Productivity improving: Treasurer Swan

15 Aug 2012, 7:11 am   -   Source: AAP

Treasurer Wayne Swan says Australia's productivity is not declining - and the mining boom is the major driver.

Treasurer Wayne Swan says a booming mining sector is driving up productivity and the nation will be reaping the benefits for years to come.

Mr Swan will use a speech in Canberra on Wednesday to say labour productivity grew by 5.3 per cent in the past year - the largest increase in a decade.

"I agree with everyone who says we should be doing better on productivity, and that our success as an economy depends on it," he will tell the International CEO Forum Foreign Investor Dialogue.

"But what I can't agree with is those who say productivity is currently in decline, when it simply isn't borne out by the facts."

Many business groups argue the federal government needs to do more to boost productivity, such as by allowing more flexible workplaces.

But Mr Swan says investment generated by the mining boom is boosting productive capacity in the economy.

"This investment is helping to build mines, ports, and important infrastructure that will deliver dividends for many years," he adds.

"As the mining investment boom eventually winds down as we expect, the mining export boom should ramp up."

While strong demand from Asia and high commodity prices had underpinned investment growth, there has also been a shift in the way Australia is viewed by global investors since the world financial crisis.

Foreign investor appetite for Australian government bonds has pushed yields to record lows because of a growing perception that the nation is a safe haven because of it economic strengths.

"Gone are the days when we were just a bet on commodity prices or a punt on China," Mr Swan says.

"Avoiding recession not only gave us the foundations for our economic outperformance, it brought into sharp focus the underlying strength, flexibility and resilience of our diverse economy."

However, Mr Swan recognises this was a mixed blessing for some businesses because it had contributed to a sustained high Australian dollar, which was affecting export prices and tourism.

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