Treasury secretary Ken Henry has defended his department’s projections for Australia’s return to economic growth, although its recovery from the current recession is likely to be slower than previously experienced.

Dr Henry on Tuesday admitted surprise by some commentary in the media and other quarters questioning the validity of Treasury’s medium-term growth projections outlined in the 2009/10 federal budget papers, released last week.

“Some commentators have given the impression that our projections would, if realised, produce a period of unprecedented economic growth,” he told a Australian Business Economists lunch in Sydney,

“As it happened, the 1960s produced average growth above five per cent.”

In the budget papers, Treasury forecast zero year average economic growth in 2008/09, a contraction of 0.5 per cent in 2009/10, growth of 2.25 per cent in 2010/11 and 4.5 per cent growth in each of 2011/12 and 2012/13.

The following four financial years were expected to yield growth at “just under four per cent”, Dr Henry said, before slowing to 2.75 per cent in 2017/18.

Dr Henry said that other periods following slowdowns or recession in Australia were also periods of relatively strong annual rates of average growth.

The Treasury projections show three years of below trend growth in gross domestic product (GDP) during the current downturn, compared to just one in the 1980s and two in the 1990s, Dr Henry said.

“This recession will involve a slower recovery than previous ones and that’s why we’ve forecast three years of below trend growth,” Dr Henry said.

“It promises to be the deepest recession globally in memory.”

But Australia would emerge from recession in better shape than most other countries, he said, provided policy makers continued to act pre-emptively.

“Perhaps it is too early to be declaring that we will come out of this period of global economic crisis in much better shape that most other stgeloped countries, but I am prepared to make that prediction,” Dr Henry said.

In addition to backing up his department’s growth projections, Dr Henry said government’s ambition to keep spending in check was realistic.

Real government spending was projected to increase by 12.8 per cent over the next seven years, Dr Henry said, compared with a rise of 25.7 per cent in the seven years from 2000/01.

Dr Henry said the projections were in line with the fiscal discipline exerted during previous economic downturns over the past quarter century.

“In similar circumstances in the past, that is circumstances in which the economy was emerging from recession with a sizeable budget deficit, Australian governments have managed to exercise the sort of discipline that the present government has embraced,” Dr Henry said.

“It is at odds with the past several years but certainly not without precedent.”

Reserve Bank of Australia governor Glenn Stevens said on Tuesday that the long term growth projections in the budget were not out of order.

“It is quiet feasible to expect above average growth for a number of years during an economic upswing,” he said.

“Exactly when that is, and by how much, no one really knows, but I don’t think it’s crazily optimistic,”

Dr Henry said the federal government faced significant challenges in framing the 2009/10 budget as it sought to explain its fiscal strategy while laying down a path for an economic recovery.

“It is story telling of extraordinary complexity,” Dr Henry said.

Without fiscal stimulus packages and monetary policy adjustments, the unemployment rate would have been on track to peak at 10 per cent, rather than the 8.5 per cent rate forecast by Treasury for 2010/11, the department’s modelling showed.

Asked during a question-and-answer session if Treasury was independent of the government of the day, Dr Henry said: “In a sense no and in a sense yes.”

“The Treasury conducts its analysis without government interference, it is up to the government of the day to decide whether to accept that analysis or reject that analysis,” Dr Henry said.

Dr Henry also said he believed Australia was “not likely” to lose its top line Triple-A credit rating.