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Monday, 18 October 2010
Page: 441

Mr SYMON (2:19 PM) —My question is to the Treasurer. Will the Treasurer update the House on the state of the global economy and what it means for the government’s reform agenda?

Mr SWAN (Treasurer) —I thank the member for Deakin for his very important question about the global economy and plans the government has to broaden and strengthen our economy.

Last weekend I attended the IMF-World Bank meetings in Washington. It was a good opportunity to take the temperature of the global economy, to talk to fellow finance ministers about the economic outlook and of course to share the Australian economic story. It is incredible to think where we were in the global economy just two years ago. Just two years ago last weekend, in Washington, there was a G20 finance ministers meeting, an emergency meeting, which was attended by then President George Bush. What the global economy was contemplating at that time was a collapse of global financial and stock markets and a drop in global demand, and it is pretty incredible to see how far the global economy has come in those two years.

Of course, two years ago last week we moved decisively to put in place our bank guarantees to secure the flow of credit to the Australian economy and we announced our stimulus package phase 1. In two years the global economy has come a long way and, of course, so too has the Australian economy. But I guess the message that came out of this meeting over the weekend was that there is still risk in the global economy and, whilst it is recovering, the global recovery is fragile and uncertain. Indeed, the IMF has concluded that the risk has intensified, particularly when you look at what is going on in the European economy and in the United States economy. In those economies you are looking at near-double-digit unemployment and in some countries even more.

This is how the chief economist of the IMF summed up the situation:

The result is a recovery that is neither strong nor balanced and runs the risk of not being sustained … in most advanced economies, weak consumption and investment, together with little improvement in net exports, are leading to low growth. Unemployment is high and barely decreasing.

There could not be a sharper contrast with the Australian situation: strong employment growth and strong economic growth, compared with all other countries in the OECD. What they are saying in Washington is that what Australia has done is truly something special. Part of the success here is that, while we put in place the stimulus, we also put in place our plans for recovery—the fastest fiscal consolidation that we have seen since the 1960s. Bringing the budget back to surplus, making the investments in infrastructure and putting in place a tax system which is competitive, to broaden and to strengthen our economy—this is the way forward for Australia, and the contrast with all of those other countries at the IMF could not have been more stark.