Federal Treasurer Joe Hockey says significant changes are required in the structure of the national economy to sustain Australians’ quality of life.
In an interview with The Australian Financial Review, the Treasurer says he is hoping that the Commission of Audit, which is reviewing government spending ahead of the federal Budget in May, will be able to release its recommendations early and help explain some of its rationale on spending cuts to the public.
The Treasurer said he wouldn’t be distracted by the current volatility in financial markets, and that they would “find their natural market point”.
Hockey signalled his belief that Australia would need to grapple with some dramatic changes to the domestic economy – and that previously reliable sectors would fade in their importance. He said:
“We are doing it because if we do not do it, then our lifestyle is not sustainable as a nation,” he said.
“We cannot longer rely on the land, through minerals and agriculture in particular, or the heavy lifting done by previous generations of manufacturing. We can no longer rely on that to sustain our quality if life in the future.”
The full interview’s here.
The comments echo warnings from Reserve Bank deputy governor Philip Lowe last year, in which he warned that without productivity gains, Australians may need to get used to lower living standards in future.
In its standoffs with Holden and, more recently, SPC Ardmona the federal government has shown it is unwilling to support loss-making companies with further subsidies. In recent days, there have been reports that the National Party’s Barnaby Joyce will be seeking a multi-billion dollar relief package for farmers.
The government will be doing a lot of this type of groundwork – preparing people for the Commission of Audit’s confronting recommendations – in the coming months.
But implicitly, Hockey’s comments signal the country will need to see productivity improvements, and also growth in other industries, to secure sustainable future growth. This will require a policy framework that goes beyond a slash and burn approach to government spending.
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