Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. What does the OECD’s Economic Outlook say about the 2009-10 budget and the performance of the Australian economy?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Flynn for his question because the OECD’s latest Economic Outlook confirms that Australia’s economic growth and employment outlook is among the best in the OECD. The report is yet another reminder of the strong economic management which has seen Australia fight off a global recession and emerge in a much stronger position than just about any other country in the developed world.

The report makes a number of very important points. We are one of the strongest economies in the OECD, we have one of the lowest unemployment rates in the OECD and we have one of the best fiscal positions in the developed world. Contrast this to what is happening across the OECD. In the past two years there has been something like 16 million jobs lost. Just think about that for a moment, think about the devastation that causes in local communities and across whole economies, and compare that to the performance of the Australian economy where, in the last period, we have created something like 250,000 additional jobs. That is certainly celebrated by everybody on this side of the House because we understand how important it was to keep the economy going when the global economy fell off the cliff at the end of 2008 and in early 2009. We had very difficult global circumstances but in those circumstances Australia performed very strongly. That is something everyone in this country can be proud of. The OECD report says:

After weathering the crisis well in 2009, the Australian economy is projected to experience strong growth in 2010 and 2011.

The OECD is now forecasting growth for Australia at 3.2 per cent in 2010 and 3.6 per cent in 2011. The forecasts for unemployment are also equally encouraging. They are forecasting unemployment of 4.8 per cent by the end of next year, which is dramatically lower than the eight per cent expected for the OECD area as a whole. That is the comparison. That means there are Australians in jobs who are going home with a pay cheque at night. It is happening in this country; it is not happening in many of those other countries. So we have to make sure that we put in place a very strong fiscal framework to ensure prosperity as we go forward, particularly when we consider the backdrop of what is happening in Europe.

This comment from the OECD is particularly important. It talks about the government’s fiscal settings. It says they are ‘welcome given the rebound in activity’. It goes on to say:

… in view of the stronger economy and fiscal restraint, the government now expects to balance its budget by 2012/13, three years earlier than previously anticipated.

This is a fiscal position that is the envy of the developed world. We have got to this point because of responsible economic management, bringing the budget back to surplus in three years—three years early—and ahead of every other major advanced economy. This is what the OECD Secretary-General had to say:

… you have navigated well through this difficult time. The behaviour of Australia may not be very typical because you have done so well but holding up you have never had a big recession; it did have a very big positive impact on growth. I wish we could export your recipe.

He had a few other things to say as well. He made some comments about the resource super profits tax. This is what the Secretary-General of the OECD had to say last weekend. He went on to make this point:

In the particular case when you’re talking about the availability of raw materials … my impression is that taxes are not the major reason why they would invest …

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I think if you look at these things strategically … of course it’s a wise thing … to invest in Australia.

Indeed, it is. You can see this particularly in the major investment that has been put forward in recent days in Queensland by the major coal companies who are wishing to invest in rail. They are optimistic about the future of this country. The government is optimistic about the future of this country. What we must do is modernise our tax system. What we must do is get a modern tax system in terms of resources. And what we must do is give the incentive for companies through lower taxes, particularly for small business, to continue to invest and to create jobs. That is something that we should all be very proud of.