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OECD rejects one nation growth forecasts



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DEPUTY LEADER of the OPPOSITION SHADOW TREASURER

EMBARGO: 4 AM, FRIDAY 1 MAY 1992

OECD REJECTS ONE NATION GROWTH FORECASTS

The OECD Economic Survey of Australia contrasts strongly with the One Nation growth projection for the economy.

The OECD forecasts for the Australian economy (page 44) project that GDP will rise by 3 per cent in 1992/93, barely enough to lower the unemployment rate to their forecast rate of 10.3 per cent for that year.

This compares to a large 4.75 per cent GDP growth forecast in the Government's One Nation document.

The Government may argue that the OECD forecasts were prepared on information available at 28 January 1992, before One Nation was released in February. However, the Government has previously made the point that One Nation only provided a mild fiscal stimulus to the economy. The Government cant have it both ways.

There is no doubt that the OECD view is that economic growth will be nowhere near the Government's projections, no matter on what exact date their projections were prepared.

It is also instructive to note that while the OECD claims that the recession 'may· have bottomed in the middle quarter of 1991 (page 9), they do not put the position unequivocally.

The OECD is not prepared, nor should they be, to declare the end of the Great Recession of the 1990s.

Indeed the OECD make a number of other interesting points.

For example, they back up the Coalition's claim that monetary policy settings were the primary influence on Australia's inflation performance (Chapter II) and specifically state on page 9:

'...ultimately monetary policy settings have had the major bearing on inflation outcomes

and on page 54:

'Low inflation has been achieved at the cost of unemployment rates~~of more than 10 per cent.'

In its conclusion, the OECD was critical of the pace of reform when it noted that:

'More vigorous microeconomic reform is urgently needed.' (Page 87)

We couldn't agree more.

30 April 1992 Canberra

COMMONWEALTH

PARLIAMENTARY LIBRARY MICAH

Contact: David Turnbull (06) 277 4277 D67/92