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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

19 February 2012

Treasurer's economic note

On Thursday, we learnt that more Australians are in work today than at any time in our history. That's more Australians than ever bringing home a pay packet to their families, gaining the opportunity of a better life and a brighter future. It's a fantastic achievement for our nation, particularly given the current state of the global economy. This news was unfortunately overshadowed in the media by reports of job losses at a number of companies. Obviously any job loss is a huge blow for those affected, but it's important not to lose sight of the bigger picture - the fact that overall 46,300 more Australians gained work last month and the unemployment rate fell to 5.1 per cent. With the media's preference for bad news over good, it's easy to be left with a distorted impression of what's really going on in our economy - something Ross Gittins wrote about in an interesting column  during the week. Of course we shouldn't view the world through rose-coloured glasses, but we need to recognise the economy's strong foundations if we are to make the most of our nation's opportunities.

Rock-solid fundamentals

There's no denying these are tough times for many businesses and workers with the high dollar, heightened global uncertainty and structural changes in our economy. But it's important to keep in mind that we face these challenges from a position of strength. We have low unemployment, solid economic growth, a massive investment pipeline, contained inflation, and very low public debt. Our strong standing was highlighted during the week when Moody's downgraded a number of European nations, leaving Australia as now one of only eight countries to hold the gold-plated AAA credit rating with a stable outlook from all three international ratings agencies. While we shouldn't be surprised if there's some patchiness in the monthly economic data going forward given the challenges we face, we must also be realistic about our rock-solid fundamentals.

The surge in January employment  takes the number of jobs created since Labor came to office to more than 760,000. Over the same period, more than 26 million jobs have been lost elsewhere in the world. It's another reminder of how Labor is managing an economy in the interests of working people. The following graph compares Australia's job record with major economies. It shows that while our employment levels have grown significantly in recent years, the U.S., Europe and Japan have yet to recover the jobs they lost during the global financial crisis.

This graph compares Australia's job record with major economies. It shows that while our employment levels have grown significantly in recent years, the U.S., Europe and Japan have yet to recover the jobs they lost during the global financial crisis.

The Prime Minister and I have been advocating through international forums for some time the need to have employment put squarely at the centre of the global economic agenda. All nations need to do more to reduce unemployment. Providing more people with the opportunity to get a decent job with fair conditions is the best way to reduce poverty and increase living standards. It's also essential for ensuring long-term, sustainable global growth. This is the message I'll again be taking to the meeting of G20 finance ministers and central bankers  in Mexico next weekend.

International cooperation

Reducing the scourge of unemployment is something that has been a focus of Bob Zoellick through his work as president of the World Bank. Bob, who announced during the week he would step down when his term ends in June, has been a great friend of Australia for a long time. Personally, I've always valued his friendship, candour and wise words, and look forward to keeping up the dialogue with him in the future. In terms of his successor, Australia has been clear for a long time that senior leadership appointments to international financial institutions should be based on merit alone, not nationality. The tradition of automatically appointing a European to head the International Monetary Fund and an American to head the World Bank belongs to a bygone era.

Sustainable Health Care

During the week, the Government passed legislation through the lower house to means test the private health insurance rebate . This critical reform is necessary to ensure spending on health care is sustainable and targeted to where it is most needed. Around nine in ten Australians won't be affected at all by the changes. That includes individuals earning less than $83,000 and families on less than $166,000 next financial year. In the year after that, the rebate will only cut out completely for singles once they are earning more than $129,000 a year and for a family earning $258,000 or more. It's simply not fair for low and middle income Australians to continue to subsidise the health insurance of households with incomes of more than a quarter of a million dollars a year.

Of course, we're hearing some ridiculous claims that people will leave private health insurance in droves as a result of this change. Treasury modelling suggests this isn't the case and that 99.7 per cent of policy holders will keep their cover. The private health insurance rebate is the fastest growing cost to the health budget, and this change will save taxpayers $2.4 billion over the next three years. This makes our investments in hospitals and health care - like more beds, better services and shorter waiting times - more affordable.

It's just another example of how the Government under Prime Minister Gillard is getting on with the big reforms to set up our country for the future. Whether it's building a superfast broadband network, preparing our economy for a clean energy future, locking in the gains of the mining boom or making historic investments in our hospitals and schools, Labor is preparing our nation for the future.

Lastly, I'd encourage you to check out my spruced-up website [www.treasurer.gov.au] it provides plenty of information on the Government's economic agenda and policies, and a range of other useful information.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia

www.treasurer.gov.au
twitter.com/SwannyDPM