Treasury boss backs Rudd Government’s stimulus package

The head of the Federal Treasury has backed the Rudd Government’s stimulus plan, saying that the economy is likely to slide into recession if the Government does not spend up now.

Ken Henry, who appeared last night before the snap Senate inquiry called to examine the stimulus package, effectively dismissed Opposition claims that the stimulus package was too large by claiming that a smaller package would not prevent Australia going into recession.

“We have certainly put advice to Government that given the macroeconomic circumstances confronting the Australian economy… there is a clear case for a very substantial fiscal stimulus… to be delivered to the Australian economy before unemployment starts to rise.”

Henry even went as far as to compare this crisis to the Great Depression.

“If one looks at the forecast growth for our major trading partners, they are as weak as we’ve seen possibly since the 1930s,” he said. “There’s a clear need to act now.”

But it is clear that the two senators that could decide the fate of the package, Family First Senator Steve Fielding and independent Nick Xenephon, have concerns.

“The more questions they answered, the more questions I had,” Xenephon told AAP.

“There’s no question we need to do something, but the other side of the coin is how that money is spent… and the impact of future debt.”

Fielding also wants to see more, saying he was pleased that Treasury would complete further modelling of the package in the next few days.

He is also angry the package contains nothing for the unemployed.

“The $42 billion package does nothing for them and Dr Henry did not address that issue,” Senator Fielding said.

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