Credit for growth belongs to miners
The 1.3 per cent GDP growth figure in the first quarter of this year is indeed a great result for Australia and all credit goes to the mining and resources sector for driving it.
But Wayne Swan shouldn’t be crowing because any analysis shows it is a tremendous result despite him, not because of him.
The result has come largely off the back of the key resource states in Western Australia and Queensland. And tell me anything Wayne Swan has done to promote the investment and development of these resources?
On the contrary, both Wayne Swan and Prime Minister, Julia Gillard, have gone out of their way to abuse those in the resources sector and to cast the sector as the enemy, while putting at risk the next stage of resource expansion with new taxes, escalating costs and more and more choking regulation.
Over half of the $500 billion pipeline the government talks about is yet to be committed, and many projects may well be mothballed, including BHP’s Olympic Dam due to the sovereign risk issues caused by the Gillard government.
Yet, we live in a country blessed with an extraordinary abundance of resources which are currently in demand. Four years ago, this resource demand in combination with no government debt, $70 billion of net assets and the automatic stabiliser of a flexible exchange rate (falling to 60c to the $US) and a 3.5 percent drop in interest rates, saw Australia weather the 2008/9 global financial crisis remarkably well.
Since then we’ve seen several subsequent years of the best terms of trade in Australia’s history.
It means that if the European financial crisis worsens Australia should, by now, be back in the resilient fiscal shape which saw us weather the 2008/09 storm. But we are not.
The reckless spending, which still sees the Gillard Government budgeting to spend $100 billion (or 40 percent) more this year compared to just four years ago, shows this is not a government which understands the importance of living within its means.
Much of this new spending is locked into new government programs which will require ongoing funding, even when the record terms of trade begin falling back towards more normal levels. The last six months has seen a 10 percent fall in our terms of trade as events in Europe have softened the demand for, and price of resources.
If the terms of trade fall another 10 to 20 percent they will still be at historically high levels but the bloated budget spending will automatically deliver more $50 to $60 billion dollar deficits. The loose spending has left Australia exposed and vulnerable.
This is not something that Wayne Swan should be crowing about.
- Wayne Swan shouldn’t be crowing while failing to produce a surplus despite out terms of trade being higher than at any time in our history.
- Wayne Swan shouldn’t be crowing while there are 140 shops closed in the regional centre of Shepparton; a story repeated in shopping strips across Australia.
- Wayne Swan shouldn’t be crowing while the government is still borrowing $100 million each and every day.
- Wayne Swan shouldn’t be crowing while millions of families are struggling to make ends meet.
- Wayne Swan shouldn’t be crowing while the government is borrowing to pay the $800 handouts.
- Wayne Swan shouldn’t be crowing when Australia has slipped ten places to be the fifteenth most competitive country in the developed world.
- Wayne Swan shouldn’t be crowing while government debt has climbed to $230 billion, and is still growing.
This against a backdrop where the two major assets of many, the family home and their superannuation are eroding in value. The third major ‘asset’ is a job and thousands of Australians aren’t feeling secure on that front either.
The fact is this government has wasted the mining boom. Wayne Swan and Julia Gillard have acted like a couple who have won the lottery and then gone on a spending binge until it is all spent.
There is a better way which only an election can deliver.
Andrew Robb is Shadow Minister for Finance, Deregulation and Debt Reduction
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