Despite high unemployment in Australia and another global downgrade forecast by the IMF, treasury secretary John Fraser is optimistic about the Australian economy
Treasury boss, John Fraser, is detecting a ‘little more optimism’ among the businesses he talks to, but concedes the Australian economy faces a ‘complex’ outlook.
Fraser also believes the labour market has held up ‘remarkably well’ considering the extended period of below-trend economic growth the nation has suffered.
However, at 6.2% the jobless rate remains high.
Addressing a Senate estimates hearing on Wednesday he said there was an urgency to get people, especially young people, into employment.
‘Employment is the greater factor in terms of confidence and demand,’ Fraser said.
But he warned further financial market volatility could be expected in an uncertain global economy.
He noted the International Monetary Fund recently downgraded the global outlook, the 15th straight time over four years.
China was undergoing a transition from investment-led growth to consumer inspired growth while developed countries were doing the reverse, moving from a period of over-consumption and under-investment.
While Australia was exhibiting signs of moving to broader-based growth away from mining, surveys since the May budget show investment remained very soft and consistent with Treasury’s general discussions with business.
‘I personally have detected a little more optimism on investment intentions in some areas in the past couple of months,’ Mr Fraser said.
But the treasury secretary is concerned about rising debt levels around the world, including Australia.
‘We are perhaps being succumbed into a sense of comfort that we can continue to borrow at remarkably low interest rates,’ he said.
But Mr Fraser believes the federal government is making good progress with its much-needed reform agenda.
The government released its response to the Murray Review into the financial system on Tuesday, while Fraser described the Harper review of competition as being ‘back on the table’ after Treasurer Scott Morrison’s discussions with his state counterparts last week.
‘I think it is fair to say that the tax reform discussion … has been moving in a very intelligent direction with all parties airing views and options,’ he said.