11 May 2011

Australia tipped to benefit from 'Asian Century'

2:51 pm on 11 May 2011

Federal Treasurer Wayne Swan says Australia stands to be a prime beneficiary of a seismic shift in economic power from east to west in what he has termed "the Asian Century".

The ABC reports the government's budget focus has clearly shifted from the global financial crisis to the commodities boom being driven by Asia's economic growth.

Treasury is forecasting Australia's economy to have grown only 2.25% over the 2010-11 financial year, down from forecasts of 3.25% growth in last May's budget.

The ABC reports the difference is largely due to an estimated $A9 billion negative impact from the floods and Cyclone Yasi which, together, are expected to wipe 0.5 of a percentage point off economic growth.

In addition, the New Zealand and Japan earthquakes will take a further 0.25 of a percentage point from the Australian economy's expansion.

However, the recovery from the disasters, particularly the resumption of full coal production in Queensland, is expected to push Australia's growth to 4% over the coming financial year.

This above-average level of growth is also being fuelled by mining investment.

Resources companies are expected to invest $A76 billion in 2011-12 to expand capacity - around eight times the annual level of spending before the boom.

The prices Australia receives for its major (mostly commodity) exports compared to the cost of its imports, known as the terms of trade, is also at a 140-year high.

Treasury's economic forecasts expect a moderation in that historically high terms-of-trade figure, but only by 0.25% over the coming financial year, and 3% the year after.

Job schemes

The Government says the commodities boom is a key driver of its determination to get more people into the workforce.

''Just as our focus on jobs helped Australia beat the global recession, so too can a focus on jobs ensure that we maximise our advantages in the 'Asian Century','' said Mr Swan in his budget speech.

The Treasurer said a package called the Government's Building Australia's Future Workforce will assist more people to find jobs, or re-skill into expanding areas of the economy.

The package includes:

$A558 million for 130,000 training places,

[$A200 million in assistance for apprentices to progress and complete their training,

$A1.75 billion to work with states and territories on changes to the vocational education and training system, and

$A263 million for other skill development programmes.

Much of the funding has already been allocated or reallocated from other training programmes.

However, Treasury's forecasts do not anticipate any boost to workforce participation, which is expected to remain at 66% this financial year and for the next two.

Unemployment is forecast to fall to 4.5% by 2012-13 due to the creation of a further 500,000 jobs.