Page 1248 - Week 04 - Wednesday, 25 March 2009
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In this instance we are concerned about the way in which the Stanhope-Gallagher government have handled the ACT economy, particularly over the last few years and certainly over the last seven years. In particular, we are concerned about how they have responded to what has now become a significant global economic downturn.
Part of our process has been to try to get an insight into the Stanhope-Gallagher government’s understanding of a recession. Yesterday I asked the Treasurer to explain the difference between a recession and a technical recession, as she had used the phrase “technical recession” earlier in question time. The Treasurer provided an answer to my question and immediately gave herself a score of 10 out of 10 for her answer. Such humility!
Unfortunately, the Treasurer failed in her answer. She failed in two ways: she failed to compare or contrast the definition of a recession with her definition of a technical recession; and, second, in any event she failed in her definition of a technical recession. Of course, there is a street definition of a recession. A recession is when your neighbour loses their job and, in fact, a depression is when you lose your job. A more considered answer to defining a recession is to acknowledge that there is no universally accepted definition. Such is the world of economics. Is economics a science or is it just an art?
Let us make an attempt to define a recession. That might be a useful starting point for this debate. I will use the definition from the National Bureau of Economic Research in the United States. That is a group of academic economists who say that:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.
That is a mouthful and I think it is fair to say that this definition generally applies to a nation. The other accepted definition, of course, is two quarters of negative growth. The points made in all of this are that they are useful starting points. It is interesting that up to this point in time the ACT is the only jurisdiction in the country in recession. The defence of the government seems to be that it is all the fault of the global financial crisis. If that were true, other economies which are more exposed than ours would have fallen first. But they did not. The ACT is the only jurisdiction recording negative growth for two consecutive quarters. If you want to use the term “technical recession” to say it is in a technical recession, it is in a recession.
It is worth looking at the ABS statistics relative to the performance of the jurisdiction over recent times, because this is not something that has just happened. If you look at the last six quarters—the last 18 months—there is a pattern of the ACT stumbling along, bumbling along the bottom of the economic pack. The performance of the ACT economy has been less than spectacular—this despite all the glowing self-praise from the former Treasurer and, indeed, the current Treasurer.
The current Treasurer tells the opposition not to talk the ACT down. Well, we have avoided that, but it is the Treasurer who says her work is all guesswork. It is the
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