Reserve Bank governor Philip Lowe says Australia faces a complex challenge in rebuilding its financial buffers ahead of any global economic difficulties, particularly as the government competes with other nations to attract foreign investment.
Dr Lowe has told an economic forum that Australia's relatively low government net debt was "a form of insurance" that gave policymakers options during the global financial crisis.
"Looking forward, we need to make sure that we continue to have this insurance," he told the A50 Economic Forum dinner in Sydney on Thursday night.
"We can do this by rebuilding our fiscal buffers."
Dr Lowe said rebuilding those buffers was "a challenging thing to do" given the additional demands on government spending and the competing need to make the tax system internationally competitive.
"One example of this complication is in the area of corporate tax, where there is a form of international tax competition going on in an effort to attract foreign investment," he said.
"Like other countries, we face the challenge of responding to this, while achieving a balance between recurrent spending and fiscal revenue."
The comments come as the Turnbull Coalition government continues to press its plan for a reduction in the corporate tax rate from 30 per cent to 25 per cent - a policy that will cost some $50 billion in revenue over 10 years.
Labor and the Greens remain firmly opposed to the policy.
In 2016 the UK announced it would reduce its corporate tax rate from 20 per cent to 17 per cent by 2020.
Dr Lowe's speech covered Australia's economic strengths, noting "a country with strong public institutions and whose economy is resilient and flexible".
The RBA boss also mentioned trade and investment, saying the nation has "benefited greatly from the open international trading system".
Share
