Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the global economic situation and any implications for our economy.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Chisholm for her very important question. Overnight we have seen the release of the IMF World economic outlook. This talks about the growing instability elsewhere in the global economy and talks about the challenges that are posed for global economic growth. What the IMF has done is give a stark warning that the global economy has entered a dangerous new phase. This does reflect concerns about sovereign debt levels in Europe and it also reflects concerns about weaker economic activity in the United States. What the IMF has done with its forecast is that it has revised down its global forecast to four per cent in 2011 and four per cent in 2012, down from 4.3 per cent in 2011 and 4.5 per cent in 2012.

It was always going to be difficult post the global financial crisis and the global recession. Things were never going to be easy. Of course, we are still living with the legacy of those events some years ago. Many advanced economies have not returned their output to what it was prior to the global financial crisis, and that is particularly the case in terms of the United States. You do not have growth momentum in either the United States or Europe, and what that is producing in those countries is very high levels of unemployment. Many of these countries are also struggling with the weight of excessive sovereign debt and hamstrung fiscal policies.

What we need to see on a global scale is that these issues do need to be confronted, and they need to be confronted with the same determination that the G20 used during the global financial crisis and the global recession. In particular, we do need the major advanced economies to take swift and credible action to restore growth and confidence. This will certainly be the message that I will be taking to meetings in Washington of the G20, the IMF and the World Bank, because international engagement now is as important as it was a couple of years ago.

Australia is not immune from these bouts of instability in the global economy, but we need to remember that our situation could not be more different than what we see in the United States and Europe. In the global economy we stand tall in a position of fundamental strength, because we did act to support jobs and growth at the height of the global financial crisis. What we did in this country successfully—and everyone on this side of the House is so proud of—is we avoided recession.

Government members: Hear, hear!

Our economy has grown by more than five per cent since the global financial crisis—not something you could say in many other advanced economies. We do have something we are also proud of and that is an exceptional record when it comes to job creation—750,000 jobs in the time that we have been in office. The consequence of that is low unemployment. We treasure that because in those countries which have high unemployment, this is what causes not only weak economic growth but the destruction of communities. We on this side of the House understand the importance of jobs and the dignity of work. The dignity of work is so important not just to individual families but to an economy. That is why we put such a high priority on jobs.

On top of that we do have a very big investment pipeline—$430 billion. What we as a country must do is maximise the opportunities that flow from that investment pipeline by putting in place the essential reforms, the long-term reforms, that will maximise our prosperity: pricing carbon, investing in skills, making sure we get a proper return from our resources. If we do that we will continue to create jobs and prosperity for all Australians.