Page 257 - Week 01 - Wednesday, 10 December 2008
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deficit of more than $900 million just a few months after the presentation of the budget.
The Governor of the Reserve Bank, Mr Glenn Stevens, was quoted only last night—I am sure Mr Smyth will be fully across his speech—at the Australian business economists annual dinner as saying:
I need not remind this audience of the international financial turmoil through which we have lived over past almost year and a half nor the intensity of the events since mid-September this year in particular.
I do not know anyone who predicted this course of events. This should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. What we have seen is truly a ‘tail’ outcome—the kind of outcome that the routine forecasting process never predicts.
Except for Brendan Smyth and the Canberra Liberals, of course; he just forgot to put that.
Mr Smyth: And the Canberra Times.
Mr Seselja: It was on the front page of the Canberra Times right through the campaign.
MS GALLAGHER: Right, the full impact, yes. Sorry, you just might have forgotten to put your name there, Mr Smyth. You might have to go and contact Mr Stevens and say, “But I saw it. I saw it; I just didn’t tell everybody what it was.” I saw you do the claw in question time, actually. You make an attractive Julie Bishop.
The International Monetary Fund forecast for global growth for 2009 has been revised from 3.8 per cent down to three per cent in the space of six months. The OECD are now forecasting that 21 out of 30 member countries will go through a protracted recession of a magnitude which has not been seen since the early 1980s. Highlighting how quickly things have changed in the Australian economy, the Reserve Bank of Australia was warning of the adverse impacts of capacity constraints and skill shortages arising from strong demand when it last raised interest rates in March this year.
Furthermore, it was even considering interest rate rises as late as May this year. Yet by December it had been compelled to cut them by an unprecedented three percentage points. This is a massive turnaround by Australia’s central bank, reflecting a turn of events that the opposition somehow expects the ACT government to have foreseen—as, of course, they did.
The full impacts of this unfolding global financial crisis were unforeseeable by all sectors, public and private, across the globe. This is evidenced by significant declines in markets around the world with fiscal stimulus and bail out packages being delivered across a number of countries, including China. The Reserve Bank target cash rate was on the increase at the time of the 2008-09 budget. It has been reduced by an unprecedented 2.75 per cent since the time the pre-election statement was released.
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