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Swan gilding the lily on stimulus.

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Fri, 7th August 2009


Senator the Hon Helen Coonan

Shadow Minister for Finance, Competition Policy and Deregulation

Acting Shadow Treasurer

Treasurer Wayne Swan has overstated the importance of the Rudd Government’s stimulus in underpinning the

Reserve Bank’s forecast of a modest economic recovery for Australia, Acting Shadow Treasurer Helen Coonan

said today.

The RBA’s Statement on Monetary Policy cited five factors behind Australia’s economic resilience, which are:

The strong state of Australia’s financial system

The significant monetary stimulus from the reduced cash rate

The fiscal stimulus

The depreciation of the exchange rate in 2008; and

China’s strong economic recovery

“While the Coalition welcomes signs of recovery, Treasurer Swan has gilded the lily in claiming that the RBA has

endorsed the full government stimulus as critical to Australia’s economic resilience,” Senator Coonan said.

“The RBA’s Statement of Monetary Policy did not say ‘the one thing we can see here in the Reserve Bank

forecasts is that they are predicted on a modest recovery and economic stimulus being fully implemented’, as

Treasurer Swan said earlier today.

“Although the assumptions of growth and inflation are based on the announced stimulus, this falls short of an

endorsement of the full stimulus being implemented.

“It is notable that the Reserve Bank has specifically referred to the assumption that interest rates will rise over the

forecast horizon.

“This warning should alert a responsible government to the need to look at reducing the fiscal stimulus and

winding back rising debt to remove upward pressure on interest rates, particularly at a time when the

unemployment rate is forecast to rise,” Senator Coonan said.