Ken Henry: “I said earlier monetary and fiscal policy were complementary.”

Steve Fielding: “You also said they were going in the same direction.”

That more or less summed up the Economics Committee inquiry into the stimulus package. The country’s most senior economic policymakers calmly explaining economic fundamentals to senators whose understanding of economics — or in the case of Steve Fielding, the English language — was none too clear.

The Government’s stimulus package has undoubtedly supported demand, helped GDP stay positive and boosted employment. So, too, has the Reserve Bank’s monetary stimulus and the external boost provided last year and earlier this year by a falling dollar and continuing demand for Australian resources. Of those three factors, however, only the fiscal stimulus has been of economy-wide impact. Moreover, it is clear in retrospect that the Government’s rush to action and its initial cash-based stimulus was crucial in supporting and then boosting consumer confidence in a way that has been absent in most countries overseas.

The jobs saved or supported by the stimuli are the only important economic indicator for now. It took Australia a decade to overcome the effects of the recession of the early 1990s — a lost decade for the long-term unemployed and their families, for businesses that faced skill shortages, for an economy that grew less rapidly than it should. The consequences for national productivity and human misery of a rise in unemployment are vast and should be avoided at all costs.

An accelerated withdrawal of the fiscal stimulus, which is already well past its peak and shrinking, would unjustifiably impose those consequences on, by Treasury’s reckoning, 100,000 Australians. It is too high a price to pay to suit the whims of academic economists and a beleaguered Opposition desperate for an issue on which to get some sort of traction.