Today's OECD Economic Outlook confirms that the Australian economy remains one of the best performing in the developed world.
The growth outlook for Australia is strong, with forecast GDP of 2.9 per cent in 2011 and 4.5 per cent in 2012. Our unemployment rate is also expected to remain far lower than the average of all OECD economies.
Despite the devastating impact of summer's natural disasters, the OECD reinforces that these events have not shaken our very strong fundamentals. It notes that the Australian economy is set to rebound after the disruptions caused by the floods and cyclones of early 2011.
The OECD endorses the Government's responsible fiscal strategy, welcoming the rapid fiscal consolidation that is already occurring despite the impact of the recent natural disasters on government finances.
The OECD also highlights the Government's commitment to our restrictive fiscal policy that will see our budget back in surplus by 2012-13.
The Government's return to surplus is only possible due to our strict fiscal rules, enabling the fastest fiscal consolidation on record – 3.8 per cent of GDP over the next two years alone.
The OECD has previously given a strong endorsement of the Government's fiscal strategy, stating in its most recent Economic Review of Australia that the prudent fiscal consolidation strategy reinforces Australia's commitment to sound public finances which is one of the major lessons from the international economic crisis.
The OECD also praises the Government's skills and participation reforms in this year's Budget, noting that these measures should have beneficial effects on growth over the medium term.
The Government's efforts to put a price on carbon have been welcomed by the OECD, which recognises that now is the time to pursue this critical reform.
The OECD says that the Government must take advantage of our favourable economic situation to pursue long-term structural reforms, including those that favour output involving lower carbon emissions.
While the global outlook remains fragile, the OECD gives reason for Australians to remain confident about the strength and future health of the Australian economy.
The Gillard Government is determined to convert our economic strength into enduring gains for the Australian people through a comprehensive reform agenda to strengthen and broaden our economy and maximise the opportunities that flow from Mining Boom Mark II.