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Current account deficit breaks 6% barrier: Australia addicted to debt.



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FOR MEDIA

CRAIG EMERSON Member for Rankin

SHADOW MINISTER FOR INNOVATION, INDUSTRY AND TRADE

5 March 2003

Current account deficit breaks 6% barrier, Australia addicted to debt

Australia’s current account deficit has broken six per cent of GDP as the Government’s economic mismanagement has addicted the nation to debt.

The Howard Government’s economic mismanagement has set for Australia three shameful records: record foreign debt, a record current account deficit and a record trade deficit.

The December quarter national accounts released today reveal a current account deficit hitting 6.2 per cent of GDP, perilously close to the 6.4 per cent reached during the 1986 balance of payments crisis.

The current account deficit is fuelling Australia’s $354 billion foreign debt.

Australia is living off the credit card.

The inability of Australians to save as they struggle to make ends meet means the nation is heavily dependent on foreign borrowings to finance spending.

The Howard Government has returned Australia to a farm and a quarry and once again our luck from relying on good seasonal conditions has run out.

What a sorry result for Australia on the 20th anniversary of the election of the Hawke Labor Government.

Twenty years ago the newly elected Labor Government recognised the urgency of transforming Australia from a lucky country to a clever country.

Those reforms yielded record productivity growth, but that, too, has started to fall1.

The Government has failed to invest in the new sources of productivity growth - innovation and skills.

Today’s productivity growth is tomorrow’s living standards, tomorrow’s jobs. Australia’s falling productivity is a bad sign for Australia, already heavily addicted to foreign debt.

Contact: Craig Emerson 0418 781 386 or Brendan Shaw 0413 013 501

1 See graph on page 135 of the Government’s recently released white paper on foreign affairs and trade.