"The government accounts show there is room for the government to continue to stimulate the economy to head off the much higher than expected unemployment, 7.3 percent (168,000 people) at the end of 2009," said CTU Economist and Policy Director, Bill Rosenberg. Treasury released the Financial Statements of the government for the six months ended December 2009 this morning.

Unemployment is expected to continue at high levels - well above 6 percent or 150-160,000 people - for two or three years. "There is also room for sensible pay rises for workers in the public service."

Statements in 2009 suggesting that ACC is in crisis are looking less and less credible as the value of its investment fund rises, according to the financial statements.

ACC made a gain on its investment portfolio $212 million more than Treasury had forecast. In addition, ACC reported a year-to-date actuarial loss of $52 million which was well under half of the forecast loss of $122million. Similarly the New Zealand Superannuation Fund rose in value by $492million more than forecast.

In all, the government's operating deficit was $1.452 billion lower than forecast. "The government's financial position leaves plenty of room to help people hit by the recession," said Dr Rosenberg.