A government-commissioned report has claimed the Rudd Government’s response to the Global Financial Crisis did the Australian economy more harm than good.
A report by Griffith University economist Professor Tony Makin argues the Labor government’s $100 billion stimulus package threw the nation into a budget crisis and harmed the manufacturing sector, The Australian reported on Friday.
Professor Makin produced a similar report in 2014 with the same conclusions which harshly condemned Labor’s stimulus package.
That paper was rejected by Labor at the time, which called out Finance Minister (and then-acting assistant treasurer) Matthias Cormann for launching a report that criticised the work of his own department.
The Australian at the time also referred to the paper as “contentious”, as Professor Makin had been a repeated critic of the stimulus package.
Labor treasury spokesman Chris Bowen slammed the 2014 report at the time, claiming it was designed to “discredit the work and advice of the Treasury”.
“This is a government of GFC-deniers,” he said.
“Labor acted swiftly and decisively to save jobs during the GFC and to ensure the Australian economy recovered quickly.”
But Professor Makin has in the new report maintained his belief that the relief package, which saw all Australians receive between $300 and $950, was “misconceived” and triggered the world’s fastest-growing public debt.
“There is no evidence fiscal stimulus benefited the economy over the medium term,” it reportedly argues.
The assertion comes after the news the Australian economy suffered a contraction in growth during the September quarter.
The 0.5 per cent decrease (shrinking the annual growth rate from 3.1 per cent to 1.8 per cent) was the first since March 2011 – during Cyclone Yasi and the Queensland floods.
Two consecutive quarters of negative growth constitute a technical recession, which, remarkably, Australia has not suffered for more than a quarter of a century.
At this stage, economists are reasonably confident the December-quarter national accounts won’t be another minus outcome, believing the economy was hit by a series of one-offs and will quickly bounce back.
Housing construction was hit by adverse weather and household spending was subdued, possibly hit by the uncertainty of a series of unsettling political events – Brexit, the run-up to the US presidential election and Australia’s own surprisingly tight election, which followed an eight-week campaign.
– with AAP