Talk of recession as Swan fumbles the figures

[MrBurns]

From Crikey............5/11/08

Talk of recession as Swan fumbles the figures
Canberra correspondent Bernard Keane writes:



Treasurer Wayne Swan refused to rule out a brief recession in coming months in releasing Treasury’s Mid-Year Economic Forecasts this morning, and Australia faces three years of tepid growth, higher unemployment and minimal budget surpluses, with lingering inflation.

Treasury forecasts real GDP growth to be 2% this year (down from 2.75% in May) and 2.25% 2009-10. Unemployment will rise to 5% (up from 4.75% in May) and go up further in 2009-10 to 5.75%. The CPI will rise further than forecast in May, to 3.5% this year, falling back to the top of the Reserve Bank’s target, 3%, in 2009-10.

As a consequence of the looming slowdown and the economic stimulus package last month, the budget forecast has been slashed to $5.4b this year and $3.6b in 2009-10. The financial crisis, according to Swan, had blown a $40b hole in government revenue across the four years of Forward Estimates. The biggest casualties of the slowdown in government revenue will be company tax and capital gains tax receipts, and Swan declined to rule out deficits if the international situation became worse.

This was Wayne Swan’s weakest performance, harking back to the early days of the Government as he parried media questions about the detail of the Treasury forecasts. While he emphasised that growth would remain positive on an annual basis, he refused to answer repeated questions about whether quarterly growth would dip into negative territory.

Swan also rejected suggestions the figures were being dumped on a day given over to US election news, saying they couldn’t have been released earlier in the week due to the Melbourne Cup and that he was flying out to a G20 meeting tomorrow. Pressed on the CPI figures, he had to go searching through his own copy of the statement to find them, thumbing through a book for an embarrassingly extended period mid-press conference.

It wasn’t a John Kerin performance but it was hardly that of a steady hand on the economic tiller.

Swan also had difficulty making clear the Government’s fiscal strategy in response to the massive drop in forecast revenue. He confirmed that pensions would still be increased in next year’s budget, but that everything else that wasn’t an election commitment was up for reconsideration, including infrastructure funding and payments to the states. The next COAG meeting is unlikely to the outbreak of Commonwealth-State bonhomie that previous meetings under Rudd have been.

The biggest casualty of the $40b drop in revenue will be infrastructure funding. That $40b is the guts of the Government’s long-term infrastructure investment. Only $26b is currently set aside from previous budgets for investment, and the slightest deterioration in the overseas outlook -- what price that? -- will mean nothing further will be available until late in Rudd’s second term.

Assuming the slowdown doesn’t claim the Government in 2010.

The Press Gallery has been given access to Treasury officials this afternoon for background briefing. The big issue officials will be pressed on is quarterly GDP growth. Given the Government chose Obama Day to release the figures, don’t rule out the revelation that growth will turn negative at some point soon.

 

[adobee]

I dont mind labour but i am not a fan of Wayne Swan whenever I see him interviewed his sort of nodding everytime he makes a point drives me crazy.. and he gives repetitive answers... (if this is the worst he does I guess he is not that bad)..

 

[MrBurns]

I dont mind labour but i am not a fan of Wayne Swan whenever I see him interviewed his sort of nodding everytime he makes a point drives me crazy.. and he gives repetitive answers... (if this is the worst he does I guess he is not that bad)..

I dont think he'll last but I'm not sure how they'll get rid of him.

 

[Duckman#72]

I dont think he'll last but I'm not sure how they'll get rid of him.

His performance on 7:30 Report was unimpressive tonight. He doesn't answer questions and doesn't appear to be on top of his briefings. It is as if he is always 3 steps behind each issue - as if he is continually playing catch up.

 

[Glen48]

Wayne is in trouble because this FWD is like a 24 hr Virus things are changing quicker than he can keep up.Look what has happened in the past few week they are spend 1/2 of the $20 B now its down to $5b remaining, tax cuts cut. I think they are just realising they have a Wall of debt, bad news coming at them at the speed of sound.
The next thing will be the growth downgraded to a negative.
Looks like the new pres. is looking after USA first.

 

[Julia]

His performance on 7:30 Report was unimpressive tonight. He doesn't answer questions and doesn't appear to be on top of his briefings. It is as if he is always 3 steps behind each issue - as if he is continually playing catch up.

I thought the same thing. And when he is fumbling and unsure he tries to make up for it with bluster. This just makes him look even less competent.

 

[chops_a_must]

I dont mind labour but i am not a fan of Wayne Swan whenever I see him interviewed his sort of nodding everytime he makes a point drives me crazy.. and he gives repetitive answers... (if this is the worst he does I guess he is not that bad)..

Easily the most incompetent minister they have.

Get Tanner in there already FFS!

 

[roland]

what a useless attempt - what would be wrong with "I don't have the exact figure with me, I'll put it in your press summary"

the whole Rudd government tends to be all doing the same ducking and weaving

 

[Julia]

Easily the most incompetent minister they have.

Get Tanner in there already FFS!

