Over the past few years there have been many moments when I've had pause to stop and reflect on the remarkable achievements of our country amid the worst global conditions since the Great Depression. Three years ago when we found out Australia – virtually alone in the developed world – had successfully fought off recession springs to mind. This past week we've seen a set of outcomes that is right up there in that catalogue of our country's stand-out economic achievements. I think it's fair to say it was one of the best weeks for economic news in a long time.
On Tuesday, the Reserve Bank cut official interest rates – a win for millions of households and small businesses. On Wednesday, the National Accounts confirmed our economy was growing faster than every single major advanced economy in the world. And on Thursday, employment data showed more Australians are in work than ever before in our history. Falling interest rates, strong growth and low unemployment is a great trifecta. What's more we've got rising incomes, contained inflation, broad-based consumption growth, a healthy rate of household savings, public finances in great nick, and a budget returning to surplus. Certainly our nation has its challenges, but Australians can deservedly be proud of the strong economy their hard work, determination and resilience have helped create.
Cumulative growth on pre-GFC levels
The results over the past few years are all the more impressive when you consider what has happened elsewhere in the global economy. Today, our economy is 9 per cent larger than it was before the global financial crisis, putting us streets ahead of the seven major advanced economies. In fact, four of the seven haven't yet recovered the ground they lost during the GFC.
Despite all of these outstanding outcomes, unfortunately there are always those who are all too ready to talk down our nation's prospects. They discount the hard work and determination of our workers, and the ingenuity and innovation of our businesses. They pretend that jobs aren't being created, that the economy has stopped growing, and that investment is set to vanish. They want us to believe that we can't succeed in building a stronger, fairer, more sustainable economy, and that our nation's best days are behind us. Over the past week, the doomsayers have been proved to be completely and absolutely wrong. It was a week when the optimists won over the pessimists.
While there has been no end to the irresponsible claims made over the last few years about the impact both a carbon price and the new resource tax arrangements will have on the mining sector, the figures tell the real story. Far from sounding the death knell for the industry, investment has actually skyrocketed since these policies were announced. The National Accounts showed that new business investment in the March quarter alone stood at a record $63.7 billion, up 20 per cent from a year earlier.
Capital expenditure in the resource sector has increased by 82 per cent since the carbon price was announced, and about 124 per cent since the Minerals Resource Rent Tax was announced. And the growth is set to continue with investment expected to increase from $158 billion this financial year to a record $173 billion next year. All up, the total investment pipeline stands at a staggering half a trillion dollars. Of course we can expect to see some lumpiness in investment from quarter to quarter because of the massive scale of individual projects, but there is no doubt that the mining industry has a very bright future. This investment provides a solid bedrock for our economy, which will help us withstand the global turbulence we're likely to see continue for some time to come.
While investment helps to increase the productive capacity of our economy, it tends to drag on productivity in the short term. For example, a lot of time, money and effort goes into building a new mine before it produces a single lump of coal or iron ore. It's only when the mine is finally up and running – producing coal or iron ore or some other raw material – that we start to see the benefits to productivity flow through. Similarly, it will take time to see the dividends of the Government's broad-based productivity agenda. Although Australia is still ranked within the top dozen countries in the world in terms of productivity levels, productivity has not been growing as fast as it did during the 1990s. This slowing started over a decade ago, partly due to neglect of the productive base of the economy. Since this Government came to office we've been focused on reversing this with measures like investing in better transport infrastructure and the National Broadband Network, improving the skills and training of our workers, and reforming out tax system to increase investment, workforce participation and competitiveness. Although you can't read too much into figures for a single quarter or even a couple of quarters, it was encouraging to see a big gain in labour productivity in the March quarter. We know from history it takes time to see the benefits of reform. The big changes of the 1980s – such as reducing tariffs or deregulating the financial sector – were behind the productivity surge in the 1990s. There's always a lag between putting reforms in place and seeing the productivity pay-off.
One of the great outcomes from the past week is that we've seen how strong economic management is delivering real benefits like more jobs – with more than 835,000 jobs created since Labor came to office, and nearly 39,000 extra Australians gaining employment in the last month alone. We also saw the dividends of returning the budget to surplus, with the decision by the Reserve Bank to cut interest rates. The official cash rate is now at almost half the level it was when Labor came to office and a family with a $300,000 standard variable rate mortgage is today saving more than $3,500 a year in annual repayments. It's good to see lenders pass on the rate cut in full to their customers. Certainly if your bank hasn't done the right thing by you, I'd encourage you to look around for a better deal because there is a lot more competition in the banking sector now and there are very often better deals on offer if you shop around. The Government's reforms – like the ban on mortgage exit fees on new home loans – have been all about making it easier for customers to vote with their feet and put more competitive pressure on the big banks.
As I said during the week, it's important we continue having a considered and constructive debate about our economy and how we can make the most of the huge opportunities ahead of us, as well as tackle the challenges of an economy in transition. I look forward to continuing this conversation at the Prime Minister's Economic Forum on Tuesday and Wednesday, which will bring together representatives from business, unions and community organisations. Almost alone in the world, we have the opportunity to convert our current economic success into lasting gains, building not just a stronger economy but a fairer society as well.
Deputy Prime Minister and Treasurer of Australia