By Alex Tarrant
Finance Minister Bill English says he is now less worried about the economic outlook for Australia and China following a trip across the Tasman to inspect mining developments in Queensland and Western Australia.
But it is not enough for the government to feel any more comfortable about its own surplus track forecasts. English said meeting the government's 2014/15 target would be "a bit of a challenge," although new Treasury forecasts to be released on December 18 would show the government was still on track.
His comments follow similar ones from Prime Minister John Key on Monday. Key said he was "not uncomfortable" with what he had recently seen from Treasury relating to the new forecasts.
While Australian investment in mining projects would fall off recent highs, it would drop to a sustainable level, English told media in Parliament Buildings on Tuesday morning. An Australian ability to sell natural resources into China and India would underpin economic activity, and boost New Zealand's prospects as well.
“In Australia you’ve had very high and unsustainable levels of investment in resources. It’s dropping back, but even when it drops back it’ll still be quite high levels of investment going on, both into gas, and iron ore and coal," English said.
“It’s slowing down, but it’s slowing down to sustainable levels," he said.
“They’ve got a pretty positive view of the outlook for China, and also for India. That matters to us because if Australia can develop its resources, feeding China and India, then they’ll do better. And we do well when they do well."
English was a “wee bit less worried" about the outlooks for Australia and China than he was before the trip.
“Australia’s just catching up with New Zealand in the sense that it’s just starting now to focus on competitiveness and productivity, which we got onto three or four years ago," he said.
English's trip included meeting the premiers of Queensland and Western Australia, as well as mining and resources companies and sector groups.
“A large part of Australia’s success story in recent years has been the performance of the resources sector. This visit will give me the opportunity to talk directly to the people who are taking the commercial risks and learn about their expectations for the future, while also seeing first-hand the scale of some of their operations," English said before he left in late November.
He was accompanied on part of the visit by a small delegation of New Zealand businesspeople, comprising of Truescape CEO Sam Chaffey, Rocklabs head of mining Brad Hunting, Gallagher Security director Rob McJannett, ITL general manager Colin Fromont, Beca Group director of industrial markets John Boers and Metraweather CEO Peter Lennox.
In September, Prime Minister John Key told a business audience in Japan that the government believed Australia had 'Dutch disease', a term for the effect large inflows of foreign currency investment into a country's natural resource sector has on driving up its currency, to the detriment of other export industries and its manufacturing sector.