Labor defends stimulus impact

Labor is defending its economic credentials against criticism it has overstated the benefits of its stimulus rescue packages during the global financial downturn.

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Reserve Bank director Warwick McKibbin has said the government’s role in supporting the Australian economy was “relatively small”.

“It could not have been responsible for creating 200,000 jobs,” he told The Australian newspaper on Thursday, referring to the government’s oft-repeated claim.

The leading economist said other forces, including falling interest rates, a drop in the value of the Australian dollar and the resilience of local banks, also helped bolster the economy from the global shock.

The government acknowledges other factors were at work but says its jobs claim is based on a Treasury analysis.

“The Treasury analysis is clear. The stimulus saved 200,000 jobs and that’s a conservative estimate,” Labor campaign spokesman Chris Bowen told ABC Radio.

Mr Bowen was keen to turn the economic argument against the coalition, pointing to Opposition Leader Tony Abbott’s performance at a town hall-style gathering in western Sydney on Wednesday night.

“Last night once again underlined his lack of economic judgment and the risk he provides,” Mr Bowen said.

By contrast, Prime Minister Julia Gillard, who addressed the meeting before Mr Abbott, was on top of issues of substance, Mr Bowen said.

Most observers thought the opposition leader received a warmer reception from the 200 supposedly undecided voters at Rooty Hill RSL Club.

Mr Bowen had a different view. “A lot of negative soundbites, but no clear plan,” he said.

Mr Abbott on Thursday will use a school on Sydney’s north shore to ram home the coalition’s message that the Labor government wasted billions of dollars of stimulus money.

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