The Phase One trade deal between the US and China is good news for the global economy.
No one benefits when these two economic giants are in conflict. With the IMF predicting at the height of these tensions that if left unresolved it would reduce the level of global GDP by 0.8 per cent or USD$700 billion by 2020.
Now with the phase one deal concluded and concerns about a ‘no-deal’ Brexit having diminished, the IMF updated its global economic outlook yesterday and pointed to tentative signs of improved market sentiment and an international economy that is stabilising.
As an open economy where one in five jobs are related to trade Australia stands to benefit from the easing of trade tensions and the reduction in global uncertainty.
With the Coalition Government having entered into a range of free trade agreements including with China, Japan, Korea, Indonesia as well as the multilateral Trans Pacific Partnership and the Regional Comprehensive Economic Partnership our exporters are now enjoying access to billions of new customers.
The dividend for the Australian economy is now being seen with the first current account surplus in more than 40 years.
The IMF are also forecasting the Australian economy to grow faster this calendar year than the US, Canada, Japan, Germany, France, the UK and above the OECD average.
With economic growth in the first three quarters of 2019 being stronger than it was in the second half of 2018 the Australian economy has continued to grow.
The most recent economic data released for the month of November showed unemployment falling to 5.2 per cent with the creation of 40,000 new jobs, building approvals were up 11.8 per cent and retail sales had their best monthly outcome in more than two years.
The housing market continued to stabilise and auction clearance rates are up on last year.
Household disposable income has also increased in the September quarter by 2.5 per cent, the fastest rate in a decade.
While these numbers were encouraging we do not downplay the significant economic headwinds Australia continues to face.
The devastating effects of both the ongoing drought and the bushfires of recent months have an economic impact beyond the directly affected communities.
In relation to the fires not only have lives been tragically lost but thousands of businesses across agriculture, forestry, tourism and retail to name just a few sectors have experienced damage and loss of income.
To support the recovery the Government has announced a $2 billion fund of which more than $500 million has already been committed.
Initiatives around mental health, local government, primary producers, tourism and wildlife and habitat restoration have been announced.
These initiatives are additional to the support already flowing under existing disaster recovery funding arrangements in place with the states.
Significantly the Morrison Government is funding these measures directly from the budget and without increasing taxes.
It has taken us six years to repair the fiscal mess we inherited with the budget now in balance for the first time in 11 years, a $48 billion turnaround since we came to office.
By maintaining our fiscal discipline and responsible economic management we have seen the creation of around 1.5 million new jobs and employment growth of 2 per cent, double the OECD average and nearly three times what we inherited.
Welfare dependency is at a 30 year low and a record number of Australians are in work.
At the same time spending on hospitals, schools, aged care and disability support are at a record high.
Despite Australia being in its 29 years of consecutive economic growth there is no room for complacency.
We are focussed on a series of reforms, particularly on the supply side to strengthen the economy.
The record $100 billion infrastructure pipeline continues to be rolled out with $4.2 billion of additional spending to be invested over the forward estimates and announced in MYEFO.
Projects that have been on the drawing board for half a century like the second airport in Sydney and the airport rail link in Melbourne are now with federal support becoming a reality.
The benefits of more than $300 billion in tax cuts for individuals has already been legislated by the Coalition and are making their way into peoples pockets.
The Coalition is abolishing a whole tax bracket which will see 94 per cent of taxpayers paying no more than 30 cents in the dollar.
This enables Australians to earn more and keep more of what they earn.
Small and medium size businesses with a turnover of up to $50 million will see their tax rates cut to 26 per cent on 1 July this year and 25 per cent from 1 July next year.
They are also benefiting from an extended and expanded instant asset write off.
Deregulation, skills and industrial relations reforms are our other areas of focus.
In MYEFO new measures cut red-tape for small business including food exporters and we are streamlining major project approvals. In the last budget measures were announced to create 80,000 new apprenticeships.
With respect to industrial relations there has been legislation before the Parliament to stamp out unlawful conduct and in the process unnecessary costs which the housing industry has estimated could be up top 30 per cent higher in some cases.
The Australian economy has a remarkable story to tell.
However, too often people put self interest ahead of the national interest and talk down the Australian economy ignoring its resilience and undermining confidence.
No where is this more on display than from our political opponents. After having racked up $240 billion of accumulated deficits they left us with an economy where unemployment was at 5.7 per cent and rising, business investment was falling and 62,000 small businesses shut their door in their last year.
Having learnt nothing from their failures in office they took to the Australian people an election platform which included $387 billion of higher taxes on income, savings, investment and business.
Nothing and no one was spared. Not to mention their class war rhetoric which saw them attack the so called ‘top end of town’.
Fortunately for Australia Labor’s disastrous economic plan was emphatically rejected.
As we enter 2020 Australians can be confident about their future and our capacity to respond to the challenges that we face and capitalise on the many economic opportunities we have.
Josh Frydenberg is the Federal Treasurer