Arthur Sinodinos (NSW, Liberal Party, Assistant Treasurer) Share this | Hansard source

I thank the honourable senator for the question, for his interest in the economy and for his own substantial interest in the agricultural economy. I begin by saying that the economic policy debate of the last three years in this country was dominated by the fact that Labor failed to realise, the present opposition failed to realise, that outside the mining sector large parts of the Australian economy were not feeling any benefit from the substantial growth. They looked at the aggregates and at the three per cent trend growth and thought the economy was going well, yet when we were on the streets of Australia, as opposed to in the halls of Canberra, people were saying that small businesses were falling over, retail was not doing well and people were facing rising costs and rising regulation. This was at a time when we had the highest terms of trade in our history and the biggest increase in national income we have seen in many generations.

We do not have that anymore. The economy we have been bequeathed is one in which our commodity prices have been falling and our terms of trade are falling. To retain our incomes at the levels we are talking about we will have to double our productivity growth over the forthcoming period. This is in the context where we have been bequeathed a budget that is in deficit and going further into deficit as a result of actions of the previous government. That is the situation we have inherited. So we have to reduce costs in the economy, improve productivity, reduce the rising tide of regulation and manage the transition from mining-led growth into nonmining investment—housing, construction and other sectors. That is the challenge we are facing as a nation. Doubling our productivity growth will not be easy, but that will be what we need to do to increase our income per head.