Treasurer Joe Hockey has warned that if mining investment projects planned for 2014/15 don't go ahead, Australia faces a great growth challenge.
Federal Treasurer Joe Hockey doesn't want red tape impeding future mining investment and other infrastructure projects so that the economy can continue to expand.
The Reserve Bank of Australia (RBA) cut its economic growth forecasts in its latest quarterly monetary policy statement released on Friday, remaining below its long term trend or 3.25 per cent out to 2015, rather than picking up next year as predicted three months earlier.
Quizzed on the report while addressing an audience in Sydney, Mr Hockey said he was fully aware of the growth challenges ahead.
"We need projects, mining projects to happen in 2014/15 and if significant mining projects do not proceed as proposed ... then we are facing a great challenge," he warned.
"We need to roll out a significant infrastructure program that lays the foundations for the re-tooling for the nation."
He told a Centre Of Independent Studies conference this roll-out of infrastructure must not be impeded by red tape and regulation at all levels of government.
The central bank warned that with the economy expected to expand at a below-trend pace over the coming year, the unemployment rate is likely to continue to drift higher for a year or so, but it is forecast to decline through 2015 as non-resource activity picks up.
The jobless rate for October released on Thursday was 5.7 per cent, up from 5.3 per cent a year earlier.
Treasury has forecast the jobless rate rising to 6.25 per cent by June next year.
Treasury forecasts will be updated when Mr Hockey hands down the mid-year economic and fiscal outlook (MYEFO) before Christmas, and when the treasurer says Australians will see the true state of the books the coalition has inherited.
"The commonwealth budget remains in poor shape," Mr Hockey said.
Shadow treasurer Chris Bowen said MYEFO must be released as a priority given the deficit will be billions of dollars worse off because of the coalition's decisions since the election.
Mr Hockey said the $8.8 billion grant he gave the RBA to replenish its reserves was not there to tackle a high exchange rate.
"It is not a currency play, I do not play currency markets, but it is about being at our best and our strongest to deal with the headwinds that must come," the treasurer said.
In its statement, the RBA said the path of the exchange rate is a "significant source" of uncertainty and a lower level was needed to achieve more balanced growth in the economy.
"A lower exchange rate, if it came about, would also see growth strengthening sooner than forecast and place some upward pressure on inflation for a time," it said.
At Tuesday's monthly board meeting the central bank left the cash rate at an all time low of 2.5 per cent, where it has stood since August.
"It was appropriate to hold the cash rate steady, but not to close off the possibility of reducing it further, should that be needed to support economic activity," it said in Friday's statement.