Columbus’ arrival in the Americas in 1492 heralded a European dominance of the global economy which would span five continents over five centuries.
Spain was just one of the European powers intent on conquering what it called the New World but, at its peak, it was arguably the most powerful.
Today, what Europe once considered the New World is fast emerging as this century’s global powerhouse.
Emerging economies have not been immune from troubles in Europe, but they continue to power global growth as economic activity shifts from West to East. Whilst there are still substantial headwinds as yesterday’s IMF outlook observed, in our own region economies like China and India are in the midst of profound and long- term economic transformations.
With our European roots and Asian outlook, Australia is in many ways straddling this historic change. While this shift is not without its challenges for our own economy, so far we’re one of its biggest beneficiaries.
In a milestone that turns the old and new world dichotomy on its head, the IMF showed yesterday that the Australian economy had surpassed the Spanish economy to become the 12th largest economy in the world based on Gross Domestic Product at market exchange rates.
This is up three places since the Labor Government came to office in 2007.
And it reverses a decline under the previous Government, which saw Australia fall from 12th largest economy in 1996 to 15th in 2007.
Let’s pause to reflect on this: the economic performance under this Labor Government has seen our economy leap-frog three places in the global batting order, while the previous Liberal Government saw it slip back three places.
In the past five years Australia’s economy has surpassed the economies of South Korea, Mexico and now Spain.
Our economy has grown around 11 per cent since the end of 2007 while the US has grown only around 1¾ per cent and many European countries are still substantially smaller due to the massive recessions they have suffered.
Inhabiting a place among the top dozen largest economies on the planet is particularly impressive when you consider that we have only the 51st biggest population.
These are the facts about economic growth under this Labor Government and no amount of the facile ‘redistributionist’ critiques from the conservative side of politics or the media can whitewash them away.
These facts also demonstrate the obtuseness of Mr Abbott’s claims on Sunday that the Australian economy isn’t growing; they demonstrate just what my predecessor Mr Costello meant when he said Mr Abbott has no aptitude for economics and why Mr Hewson described him as genuinely innumerate.
That is not to say that we do not face challenges in our own economy, but we should also recognise the substantial achievements that have been made by businesses and workers pulling together in the face of the most difficult global conditions in 80 years.
Of course it’s a matter of grave concern to all of us that Spain is currently enduring the economic and human impacts of a deep recession, including unemployment rates of around 25 per cent.
While Spain has made a number of tough decisions over a number of years to try to put its economy back on track, it faces a tough road ahead.
By supporting our economy during the most turbulent period in the global economy in a generation, Australia was able to avoid the destruction of capacity in our economy that comes with such recessions, in particular the human cost of high and long term unemployment.
Our graduates are looking at an unemployment figure of just over 5 per cent and are beginning their careers in an economy with bright prospects and all the opportunities of the Asian century ahead of them.
Australia’s performance doesn’t just reflect our extraordinary economic journey over the past three decades.
Our performance is also symbolic of the tectonic movements happening in the world economy.
ANZ’s Richard Yetsenga called it a “microcosm of the structural shifts in the global economy away from the old developed core to the emerging and peripheral part of the global economy.”
If you count from Federation, Australia is barely a century old and one of the youngest of the ‘New World’ economies. But we have just completed our 21st consecutive year of growth, which is a record unmatched by any other advanced economy over this period.
This is the result of decades of reform such as floating the dollar, bringing down the tariff wall, abolishing centralised wage fixing, and introducing compulsory superannuation.
It is also a reflection of our almost unique success in fighting off recession during the worst global downturn in 80 years.
As a result we have the enviable combination of solid growth, low unemployment, contained inflation, sound public finances and an enormous pipeline of investment in resources that’s delivering greater economic capacity and export volumes.
Next month I will travel to Mexico City, once part of a colony Cortez called New Spain.
As I work with my fellow G20 Finance Ministers to tackle the challenges from the ongoing crisis in Europe, we will also continue our work to support the fundamental rebalancing of global growth that is underway.
This shift would have been unimaginable to Columbus more than 500 years ago, as would have the rise of Australia – a country not even known to Europe until nearly 300 years later –to take its place as the 12th largest economy in the world.
An achievement every Australian worker and business should rightly be proud of.