Treasurer Joe Hockey says the economy must do better than the 2.8 per cent achieved in 2013 if more jobs are to be created
The economy grew at a solid clip in the final three months of 2013, but Treasurer Joe Hockey says there must be an even faster expansion to get unemployment down.
He also promised that his first budget in May would not hinder growth and instead outline a credible path back to surplus.
The latest national accounts released on Wednesday showed the economy grew at 0.8 per cent in the December quarter. The increase was led by exports and household spending, and comfortably offset a drop in business investment.
The annual rate rose to 2.8 per cent, which was stronger than economists and the Reserve Bank had expected, but still below the long-term trend at just above three per cent.
“We need to do better,” Mr Hockey told reporters in Canberra.
“You need trend growth or better … to start to get unemployment down.”
Shadow treasurer Chris Bowen agreed that faster growth was needed to create jobs, telling parliament that Prime Minister Tony Abbott had failed to deliver the “adrenalin charge” he had promised at the election.
Mr Abbott thought the national accounts were encouraging.
He also pointed to building approvals rising to their highest level since 2002, job advertisements rising sharply and business confidence above its long-run average.
“There are positive signs emerging in the economy,” Mr Abbott told parliament.
Although Mr Hockey has repeatedly talked about bringing down a tough budget in May, he was not about to undermine improving economic growth.
“But we are of course going to do everything we can to have a credible path back to surplus so that we can then start paying down debt,” he said.
He said the latest growth numbers highlighted the challenge of the next couple of years as construction on large mining projects came to an end and the economy slowly moved to broader-based growth.
The government’s plan was to reduce regulation and abolish taxes, which would help “grease the wheels” of that transition.
For starters, he said business wanted the shackles of the carbon tax removed, and again urged the Labor opposition to support its repeal.
The legislation remains stuck in the upper house, and four key business groups have called on senators to swiftly repeal the carbon tax.
The Australian Chamber of Commerce and Industry, Australian Industry Group, Business Council of Australia and Minerals Council of Australia released a joint statement urging the Senate to pass the government’s package of bills.
“Business is saying you should support the repeal of the carbon tax,” Mr Hockey told parliament, pointing at the opposition benches.
“That is one way you can immediately lift the speed of Australia’s economic growth.”
HSBC economists expect the RBA will be comforted by the latest growth figures, and are unlikely to cut interest rates again soon.
“If our central case plays out and growth continues to rebalance, we expect they may have to lift rates before the end of the year,” they said in a note to clients.