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Victorian Treasurer says state not in recessi -

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Victorian Treasurer says state not in recession

The World Today - Friday, 24 April , 2009 12:39:00

Reporter: Alison Caldwell

PETER CAVE: Much of the talk this week in Australia has been about the country sliding into a
recession in the months ahead. If you believe the Reserve Bank governor Australia is already in
one.

So what is it about Victoria? On the eve of delivering his second Budget, the Victorian Treasurer
John Lenders has declared the state is not in a recession.

The Budget is expected to forecast that about 50,000 jobs will be lost and an increase in the
state's debt.

Alison Caldwell reports.

ALISON CALDWELL: The Victorian Treasurer has bucked the trend of politicians predicting a recession
and countered the Reserve Bank governor who declared that Australia was most likely already in
recession.

With his second Budget due in a matter of weeks, John Lenders said while times are tough, Victoria
is still keeping its head above water when it comes to economic growth.

JOHN LENDERS: In my view the state is not in recession but the most important thing for Victoria is
we are in difficult economic times caused by a global recession.

ALISON CALDWELL: There's speculation the May Budget will forecast a major rise in unemployment in
Victoria from 5.7 to almost 8 per cent.

The Budget is expected to forecast about 50,000 job losses in the state over the next 12 months
along with an increase in state debt.

John Lenders wouldn't comment on the figures. He said the debate about whether or not Victoria is
in a recession is an academic one.

JOHN LENDERS: What we know is that there is a global slowdown. It is putting extraordinary pressure
on Victoria and we need to fight the global recession and we can do that by building in Victoria
today and creating jobs.

ALISON CALDWELL: Economist professor Neville Norman is with the University of Melbourne. He's the
immediate past president of the Economic Society of Australia.

He says, technically speaking, the Treasurer is right.

NEVILLE NORMAN: Splitting hairs because certainly economic activity is sort of just very flat at
the moment. It's just not growing and it's a bit of a semantic snarl at Victoria's marginally into
positive and Australia is marginally into the negative. But certainly the economic growth in
Victoria is well below the expectation that this Government had last year and the year before. But
it's probably right that we are slightly better than the average of the other states.

ALISON CALDWELL: During the week, the Prime Minister for the first time uttered the word recession
and the Reserve Bank governor the other day said and most would agree that we are in a recession.

NEVILLE NORMAN: We've already had one negative movement in the overall real national income
indicator and more likely than not there will be a second one announced in early June so the Prime
Minister is getting in early.

It's a little bit the old story of the frog in the pond. If you release the bad news slowly you
won't notice so much.

ALISON CALDWELL: Would it be possible for Australia to be in a recession but for Victoria not to
be?

NEVILLE NORMAN: Yes, and I think that's more likely than any other outcome but nevertheless, both
Victoria and Australia are in a marked economic slowdown. Possibly Victoria is in a little less of
a slowdown than Australian overall. But I think it's really splitting hairs for a state treasurer
or any state representative to try and claim any great credit out of all of that.

We are in an economic slowdown. It's a marked loss of tax revenue, a need for government stimulus
and that's the more important point than we are one point ahead of the Opposition.

PETER CAVE: Economist professor Neville Norman from the University of Melbourne, ending Alison
Caldwell's report.