Mr Dunne says the BPS discloses a very sobering picture, and inspires little confidence in the government’s ongoing economic management.

“According to the BPS, the current international economic slowdown is likely to be more pronounced than previously anticipated, by its own admission rendering all economic forecasts subject to ‘considerable uncertainty’.”

“Against this background the BPS’s forecast of a 42% decline in the growth rate from 3.3% on Budget Day 2001 to 1.9% today is alarming.”

“The economy’s current fragility is further underlined by the fact that the government’s spending programme next year will be sustained by growth in revenue being 1% more than growth in expenditure.”

“It is arguable that balance will be sufficient to offset the increasing pressures now being felt in key areas like health, family and social services, education and public sector wages, especially in election year.”

“The situation becomes more precarious when it is realised that, according to the December Economic and Fiscal Update (DEFU), the current growth in tax revenue is based on growth in GST receipts.”

“In other words, the strategy is based upon consumer demand remaining strong.”

“But the DEFU also discloses that is unlikely over the next 2 years because both households and businesses are likely to adopt a more cautious ‘wait and see’ approach, with no real recovery in demand levels likely for a further 2 years beyond that.”

“All in all, the end of Dr Cullen’s Golden Weather is coming rapidly upon us,” Mr Dunne says.

ENDS