FED:Insurance wouldn't have covered Qld =2

AAP General News (Australia)
02-16-2011
FED:Insurance wouldn't have covered Qld =2

Economist Saul Eslake, of the public policy think tank the Grattan Institute, said
the Queensland government's extra borrowing in the wake of recent natural disasters wouldn't
put upward pressure on interest rates or have other adverse affects on the Australian
economy.

Mr Eslake said the fact that federal Labor's decision to impose a flood levy was political
didn't make it wrong.

"Other choices would have been equally (economically) sound ... hence it's really a
political judgment," he told the inquiry.

"It's not correct to say the specific choices the government has made are ones that
- had they made different choices - could legitimately have been depicted as economically
irresponsible."

However, Mr Eslake said it would be "problematic" if the government slugged taxpayers
with an extra tax every time a significant expense popped up that needed to be covered
quickly.

Fellow economics expert Warwick McKibbin said Canberra's and the public's focus on
debt levels wasn't good for the economy.

"Both sides of politics should actually move away from this focus on deficit and debt
(and) focus on the quality of government spending," he said.

Professor McKibbin is a Reserve Bank of Australia board member but said he was not
speaking on the institution's behalf.

AAP bsb/rl/jl

KEYWORD: FLOODS LEVY 2 CANBERRA

� 2011 AAP Information Services Pty Limited (AAP) or its Licensors.