CEDA's 2011 Post-Budget Briefing on May 12 provided attendees with an insightful economic overview of the Federal budget.
The presenters stated that while there were some positive measures, and the broad focus of the budget was in the right direction, it was a missed opportunity to significantly address the imminent challenges the Australia economy would experience as a result of the resources boom.
Speakers also highlighted that the budget failed to meaningfully address the structural adjustments the Australian economy is experiencing. This will create an awkward period for Government as the economy booms on the back of mining and resources, but we are likely to see businesses in areas such as manufacturing and tourism fold or move parts of their operations offshore due to the high Australian dollar.
ANZ Chief Economist Warren Hogan described why he thinks we are in a genuine "super" economic cycle, which is not just because China is industrializing but because this is coinciding with the upturn in global infrastructure spending in the developed world.
He also highlighted issues that need to be better addressed to support our economy including immigration and increasing labor availability as demand surges under the mining boom, why with the current budget there was little chance of a sovereign wealth fund and why it was important that Government does not try and prohibit the structural changes to the economy that are likely to occur due to the high Australian dollar.
On forecasts made in the budget in areas such as GDP, the Australian dollar and unemployment, Mr Hogan explained why they were quite reasonable for the next few years, but historical experience suggests that the long term assumptions were unlikely to eventuate and were where the vulnerability lay in the budget.
Business Spectator CEO and Publisher Alan Kohler explained why he is sceptical about the Government's surplus forecast in three years and why more needs to be done in key areas such as skills.
Mr Kohler highlighted that the key changes in the budget required to return to surplus were largely to occur in the third year and only minor changes in the economy would make this difficult to achieve.
He also provided insight into the political positioning of this year's budget.
Roxanne Punton | Communications Manager
13 May 2011