Australia is not heading towards a recession resulting from a fading mining investment boom, says former treasurer Wayne Swan.
In his first major speech since stepping down as treasurer in June after nearly six years in the role, Mr Swan told an audience in Sydney the Asian century offers a "rich bounty" for Australia in the decades ahead.
"Now there are some who argue the transition underway in our economy to non-mining sources of growth could lead to serious economic instability, even dangling the 'R-word' to get a newspaper headline and their name underneath it," Mr Swan says in his prepared speech.
But he told the Economist Magazine - Bellwether Australia conference these dire predictions ignore some key points.
He said the transition from mining investment to broader based growth is occurring quite gradually.
"We're not seeing the jumps and drops usually associated with instability," he says.
"In fact, the latest CAPEX (capital expenditure) figures forecast that after mining investment peaks this financial year, it will come off its record highs slightly but remain high for some years to come."
At the same time, the housing market and other non-mining investment are showing signs of gathering strength, while record low interest rates, the measured pace of fiscal policy tightening and a sizeable fall in the exchange rate will support the transition.
He has also been encouraged by the recent improvement in labour productivity growth, "which reassures me that we are not running out of puff".
"We often see a big boost in productivity in recovery from recession, but in this case we are seeing it when the economy is growing a little below trend," he says.
"That suggests to me that the gains will be enduring and persistent."
He said Australia has just completed the "remarkable achievement" of 22 years of uninterrupted economic expansion.
"If we look at the structure of the economy today we can see that we are very well placed to continue that expansion for quite a while," he said.
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