Australia’s economy is poised for a “tectonic shift” as a fast-growing Asia region transforms the resource-rich nation’s prospects, Treasurer Wayne Swan said in a speech Wednesday.
Australia faces a defining moment and needs to mould the Australian century in Asia, rather than “hitching a ride as a passenger,” Swan said.
Australia’s Treasury department will update its economic modelling tools to ensure it fully grasps the consequences of the rapidly-advancing Asia region.
Announcing plans to lead a delegation of top business leaders to Beijing later this year, Swan said he wants businesses to embrace a new A$30 billion currency swap deal signed between the Chinese and Australian central banks this month.
“I see opportunities between our two countries in the internationalisation of the renmimbi and will be looking to nurture these,” he said in the speech, which he delivered in Melbourne. The renminbi is the official name for the Chinese yuan.
The resource-rich nation is being transformed by a massive mining boom, which in turn is fuelling high exchange and interest rates that are hurting sectors such as tourism and manufacturing. Much of this demand for commodities is being driven by China, which the International Monetary Fund forecasts will become the world’s biggest economy in 2016.
Swan noted that countries like Vietnam and India also remain on a rapid growth trajectory. Together, it means that a third of the world’s total output is within 10,000 kilometres of Australia, compared with only 15 percent in the 1950s, he said.
“These tectonic shifts are occurring right on Australia’s doorstep,” Swan added. “For Australia, the implications of all this are truly enormous.”
The mining boom is only one part of the Asia story, which will eventually mature into a consumption boom, in turn driving demand for Australian services such as education, banking and healthcare, he said.
“And we know that as this happens, Asia will evolve to become not only the world’s largest production zone but also the world’s largest consumption zone,” he added.
To make the most of opportunities ahead Swan said the country must embrace productivity reforms and continue to boost the skills of its labour force, while embracing policies such as the government’s new tax on the profits of mining companies.-By Enda Curran