Fed: Govt should boost productivity to help economic growth:Swan

AAP General News (Australia)
12-20-2006
Fed: Govt should boost productivity to help economic growth:Swan

SYDNEY, Dec 20 AAP - The federal government should focus on boosting productivity amid
signs the economy might not be growing as fast as expected, Labor says.

Treasurer Peter Costello today slashed the government's economic growth forecast for
the 2006/07 financial year due to the impact of the ongoing drought.

The government's Mid Year Economic Review and Fiscal Outlook cut the economic growth
forecast to 2.5 per cent from 3.25 per cent and tipped the drought to cut farm growth
by 20 per cent.

But opposition treasury spokesman Wayne Swan said the review also sliced growth forecasts
for the non-farm sector to 3.0 per cent from 3.25 per cent, suggesting productivity was
falling.

Mr Swan accused Mr Costello of having "his head completely in the sand" and failing
to address the growing need to boost productivity to drive economic growth.

"If we want to lock in future prosperity we've got to do something about declining
productivity and declining competitiveness," he told reporters.

"That means facing up to the skills crisis, the underfunding in education, the infrastructure
bottlenecks.

"It's not good enough for Peter Costello today to put his head in the sand and sell
the country short.

"We need Peter Costello to roll up his sleeves, accept the challenges that we need
to meet if we're going to continue to have strong growth and strong prosperity."

While the government has revised down its economic growth forecast, Mr Costello said
the budget surplus for 2006/07 was expected to rise to $11.8 billion from $10.8 billion
thanks to strong jobs growth and hefty company tax receipts.

Mr Swan welcomed the higher budget surplus forecast, but said that only highlighted
the need for the government to maintain strong fiscal discipline.

He said the government needed to rearrange its spending priorities on ways which would
improve productivity, such as investments in improving infrastructure bottlenecks, education
and skills.

"We've seen a lot of vote buying from this government over the years but not enough
investment in the productive side of the economy that will put downward pressure on inflation
and downward pressure on interest rates," he said.

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KEYWORD: BUDGET LABOR

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