Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Treasurer. Treasurer, why is annual GDP growth well below trend at 2.3 per cent and well below the level of growth needed to address unemployment?

Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Well, for a range of reasons. Firstly, we faced significant headwinds offshore, and there is no doubt about that. We had had the biggest fall in the terms of trade in history. We inherited an economy that was facing rising unemployment. We inherited an economy that was facing bigger deficits. We started to turn it around.

Ms O'Neil interjecting—

Ms Claydon interjecting—

Mrs Bronwyn Bishop (Speaker) Share this | Link to this | Hansard source

The member for Hotham and the member for Newcastle will cease.

Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Quite obviously, we had significant headwinds with continual downgrades in forecasts, by the IMF, the OECD and a range of others, for growth in the United States and, particularly, Europe. The Eurozone is, in fact, the biggest single economy in the world. And this time last year at the G20 there was a discussion that there was a 40 per cent chance that Europe would go into recession. The good news is: Europe has not gone into a recession; Europe is not going into recession. And the work of the European Central Bank has been exemplary in helping to avoid that. The United States has had a remarkable turnaround. The United States has now near-full employment, which is a remarkable turnaround from the near 10 per cent unemployment it had a few years ago. And, as that huge middle class gets the benefits of full employment in terms of higher income, they will become bigger consumers, and the United States consumer helps to drive economic growth around the world. Our trade with the United States has improved as well. So we are seeing good signs.

One of the challenges is that China has been coming off its higher levels of growth. China is our biggest trading partner. We are now diversifying our trade with China beyond iron ore and coal and a range of others, which is hugely important, and continues to be hugely important. But we are diversifying into the services area, which has had more than eight per cent growth over the last 12 months in services such as tourism, education and health.

This is a recalibration of the Australian economy, and we are helping to guide it in the right direction and, importantly, strengthening the Australian economy, and as a result of initiatives that we have put in place, like getting rid of that carbon tax, getting rid of the mining tax, abolishing 50,000 pages of regulation, and ensuring that the Australian government gets back to the point where it lives within its means. As a result of that, we are seeing job creation in Australia run at four times the speed it did under Labor, and we are seeing the economy grow stronger than it would have under Labor.