Treasury not optimistic on the global economic crisis

If Australia’s Treasury officials share Ben Bernanke’s optimism, about prospects for an early end to the global economic crisis, we will never know it.

The US Federal Reserve Chief is saying that there is a “reasonable” chance that his country’s recession will end late this year, if America’s banks are fixed.

And the US President, Barack Obama, is declaring that this is exactly what he intends to do.

The National Party Senator Barnaby Joyce asked one of the Australian Treasury’s most senior officials yesterday, if he could predict when Australia’s pain, from the global crisis, might end.

Dr David Gruen, executive director of Treasury’s macro-economic group, said he could not.

“We forecast out to the middle of 2010,” he said.

Dr Gruen said Treasury merely provides projections, after that.

And those projections are based on the assumption that the economy will return to trend.

Private Briefing approached Dr Gruen, when the Senate Estimates Committee broke for morning tea, to ask if his reply implied that there would be no recovery before the middle of 2010.

He told your reporter that this implication  should  not be placed on what he had said.

Clearly, though, Treasury is not forecasting a recovery before then.

Dr Gruen also said  that the Treasury is continuing to get l  an “overriding signal” that the international economy is “deteriorating.”

The Treasury chief  Ken Henry, who arrived  later, didn’t have much comfort to offer, either.

He said Australia is “going into” its bad times.

Mr Henry’s message was underlined by   Pacific Brands announcement that it was sacking 1,850 workers from its clothing factories  throughout Australia.

The government immediately promised the sacked workers retraining support under its textile, clothing and footwear package.

It might also offer Treasury officials a little  retraining in optimism.

A former Labor minister, John Kerin, made no secret of his dislike of  Treasury bureaucrats.

He once volunteered his own definition of the word  “catastrophe.”

He said that’s what happens when  a busload of Treasury officials goes over a cliff – with two empty seats.