MAKING NEWS

Tue, 21 October 2008
Tanner rules out 10% jobless rate


October 21, 2008, 7:44 pm

Unemployment will be higher than predicted in the May budget but will not reach 10 per cent, Finance Minister Lindsay Tanner says.

The federal government is due to deliver its mid-year budget review next month, when it is expected to lower its economic growth forecast due to the impact of the global financial crisis and a potential world-wide recession.

It is also expected to lift the budget jobless forecast of 4.75 per cent by June next year.

The unemployment rate was 4.3 per cent as of last month.

Asked on SBS Television's Insight program whether unemployment could reach 10 or 20 per cent, Mr Tanner said: "Definitely not".

"None of us can see into the future and the international crisis is obviously so unprecedented it's very hard to make predictions, but the fundamentals in Australia are very strong,' Mr Tanner said.

"We're better off than virtually anybody else in the world to deal with these problems, and we remain optimistic that we will be able to ride through this buffeting in reasonable shape.

"But we can't be precise about how that's going to unfold because we are dealing with international forces from America and Europe and elsewhere that are way beyond any Australian government's control."

Mr Tanner was asked again whether he would rule out 10 per cent unemployment as a possibility.

"I think that kind of thing is not even worth discussing," Mr Tanner said.

"Frankly what we are looking at is a slightly higher increase in unemployment than was projected in the budget.

"We projected it to go from the low fours to the high fours, so I expect we'll see a slightly higher projection for unemployment but nothing even remotely in the zone you're suggesting."

"Into the medium term, clearly projections become harder to make but I'm very confident that we will ride through these circumstances in good shape."

It was a similar story for economic growth.

"All of the projections until recently were in the two-three per cent zone and now I think the projections are going to be a little bit below that, but we still anticipate economic growth being projected to be in the positive.

"Even though it'll be pretty anaemic, it'll still be in the positive."



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