Two-speed economy 'not a result' of mining boom

Friday, 15 Jun 2012

The emergence of a two-speed economy in Australia is not the result of the mining boom, the governor of the Reserve Bank has noted.

Speaking at the federal government's economic forum in Brisbane, Glenn Stevens said that the situation is due to fluctuations in household spending.

"I think it's got a lot to do with changes of household behaviour, which come after a very unusual period of strong spending, leveraging up and saving nothing out of current income," he told delegates.

This is a trend that ended around five years ago, Mr Stevens claimed, and it is still playing a major role in the high level of disquiet among some people.

It is not uncommon for some parts of the economy to be weaker than others, as the governor said it is never "a seamlessly woven garment".

Parliamentary secretary to the treasurer Bernie Ripoll recently highlighted that the Australian economy is a standout performer compared to many other countries.

The government has successfully brought the Budget back to surplus, which should give the economy the solid grounding it needs to succeed, he indicated.