Australia at crossroads as China resources boom ends, says Rudd
Australian Prime Minister Kevin Rudd on Thursday said the China resources boom was over, leaving the economy at a crossroads, as he called for a new productivity pact to boost competitiveness.
In his first major policy speech since ousting Julia Gillard as leader, Rudd also urged a sharper engagement with Asia, particularly Indonesia, to help smooth the nation’s economic transition from its reliance on commodities.
“If we make the wrong decisions now, we will be living with those decisions for the decade ahead,” he said.
“The truth is this year, the China resources boom is over. While the export of resource and commodity volumes are up, the prices we receive for them have now fallen almost 25 per cent since their peak and may well fall further.
“Right now, we find ourselves at a crossover point for our national economy.”
Rudd’s comments came as Australia’s jobless rate jumped to 5.7 per cent in June, its highest level in almost four years, as the mining-driven economy begins a tough diversification drive to other sources of growth.
The economy grew at a slower-than-expected rate in the first three months of the year, expanding 0.6 per cent on quarter and 2.5 per cent on year suggesting the decade-long mining investment boom was unwinding
“Managing this economic transition is now a core task of Australian economic policy,” said Rudd. “Critical for jobs. Critical for infrastructure.”
He said lifting national productivity was a key priority, calling for better cooperation between business, unions and government so everyone was “pushing in the same strategic policy direction”.
“The core of this new national competitiveness agenda must be a common agreement to lift the rate of annual productivity growth from its existing level of 1.6 per cent to two per cent or better,” he said.
Since becoming prime minister a fortnight ago, Rudd has met four times with the Australian Council of Trade Unions and the Business Council of Australia to enlist their support for closer cooperation.
Agenda items included rising energy prices, rigidities in the labour market, business productivity, red tape, education, skills and training, infrastructure and small business.
Rudd said greater business engagement with Asia outside of the resources and energy sector was also necessary to help the economy cope.
“The truth is Australia is much under-done in Asia beyond the resource and energy sector,” he said.
“Indonesia is a classic example - an economy which by 2050 is on track to become the fourth largest economy in the world after China, India and the United States. But at present, Indonesia does not fall within our top 10 trading partners or our top 20 investment destinations.”