The Australian economy had cleared some of the major hurdles erected by the global financial crisis, the Federal Treasurer said, despite the International Monetary Fund's caution on the medium- to long-term outlook.
The Deputy Prime Minister and Treasurer the Hon Wayne Swan said "we've now cleared some of the major hurdles, but the finish line is still some way off in the distance", when speaking to the Financial Services Council's breakfast.
The two main hurdles were the European crisis, and the fiscal cliff in the United States, he said. "Europe could do well to look at the reforms in Australia," he said, echoing Prime Minister Julia Gillard's advice to the Mexico G20 meeting in June.
However, just the day before the Treasurer's optimistic message to financial services' leaders, International Monetary Fund deputy director Asia Pacific Dr Masahiko Takeda said that, while pessimism about Australia's short-term economy "is not warranted in my view ... in the medium-term, Australia faces structural challenge in the Asia century".
The resources boom could be seen, he said, as a "blessing or a misfortune if you look at the economy as a whole. The major effect is the two-speed economy".
"The high volatility of commodities led to asymmetric shocks to the economy, and "one of the problems is the economy as a whole is partly protected by exchange rates," Takeda said.
Two other factors which signalled mid- to long-term structural problems were labour mobility and fiscal policy. Compared with 20 to 30 years ago when Australia had a centralised wage system, Takeda said the labour force was now more mobile and people were moving, even if on a fly-in fly-out basis.
However, Takeda said "some impediments are still remaining". For example, stamp duties on houses "make it harder for people to sell and move".
Fiscally, Australia was "fortunate because you have a central Federal Government with the ability to adjust tax and transfer wealth, but medium-term adjustment is outside of IMF expertise".
