Global Financial Crisis is 'over' - Treasury boss Ken Henry

Treasury Secretary Ken Henry believes the GFC is over. Picture: James Croucher Source: The Australian

TREASURY boss Ken Henry has declared the global financial crisis is over as Australia's unemployment rate fell to an 11-month low.

Australian Bureau of Statistics figures showed business was booming nationally and employing both full-time and part-time workers, with Australia's jobless figure falling to 5.3 per cent from 5.5 per cent.

The decrease came as Dr Henry told a Senate Estimates hearing yesterday the worst of the downturn had passed.

"What people have called the global financial crisis, that has passed, I think it's safe to say," Dr Henry said. "But that isn't to say that there will not be further adverse shocks for financial markets down the track and some of those shocks . . . could be of some significance for individual countries, but I don't imagine (they would be) shocks of the sort that would be globally significant."

Despite the jump in job numbers Dr Henry said that there was "substantial spare capacity at this point" in the economy.

He said he did not expect the economy to confront capacity constraints until the jobless rate was up to a percentage point lower than it is now, The Australian reports.

Concerns emerged this week about rising job losses in the US and fears that Greece may default on its loans without a bailout package.

Grattan Institute economist Saul Eslake said he would largely agree with Dr Henry but added that some of the consequences of the crisis - like high unemployment and tight credit markets - would linger for a long time.

Opposition Treasury spokesman Joe Hockey seized on the jobless figures, demanding an end to the stimulus package.

"This signals the end of the recession rhetoric and it must be the end of the recession spending," he said.

Treasurer Wayne Swan said the unemployment results were a tribute to the Government's $42 billion stimulus package.

"What we particularly celebrate about these figures today is the thought that 52,700 Australians have told their families in January that they got a job," he told Parliament.

The results prompted Premier Anna Bligh to boldly claim her election pledge of creating 100,000 jobs was on track.

Economists noted the headline figures masked a 1 per cent fall in aggregate hours worked.