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Treasurer's economic note: 20 January 2013



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Being Australian means many things. At times of national remembrance, it means the type of mateship forged in places with an enduring meaning, like the shores of Gallipoli or the Kokoda Track. During times of emergency, like we’re seeing at the moment with harrowing firestorms ravaging many parts of our country, it’s about communities rallying together to fight fires and floods, individuals jumping in to help their mates, neighbours and total strangers without a second thought.

As we gear up to celebrate Australia Day this week, it’s a good time to reflect on all the things that make our country great. We all have different stories, but as the old adage goes, we know that the things that unite us are greater than the things that divide us.

We have a lot to be proud of. If we’re known as the lucky country, it’s because we’ve made our own luck. Yes, we’ve been endowed with rich natural resources, but our standing in the world is built on more than that - it’s been built on the hard work, sweat and perseverance of all Australians.

Working Together

As a people and as a country, we determine our own fate - Australians don’t rely on the spin of the wheel or the luck of the draw. We’ve had to fight and make hard decisions - often against the howls of vested interest - to get where we are. It’s our achievements together, as a nation, that have made us strong.

There’s no greater example of this in recent history than the way our country came together during the global financial crisis to fight the biggest economic meltdown in 80 years. We could’ve sat on our hands - as some suggested we should - kidding ourselves that the volatility coming out of the US and Europe was too far away to reach our shores. But instead we had government, business and workers come together to overcome the worst the world had to throw at us.

The big economic calls we got right in the dark days of the global financial crisis and the resilience of the Australian people meant we were one of the only developed economies to avoid recession. This has provided a crucial foundation for future growth, with our economy now 13 per cent bigger than when the Government came to office, while many developed economies have gone backwards or barely grown over the same period. While the jobs data out this week showed Australia’s unemployment rate tick up slightly to 5.4 per cent, it still remains one of the lowest in the industrialised world. Our economy has also added more than 800,000 jobs over the past five years, while tens of millions have been lost around the world. In addition to this, we’ve also got strong public finances, very low debt, contained inflation, a massive investment pipeline and a solid growth outlook.

Of course, we’re not immune from ongoing global uncertainty, which has weighed on consumer and business confidence and contributed to patchy conditions in some parts of our economy. Global headwinds, commodity price volatility and a sustained higher dollar have also wiped $160 billion in revenues from our budget bottom line over the past five years. But in the face of these challenges we’ll continue doing what’s right for growth and jobs in our economy, protecting the livelihoods of the most vulnerable in our community, while making room for our priorities and investing for the nation’s future.

Cautious Optimism

In my speech to the Harvard Club on Friday, I talked about the resilience of Australia’s economy against a backdrop of continued uncertainty in the global economy. I think 2013 could be a better year for the global recovery if policymakers around the world do the right thing for jobs and growth. In particular, it’s encouraging to see good evidence that China’s economy is stabilising, with data on Friday showing that China’s economy grew by 7.9 per cent through the year to December, up from 7.4 per cent through the year to September. This result follows more positive data out of China in recent months, which have pointed to a broad improvement in economic activity. While I remain cautiously optimistic, there are still some big hurdles that need to be cleared in the global economy this year, particularly in the US and Europe. As IMF Managing Director Christine Largarde said this week, now is not the time to relax.

It’s the responsibility of all leaders, governments and commentators around the world to ensure that sensible realism about these challenges doesn’t morph into undue pessimism, which itself hurts confidence. Endless pessimism is in itself a risk to the global recovery, just as it weighs on business and consumer sentiment in Australia’s economy. I’m determined to have a positive debate in Australia in 2013 about how we lock in the gains we’ve made in the last five years, and set our economy and our community up for the next five years. This is why the Gillard Government has a detailed plan to build on Australia’s strengths beyond the first phase of the mining boom and maximise the benefits of the Asian Century.

Education the Key to Our Strong Future

At the centre of our plan is the historic investment we are making in education. Right now around the country, mums and dads are busy getting the kids ready to go back to school. We know this isn’t cheap - the costs of books, stationery, uniforms, shows and school bags can pile up. This year, 1.3 million families have been receiving the Schoolkids Bonus directly into their bank accounts to help with these essentials. Last Budget, we brought in the Schoolkids Bonus to replace the old Education Tax Refund, meaning families no longer have to keep a bunch of receipts at the busy start of the year or fill out extra paperwork at tax time - it gets paid automatically twice a year.

For each eligible child in primary school, families get up to $410 a year, and up to $820 for each high school student. There are a million high school kids, and 1.2 million primary school kids whose families will be receiving the bonus right now. These payments will go a long way to helping kids have a great start to the school year, just like a good education will help them have a great start to their life. Just as parents want the best for their kids as they head back to school, we want to ensure they have the best possible chance at an excellent education.

There aren’t too many things more Australian than the idea of the fair go. The sense of a fair day’s work for a fair day’s pay and a decent safety net for the most vulnerable in our community. The idea that our kids and grandkids deserve the same opportunities no matter where they were born or who their parents are. That’s what the Government is determined to achieve with our school reforms - it’s about giving each and every student the same opportunity of a quality education, ensuring they can succeed to the best of his or her ability, no matter if they live in Penrith or Perth, in Newcastle or Nundah.

Education has always been at the centre of this Government’s agenda. Our National Plan for School Improvement will enhance school standards and education of students around the country for years to come. We need to ensure our kids have the education for the skills of the future. Australia can’t walk complacently into the Asian Century assuming we’ll enjoy economic prosperity without

developing the skills we need to harness its opportunities. With a great education under their belts, our kids will be in the best position to create prosperity and wealth for our country.

Devastation

In last week’s Economic Note, I wrote of the devastation being wrecked by bushfires right across the country. Sadly, the situation in many places remains extremely difficult. The tireless work of all our firefighters, emergency services and volunteers deserves our strongest praise - we are forever grateful for what you do. During the week, the Prime Minister visited areas affected by the fires and has announced assistance to help communities, families and businesses get back on their feet. Our thoughts are with communities that remain under threat and with those who are being forced to spend the first month of 2013 rebuilding their lives.

Wayne Swan Deputy Prime Minister and Treasurer Sunday 20 January 2013 www.treasurer.gov.au twitter.com/SwannyDPM