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Unemployment's worst hasn't come: Treasury -

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Treasury secretary Ken Henry has spoken in support of continuing Australia's economic stimulus,
saying unemployment has not yet peaked and more than 100,000 extra jobs could still be lost.


LEIGH SALES, PRESENTER: The nation's top economic bureaucrat has warned that there's worse to come
for Australian workers. The Treasury Secretary says unemployment hasn't peaked and he expects more
than 100,000 extra jobs could still be lost. Ken Henry credited economic stimulus for Australia's
remarkable resilience, and not for the first time that's put Dr Henry in the Opposition's
sights. From Canberra, Hayden Cooper reports.

HAYDEN COOPER, REPORTER: It was an upbeat Treasury secretary at Parliament House, surprised by
Australia's strong economic performance.

KEN HENRY, TREASURY SECRETARY: It is certainly the case that on the numbers we presently have, the
Australian economy is performing better than we thought it would.

HAYDEN COOPER: The world thinks so too. The latest rankings from the World Economic Forum rate
Australia as the second-best performing financial centre, up nine places in a year.

WAYNE SWAN, TREASURER: Australia is a stand-out success when you look at what has gone on around
the world in the middle of this global recession.

MALCOLM TURNBULL, OPPOSITION LEADER: Now what the rest of the world wishes they could have had was
11-and-a-half years of Coalition Government.

HAYDEN COOPER: The Treasury secretary credits economic stimulus as part of the reason for the
resurgence and he warns of disaster if the spending strategy is pulled apart too early.

KEN HENRY: If you withdrew the stimulus right away and you withdrew all of the stimulus right away,
yes, we would consider that the increase in unemployed would be of that order of 100,000 jobs. It
could quite possibly be more than that.

HELEN COONAN, OPPOSITION FINANCE SPOKESWOMAN: Well, we don't think that that would mean
unemployment. If you look at the fact that unemployment, thankfully, is going down, that's
obviously a starting point and it's been steady for some periods of reporting.

CHRIS BOWEN, FINANCIAL SERVICES MINISTER: I'll take Ken Henry over Helen Coonan any day.

HAYDEN COOPER: But even with stimulus, the news will be bad. Treasury's not fooled by yesterday's
dip in unemployment - it expects a peak of about 7 per cent.

KEN HENRY: Without publishing today the Treasury's revised forecast for the unemployment rate, I
think that's a reasonable figure to be talking about. It is our view that the unemployment rate has
not peaked yet.

HAYDEN COOPER: But he's also warned spending will have to be curtailed or taxes will moved in the
wrong direction.

HELEN COONAN: Dr Henry has himself conceded that this will mean increased taxes in the future or
less spending. Now you can't have it every which way - there is a price.

KEN HENRY: Either government spending will be lower than it otherwise would have been, or tax will
be higher - tax settings would be higher than they otherwise would have been.

CHRIS BOWEN: We have indicated that as the economy returns to normal, we'll be reining in
government spending by our budget rules.

HAYDEN COOPER: The Opposition will be grateful that the debate has shifted back to the economy, but
even so, today's effort to expose wasteful stimulus didn't exactly go to plan, with another
rejection of the call to wind back the spending. It caps off a bad week all round for the
Opposition Leader.

A weekend in Perth won't improve matters; Malcolm Turnbull's leadership woes will flare again.

MALCOLM TURNBULL: Political parties, as I said yesterday, often go through periods of disorderly
conduct, let us say that, and where people snipe at each other and so forth. It's not something
that I can waste a lot of time on, frankly.

HAYDEN COOPER: Too late, the party already has. And tomorrow the WA Liberal conference will protest
against Mr Turnbull's effort to negotiate on emissions trading.