Getting the settings right will allow Australia to manage the impact of the resources boom, boost our productivity, increase our living standards and take advantage of the emerging opportunities from the Asian Century.
The patchwork economy
Dramatic changes in the global economy are driving change in the Australian economy.
Mining related sectors are expanding as a share of GDP due to historically high terms of trade and a surge in mining related investment. Some other sectors, such as parts of the services sector, are also performing solidly.
Conditions remain difficult, however, for those sectors not benefiting from the resources boom. The high Australian dollar is weighing heavily on trade‑exposed sectors like manufacturing and tourism.
At the same time, ongoing global uncertainty and cautious behaviour by consumers is creating further challenges for retail and related sectors.
More broadly, a shift towards knowledge based services has been occurring for several decades. This has been driven by higher incomes and demographic and technological change.
Opportunities in the Asian Century
The pace and scale of change occurring in Asia, including China and India, is unprecedented.
While it is difficult to predict patterns of development and growth, it is clear that as developing nations’ incomes rise, significant new markets, including from a growing middle class, will concentrate on our doorstep.
It is important that the right policy settings are in place to improve our productivity so we can take advantage of these opportunities.
These policies include our $36 billion investment in roads, rail and ports which support the physical economy and building the National Broadband Network to ensure we benefit from the digital economy.
We are building on our $3 billion investment in skills in the 2011–12 Budget by delivering lasting reforms to the national training system. In April we agreed a $1.75 billion partnership with the states on skills reform and in this Budget we are providing a further $101 million in related initiatives.
Undergraduate places are now fully uncapped at all public universities for the first time, driving an increase of 150,000 students this year compared to 2007 levels.
Australia’s merchandise export shares
Employment share by activity