Australian Prime Minister Kevin Rudd yesterday 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 former Australian prime minister 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, in 2013, 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 percent 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 percent last month, 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 percent on quarter and 2.5 percent on year suggesting the decade-long mining investment boom was unwinding
“Managing this economic transition is now a core task of Australian economic policy,” Rudd said. “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 percent to 2 percent 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 labor 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 underdone 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 US,” he said.
However, at present, Indonesia does not fall within our top 10 trading partners or our top 20 investment destinations.”
Rudd had invited conservative opposition leader Tony Abbott to join him at the National Press Club, where he made his speech, to debate the economic future of Australia, but Abbot declined.
The prime minister said Abbott was scared of “the public scrutiny of an economic policy debate” and branded him “Captain Negative,” suggesting he routinely talked down the economy.
Abbott, who remains the narrow favorite to win national elections later this year, responded by accusing Rudd of being all talk and no concrete policy.
“Unfortunately, Mr Rudd has no specific announcements to make. All he can talk about is process, not change,” he said of his opponent’s speech.