THE upcoming federal budget will focus heavily on skills and education to meet the needs of the surging economy and flood reconstruction.
Treasurer Wayne Swan today said the floods recovery would worsen capacity constraints in the economy that were already beginning to bite.

“The truth is, the speed with which we can rebuild Queensland will be limited by the tightness of labour, as will the extent to which we can take advantage of the mining boom,” Mr Swan told an audience of business leaders in Queensland.

“The coming budget was always going to be about the challenges of our patchwork economy – it’s just that the floods have added additional complexity to the policy response we need.”

Mr Swan said it was too early to go into detail, but the May budget would make sure the booming economy got the workers it needed to cope with the resources boom mark II and the flood reconstruction.“It will recognise education is the principle driver of prosperity in an economy that demands we draw more heavily on the talents and efforts of even more of our people,” he said.“It will build on the PM’s conviction that our nation can create opportunities for all, and that if we all work together to grasp these opportunities we will prosper together.”

Mr Swan said the nation’s “patchwork” economy presented major challenges into the future.
But he said the resources boom was also an opportunity and the government would seize it to restructure the economy.

“Our challenge is to create a flexible, high-productivity, low-pollution economy and it’s a challenge equivalent in scale to Hawke’s and Keating’s successful reforms that opened up our economy to the world.” he said.

“On top of that, we need to ensure we’re harnessing the talents and efforts of more Australians, giving more people a stake in the next generation of growth and prosperity.”

Mr Swan repeated predictions that the flood disaster would slice 0.5 per cent off Australia’s economic growth rate.
Detailing preliminary costings of the month-long emergency that has engulfed Queensland, rural Victoria, parts of northern NSW and Tasmania’s north, Mr Swan said rebuilding, when it began, would not fully offset the damage done to gross domestic product.

The hit to the economy meant GDP, which prior to the flooding was predicted to grow at 3.25 per cent for 2010-11, would slip to 2.75 per cent.
Mr Swan said the flooding was the most costly disaster in Australian history.

He said “several billion dollars” would be lost in coal production alone, while the damage to tourism would run to $300 million. Fruit and vegetable crop losses in Queensland alone would be about $225 million.Other industries would suffer losses totalling $500 million.

Source: The Australian

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