FORMER federal treasurer Peter Costello believes the worst of the financial crisis has passed, but has criticised the Government for not thinking of the long-term consequences of its decisions.
Mr Costello said although the worst was over, it could take some time for the economy to bounce back.
"I've compared it to a tsunami, that is it'll come in waves and you'll have a bit of a lull and then it'll be a shock to the system," Mr Costello told the Melbourne Press Club today.
"I think most of the bad news has now been reported and most of he bad news is now out there. So that's a good sign. But it could be a while back."
Mr Costello, who said he would love to be the treasurer dealing with the global crisis, believed Australia was in the best position of any country to withstand the pressure - and praised his 12 years of financial management for putting it there.
"We still have very low unemployment and economies like China are still growing so it puts us in about as good a position as you can expect in the world today," he said.
Despite a relaxed attitude and a humorous speech, Mr Costello couldn't resist a dig at the Rudd Government. He said decisions relating to the economy should be made "very, very carefully" and questioned whether the Government's bank deposits guarantee was good for the country in the long term.
"It is very important in the middle of financial instability not to make long-term decisions that we will regret," he said.
"When the Government makes a guarantee, it's not actually the Government that's making the guarantee, it's the taxpayer.
"What they are saying is if necessary, we will tax people, to look after particular financial institutions.
"And the point is this, the moment you guarantee one part of the financial sector you are always going to put another part into disadvantage."
He said the Government's guarantee has now "potentially" started a run on mortgage funds which, as a result, have had to suspend retention.
"So, I would say to the Government they should be very careful with their next announcement so it doesn't produce another problem in the financial industry."
He once again dodged the question of his future - he remains a backbencher but has joined the World Bank's international advisory board and appears to spend more time promoting his memoirs and writing columns than in Parliament.
He admitted he misses holding the controls of the country's fiscal policy.
"This is my bread and butter, this. Financial instability and the international financial architecture is somewhere where I've had enormous experience," he said.
