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Treasury accused of manipulating forecasts

Opposition frontbencher Andrew Robb says the Treasury’s latest economic figures have got “the smell of manipulation” about them because they differ from the Reserve Bank’s.

The Reserve Bank yesterday released figures which show it expects growth to slow to 1.5 per cent, compared to Treasury’s prediction of 2 per cent.

Mr Robb says it is “odd” that Treasury factored in a drop in interest rates to calculate their figures.

“I think they were required to get a two in front of their growth forecasts so that the Prime Minister wasn’t embarrassed and it’s unfortunate that’s the situation,” he said.

Treasurer Wayne Swan says there is no conflict in the difference between the figures.

“They are broadly similar,” he told Sky News.

“There is a difference in terms of the Reserve Bank and the Treasury forecasts because the Treasury forecasts do take into account a loosening of monetary policy and for obvious reasons the Reserve Bank forecasts do not,” he said.

“They demonstrate the dramatic impact on the Australian economy of the slowdown of the international economy and that is why over a month ago the Government put in place its economic security strategy to boost growth.”

Opposition treasury spokeswoman Julie Bishop says the move by Treasury to factor in interest rates is unusual.

“What assumptions has the Government made on interest rate reductions in order to come up with a figure that had a two in front of it?” she said.

“If you have to do something unusual in taking into account interest rate cuts to come up with a figure of two you have to look at the RBA’s figure of 1.5 and say that’s closer to the mark.”

A spokesman for Mr Swan says while it is unusual to take interest rate reductions into account there are exceptional circumstances at the moment which did not exist previously.

The spokesman said with two recent unprecedented cuts by the RBA it makes sense to factor in further cuts.

ABC Online
by Online Parliamentary Correspondent, Emma Rodgers
11th November 2008

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