Kym Richardson (Kingston, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Will the Treasurer inform the House of the results of the latest OECD Economic Outlook? What is the OECD’s assessment of the Australian economy?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Kingston for his question. Overnight the Paris based OECD released its latest assessment of the Australian economy. It was a very positive assessment of Australia and its prospects. The OECD forecasts real GDP to grow 2.6 per cent in calendar year 2006 and to pick up to three per cent in calendar year 2007 and 3.4 per cent in 2008, although it notes that growth could well be held back by the effects of the drought.

The OECD expects growth to rebalance over this period, with domestic demand easing and business investment moderating but foreign demand to contribute more to growth through increased export volumes. The OECD expects Australia’s strong labour market performance to continue, with an unemployment rate forecast to remain around five per cent or lower. It also sees inflation easing after the effects of recent petrol and fruit price increases passing through the system.

What gives Australia great strength, of course, is the government’s fiscal position, the government now having delivered nine surplus budgets and having repaid in total $96 billion of Labor Party debt. As the OECD notes, the general government surplus probably surprised on the upside but net government debt has recently been eliminated. That puts Australia in a very small class of countries around the world that are carrying no central government debt. Our debt to GDP ratio is zero. The OECD average is around 40 or 50 per cent. If we were at the OECD average on a debt to GDP ratio we would be carrying $500 billion worth of debt. But in fact we are carrying zero. The benefits of repairing Australia’s fiscal position have given this country great strength. This great strength was brought by disciplined economic management, the kind of economic management that the coalition stands for.