outlined in this supposed plan in the budget, but I do not think any of it has any credibility at all.
Given the strength of the Australian economy in the global context, we could be—maybe should be—feeling quietly confident about the future. But I think there are significant concerns that still should be very evident, and our immediate concern is that the Stanhope-Gallagher government has not sufficiently prepared for the unexpected. There are, and there continue to be, notes of caution about the estimates about the global economy in general and about particular regions and particular countries.
On Tuesday this week it was interesting to note that the Australian share market fell by 120 points or about three per cent. And the reason for this fall? It was largely as a result of the report from the World Bank which suggests that global economic recovery will be more subdued than previously thought. It is covered quite well in the article and, if you take this into the context of what the government have put forward as their estimates for growth in the outyears and the way that they will attempt to manage, it really does rest on a wing and a prayer.
I think we also need to make some comments in response to the views of the Treasurer about the forecasts contained in her budget. Assumptions appear to be being made that the current recession is simply another recession and that, like all the economic cycles—we had the lectures from Ted Quinlan for several years about economic cycles—there are ups and there are downs. Contrary to the way that they were linked to election cycles, there is an assumption that we will just simply pull through this difficult time.
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