Helped by its massive natural resources, Australia has weathered the global financial crisis better than other Group of 20 economies. In 2012, its economy grew 3.1 per cent, compared with 1.6 per cent in the United States and 1.1 per cent in Canada.
New treasurer looks to keep Australia out of recession
Australia’s new Treasurer Chris Bowen was on Friday welcomed by business figures as he hinted at policy changes amid recession fears following an unprecedented Asia-mining boom.
Bowen, who served as assistant treasurer from late 2007 to mid- 2009 and was also minister for immigration, tertiary education and small business, was installed as treasurer on Thursday.
The high office rewards the 40-year-old from Sydney for his strong support of Kevin Rudd, the former prime minister who made a dramatic political comeback as national leader on Wednesday night, ousting Australia’s first woman premier Julia Gillard.
Chief economist at Bank of America Merrill Lynch Saul Eslake said one of Bowen’s first challenges would be to improve relations between business, which has had to absorb divisive mining and carbon taxes in recent years, and government.
“I think Bowen probably needs to do things to shore up the credibility of the budget,” Eslake also said, adding this would be a delicate balancing act given the economy was likely weaker now than when the budget was announced in May.
Bowen, a career politician with a degree in economics, said the new leadership will see some continuity but also change ahead of the yet-to-be-announced election date, originally scheduled for September 14. Rudd was due to unveil his full cabinet later Friday.
“If you are asking us... to say we are never going to change any government policies, we’re never going to discuss any change to government policy in the future ... well we are not going to do that,” he told Network Seven.
Bowen takes over from Wayne Swan who took on the job in 2007 when Rudd was first elected prime minister and who was credited with helping Australia sidestep the global financial crisis.
Rudd announced he wants to reconnect with the business community and declared the mining investment boom over, while Bowen’s appointment has been welcomed by members of the business community.
Business Council of Australia President Tony Shepherd said Bowen was “decent”.
“He is straightforward, pro-business by inclination, and one of those people you can talk with rather than get caught up in the politics of division,” he told the Sydney Morning Herald.
Peter Strong, executive director of the Council of Small Business said Bowen “gets business”.
But Eslake warned there was a risk of recession for Australia, which dodged the global financial downturn, in 2015-16 due to falling investment in the energy sector and the government needed to do something to fill the gap.
Bowen told parliament Thursday: “We do need to recognise that Australia’s economy is in transition, we are moving from the investment phase to the production phase in the mining industry, this does have a very big impact on our economy.”
But the conservative opposition called the new Labor leadership a “joke” and said it would provide careful, prudent government if elected.
“What we’ve seen over the last 48 hours is a circus,” shadow treasurer Joe Hockey said Friday. “The circus has got to come to an end. “