Australia is at a “critical point” in its transition from the resource-investment boom that has underpinned economic growth, and sentiment needs a boost to spur spending elsewhere, business leader Roger Corbett said.
“Domestic demand is very flat,” Corbett, chairman of Fairfax Media Ltd. and a Reserve Bank of Australia board member, told reporters in Sydney today after a speech. “Confidence generally across our community is at quite a low ebb.”
The RBA cut its key interest rate to a record low 2.5 percent yesterday as it seeks to buoy non-mining industries that struggled with an elevated currency. The nation’s mining investment boom may have peaked, with declines from elevated levels set to drag on the economy and threatening a growth gap next year.
“We are at a very critical point in the transition out of the resources investment boom,” said Corbett, former chief executive officer of Woolworths Ltd., Australia’s largest retailer. “We need to stimulate investment elsewhere in the economy and the confidence of the business community and the consuming community, the people.”
Prime Minister Kevin Rudd, who called an election for Sept. 7, is framing the vote as a battle between David Cameron- style austerity from the opposition and his own program that allows the deficit to widen as it prioritizes jobs. The government on Aug. 2 cut its growth estimate for this fiscal year to 2.5 percent and said the unemployment rate will rise to 6.25 percent by the middle of 2014.
“The political issue I think is one of leadership,” Corbett said today. “What’s going to happen next year is already determined to a very large degree. The real issue is where we’re going to be in three, five years from today.”