Agreed. Tanner seems competent, is articulate and genuinely attempts to answer questions in a meaningful way.

 

[Smurf1976]

This is exactly the sort of thing that went on before the last recession.

1. The boom will last for ever.

2. Slowdown? No chance, we're strong.

3. A bit of a slowdown but we'll be fine.

4. A slowdown certainly, but no recession.

5. Government refuses to admit possibility of recession.

6. Possibility of recession acknowledged, but it will be a quick bounce that won't last.

7. "Recession we had to have" sees 1 million unemployed and queues the length of entire city blocks for even basic jobs.

We've gone from 1 to 5 in a couple of months so I'd say a recession is pretty much a certainty at this rate. Odds are we'll get to 6 this month and the recession is probably already underway - but it won't show up in official figures that will be officially acknowledged until April - May next year.

Note that even the official forecasts now point to higher unemployment. If it's officially forecast then you know it's coming...

 

[sammy84]

Watching Swan in question time is utterly painful. He is always flustered in the face, has no composure, cant answer a question without yelling and responds to any question on the defensive, by simply blaming the libs and not offering any good insight. I agree with the Tanner suggestion but it looks like Swan has too much factional support. All this just makes me really miss Costello, whilst he couldn't have saved us from this mess, he could at least speak with some conviction and create confidence.

 

[numbercruncher]

He is running scared because he knows Australia has the potential to be spanked harder than any other Western nation .....

Theyre addicted to a hole in the ground economy and thats going pear shaped at a pace they could never of even dreamed or nighmared about.

Seriously what do we have to offer the world other than stuff we dig up ? Previous Government has failed miserably in preparing us for a rainy day ..... I cant believe after a decade of ever increasing income we are so woefully unprepared and vulnerable.

Our bAnAnA republic' destiny awaits ??

 

[MrBurns]

Seems we're all agreed that Swan is more than useless and yes Costello would have at least made us feel like there was someone with a brain in charge.

As for when the recession starts to hit, I'm watching the retail firgures especially Harvey Norman, no real sign yet but when those figures plunge you will know we're on the slippery down slope.

Added - unemployment is rising by the day, I feel for the poor bastards that are put out of work and have no hope of finding anything else.

 

[gav]

Added - unemployment is rising by the day, I feel for the poor bastards that are put out of work and have no hope of finding anything else.

I was recently successful for a govt job. Only two positions were available, and there were 23 applicants! It seems ppl are looking for steady jobs...

 

[MrBurns]

I was recently successful for a govt job. Only two positions were available, and there were 23 applicants! It seems ppl are looking for steady jobs...

Congratulations, work hard and keep your head down !

 

[sammy84]

unemployment is rising by the day, I feel for the poor bastards that are put out of work and have no hope of finding anything else.

Figures out today actually showed that unemployed has risen slightly for the mean time.
http://www.skynews.com.au/business/article.aspx?id=276544

 

[adobee]

It could be possible that Swan is awful at speaking to the media but actually a brilliant economist and treasurer.. I have seen any proof of it but I dont think he should be judged only on his tv performance.. (althought his constant nodding / leaning forward kills it and I cant bare to watch when he doesnt have an answer and speak louder and tougher...)

I could handle if they had a complete nerd who couldnt talk at all on tv but was a wizz when it came to economics.. maths etc...

Turnball and Bishop will eat him up.. and both of them have facebook links from the liberals website.. !!

 

[inrodwetrust]

Hi,

Correct me if I'm wrong but didn't Swan got to the same school as Rudd, Nabour High?(Swan on the footy team & Rudd on the Chess or Debating team or something)

Wasn't it also Rudd & Swan who through successful investing built up the coffers of the Goss Qld Labor finances? Though I don't know how much Swan contributed.

So if your think he'll get the flick.....I think your dreamin' !

And hope that he doesn't cause if he does he'll have to do a monumental stuff up!

Regards

 

[Glen48]

If the Libs put up Costello it will all be over for Krudd.
I am sure they have no idea how bad this will be. 500 car yard closing up unable to get finance for people who don't want to buy a car.
Fully employed ( more than 2 hr a Week ) those on 38 hr are down and the latest figures are 6 mths old. Part time employment increasing but a few hrs a week will not go far.
More bad news to come each day.

 

[Julia]

It could be possible that Swan is awful at speaking to the media but actually a brilliant economist and treasurer.. I have seen any proof of it but I dont think he should be judged only on his tv performance.. (althought his constant nodding / leaning forward kills it and I cant bare to watch when he doesnt have an answer and speak louder and tougher...)

As far as I know he's not an economist for a start. Does anyone know what skills he can claim to make him competent as Treasurer?

Especially under the current circumstances of fear and anxiety, the Treasurer needs not only to be absolutely competent, but needs to be seen to be so.
Costello, if Treasurer now, would be calm and measured in his comments and project an air of being in control. Swan absolutely does not do this.

And we've just spent eight years lamenting GW Bush's mispronunciations.
Swan looks like taking over from him with his repeated comments about the "deteriating" situation! Why doesn't someone tell him it's "deteriorating"!