L-plate Treasurer's still stuck in negative opposition mode
First the new Prime Minister slips up big time over a free trade agreement with China with his "whatever we can get" kowtow.
Now the new Treasurer is promoting old Australian growth figures from the International Monetary Fund as fresh bad news for the economy. The L-plates are being worn large this spring.
Overnight the IMF got around to adopting the existing Reserve Bank and Treasury forecasts for Australian economic growth, which is what it routinely does. In cutting its forecast for Australia's 2013 GDP to 2.5 per cent, the IMF was catching up with what the RBA was saying five months ago in its May Statement on Monetary Policy. Treasury took a little longer to revise its more optimistic budget night forecasts, but by the August monetary policy statement and Treasury economic statement the numbers were all aligned and pretty much what the IMF produced two months later.
Treasurer Joe Hockey didn't treat it that way, issuing a statement to tell us the IMF had downgraded its expected growth rates for the Australian economy by 0.5 per cent. More bemusingly, the Treasurer said: "Worryingly, the IMF forecasts Australia's unemployment rate to rise from 5.6 per cent in 2013 to 6 per cent in 2014."
It seems poor Joe has been in negative opposition mode for so long he doesn't recognise possible good news when he sees it. That IMF unemployment forecast is an improvement on what the RBA and Treasury have been saying. The budget back in May guessed unemployment would be 6.25 per cent by June and the pre-election economic and fiscal outlook forecast it would stay there for another year.
Maybe Hockey not only didn't believe Treasury's figures, maybe he didn't read them.
What the IMF experts tend to do every six months is have a chat with the similarly minded nerds in Treasury and the RBA, plus perhaps one or two of the more rational private sector economists if they're old mates, and print the Treasury/RBA numbers in their World Economic Outlook publication. Unlike the Treasurer, the IMF has plenty of respect for, and faith in, those Australian institutions.
So, if the IMF now has a more optimistic outlook for Australian unemployment next year than what Treasury had two months ago, it's possible the official family's faith in a slow pick-up next year is increasing.
But the Treasurer isn't seeing that, warning instead: "The downside risks documented in the World Economic Outlook confirms significant risks to the Australian budget that will need to be appropriately managed by the Coalition government."
Which all boils down to why we no longer have that budget crisis we used to hear so much about, that the big-picture fiscal policy is not changing at all with the change of government. And that's a relief when there are learners at the wheel.
Too bad, though, that some of the more impressionable news outlets have been running that IMF "downgrade" as if it were indeed news.
Michael Pascoe is a BusinessDay contributing editor.
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