CANBERRA (BLOOMBERG) - Australian central bank Governor Philip Lowe said his nation's economy is capable of faster growth, while warning that achieving it will require lawmakers to surmount current political gridlock.
"It is important that we have a sharp focus on the reforms that can make a real difference to our living standards," Mr Lowe said in prepared remarks for the Crawford Australian Leadership Forum Monday. "If we don't do this, we will fall behind."
Since the 2008 global financial crisis, Australian politics has become increasingly polarized as parties exploited those losing out from proposed reforms to gain electoral advantage. This has resulted in risk-aversion increasing among government and limited action, meaning Australia hasn't cemented a significant economic reform since a goods and services tax was introduced in 2000.
"The positive news is that there is no shortage of good ideas here," Mr Lowe said. "The not-so-positive news is that there is a shortage of good ideas that can successfully navigate the political process."
The governor reiterated the RBA's forecast that growth will accelerate over the next couple of years, helped by vast natural gas projects coming on line. But he warned that average per capita income in the next couple of decades was likely to be lower than in the past quarter-century, a period when Australia's economy managed to avoid a slump. The RBA chief said while 26 years without a technical recession - or two consecutive quarters of economic contraction - "is a significant achievement," he said strong population growth has "flattered" the nation's gross domestic product data.
Mr Lowe also noted the changing drivers of growth in the country as Australians increasingly work in service industries, even as natural resources remain the key export earner.
"Right across the spectrum, competitive advantage is increasingly built on technology and management capability," Mr Lowe said. "This trend is not going to go away and we need to capitalize on it. There is no magic solution."