Keating aware of recessionary risks
letter published in The AFR, 27 January 2009
In reviewing the role of Treasury Secretary, Ken Henry, ("Ken Henry king of the hill", January 23-26), Andrew Clark claims that when Henry was senior adviser to treasurer Paul Keating (from September 1986 to June 1991) "what stuck in his mind" was that Treasury didn't anticipate the recession of the early 1990s or its severity.
While I do not know whether this is a correct interpretation of Henry's perception, I should point out that, shortly before Henry became senior adviser, I advised treasurer Keating of my view as a Deputy Secretary to the Treasury that Australia faced the most serious economic situation since the 1930s and that, unless major policy changes were effected by the Government, there would be a serious recession.
Shortly after, Australia experienced its initial downgrading of its credit rating and, in early 1987, I resigned from Treasury and joined the Institute of Public Affairs.
As senior fellow of that organisation I published in May 1988 Australia in Hock: The Way Out suggesting a program of policies needed to remedy the still deteriorating situation.
In short, although not the official Treasury view, there can be no doubt that both the Treasury and the Treasurer were aware in the period after late 1986 of the recessionary risks inherent in then current policies.
Des Moore
Director, Institute for Private Enterprise
South Yarra, Vic