Treasury has lost all credibility

Terry McCrann, in The Australian, comments that two recent examples of economic modelling by the Treasury, on the financial meltdown and the impact of an ETS respectively, demonstrate how that department's tenuous grip on reality has finally evaporated.

On Sunday, October 12, Treasury signed off on Kevin Rudd's unlimited bank deposit guarantee.

On Thursday, the Treasury modelling on his emissions trading scheme was released. These events bookend the shredding of Treasury's credibility over 18 days in October.

The first was inexcusable, creating a mess for markets and investors. The second was disgraceful, a statistical fraud on the Australian people. Apart from the sheer waste of time and resources -- and balloons of carbon dioxide released.

And, rightly, he is particularly scathing about the ETS modelling:

It purported to show that we could have our low carbon economic cake and still get to eat more and more of it. That sharply reducing emissions would hardly dent our growth path out to 2050.

That broadly, instead of the economy growing at 1.4 per cent per person per year in real terms, it would grow between 1.2 and 1.3 per cent instead.

If an adult of reasonable intelligence and basic economic understanding can't see immediately that this is sheer, utter rubbish, we really do have a problem at the centre of economic advice in this country.

And he concludes:

Treasury was one of the last bastions of reason. It has now signed on as official "statistician" in Kevin Rudd and Penny Wong's First Church of Climate Apocalypse.

Read it here.