The head of Treasury has delivered an upbeat appraisal of the Australian economy, but warns productivity must increase if living standards are to improve.
John Fraser believes the economic outlook is "largely positive" after completing 25 years of uninterrupted expansion.
However, the outlook for global growth continued to be subdued and downside risks remain across both advanced and emerging economies.
"Despite the global backdrop, Australia's domestic outlook remains largely positive," Mr Fraser told a Senate committee in Canberra on Wednesday.
"While we are doing reasonably well, we are not guaranteed a strong future."
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Private investment remained the "missing link", as it is in economies elsewhere in the world, and continues to detract from growth as mining investment continues to fall.
Treasury was alert to the downside risk of building activity declining more quickly than expected once a large construction pipeline was complete, especially in the high-rise apartment market, Mr Fraser said.
"Low wage growth along with falling exchange rate and low interest rates continue to support the transition in the economy towards the non-mining sector," Mr Fraser said.
His comments came as the Westpac-Melbourne Institute leading index suggested the economy will expand at an annual rate around three per cent over the next three to nine months.
"It is the strongest growth (in the index) since December 2013 and a clear positive for the near-term economic outlook," Westpac chief economist Bill Evans said.
The economy grew at 3.3 per cent in the year to June.
Labor force figures for September on Thursday are forecast to show the jobless rate ticking up to 5.7 per cent from 5.6 per cent in August with only a modest 15,000 rise in the number of people employed in the month expected.
