LABOR has taken aim at Finance Minister Mathias Cormann for launching an economic paper that disputes the work of one of his own departments in a new row over the $95 billion fiscal stimulus.
Mr Bowen backed the federal Treasury in its rejection — issued late on Friday — of Professor Makin’s conclusion that the spending splurge did not save the 210,000 jobs claimed by the former government during the crisis.
Professor Makin, a long-time critic of the stimulus and the professor of economics at Griffith Business School, found that Treasury’s claims about the impact of the policy were based on “spurious” modelling on the long-run relationship between GDP and employment.
Treasury Secretary Martin Parkinson issued a response on Friday night rejecting the assertion, saying Treasury only assumed a short-term impact.
“The stimulus package was estimated to have a temporary impact on GDP, which would translate to a temporary impact on employment,” Dr Parkinson wrote.
“The peak impact of the stimulus packages was estimated to be the addition of 210,000 jobs and the peak unemployment rate was estimated to be 1.5 percentage points lower as a result of the fiscal stimulus.”
