Well, a lot of folks have criticised the RBA for supposed--actually, it would seem, rather illusory--misses (or 'misreadings') on its GDP forecasts over the last year or so. My buddy Rory Robertson questioned the Governor on a few topics today, including Australia's stubbornly strong labour market. What will not be a surprise is that the content of his question triggered some mirth in the audience....
MR ROBERTSON: Rory Robertson, Westpac Group Treasury, Governor
Stevens, thanks for a really great talk today, so your previous talk was “A Glass
Half Full”, today is “The Lucky Country” because you know on lots of measures Australia has outperformed the world, I wonder if I could suggest that your next
talk be called “The Australian Paradox”. A colleague of mine overseas was keen
for someone to ask you whether you thought the current TV show “The Shire” is
a better representation of life in your home town than “Sylvania Waters” a decade
or so ago, but I won’t ask that one today. My question today is the unemployment – unemployment – so unemployment’s been about five to 5¼ for
pretty well the past year, the question is, has that surprised you that
unemployment’s been able to stay low you know given the drama all around the
globe and even given the newspaper reports of you know lay off and restructurings. So is it surprising that unemployment is so low and can it stay
low?
MR STEVENS: I think it would be true to say that in our forecasts we had probably expected it to be a bit higher by now than it is, that’s not to say it
mightn’t still go up a bit, I think we would probably expect it to go up a bit. Is it surprising it can stay low given all the talk of layoffs? Well it’s an interesting question because, and I’m not the first person to point this out, but in an average month according to the statistics in any way, there are tens of thousands of jobs created and destroyed every month, and we don’t really – we don’t read about that because they’re, you know, they’re in all sorts of small places or industries
we don’t know much about and indeed it’s normal for there to be a non-trivial
amount of action in parts of the economy that are in the category called other that
we don’t know much about. So it’s probably not entirely surprising that you can turn in okay performance on unemployment even with some prominent, you
know, downsizing in some of the industries that are under pressure from the
exchange rate or the change in household behaviour or whatever. In the end
though, I think from where I’m sitting we’ve got an unemployment rate in the low
fives, let’s call it that, inflation rate, we’ll see what happens tomorrow but it will be probably in the you know near 2 per cent, the banks are strong, Government
finances are in reasonable shape, currency’s sound, not too shabby actually,
next question.
