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Challenges and opportunities for Australia over the next decade Dr Martin Parkinson Secretary to the Treasury 1 Real GDP growth 6 Per cent Per cent 20-year average 4 Projections Forecasts 5 6 5 4 3 3 2 2 1 1 0 1993-94 1997-98 2001-02 2005-06 2009-10 2013-14 0 2017-18 Source: ABS cat. no. 5206.0 and Treasury. 2 Mining investment and capital stock 120 $billion (2011-12 prices) Index (2002-03=100) Mining investment (LHS) 100 350 300 250 80 200 60 150 Mining capital stock (RHS) 40 100 20 0 Jun-1963 50 Jun-1973 Jun-1983 Jun-1993 Jun-2003 0 Jun-2013 Source: ABS cat. no. 5204.0 and Treasury. 3 Contributions to real GDP growth 4 Percentage points Percentage points Projections Forecasts 3 3 GDP growth 2 Non-resources expenditure Resources expenditure 4 2 1 1 0 0 -1 Net resources investment 2011-12 2012-13 Resources exports 2013-14 2014-15 Note: Assumes that mining investment has an import share of 50 per cent. Source: ABS cat. no. 5204.0, 5206.0, and 5302.0, BREE and Treasury. -1 2015-16 2016-17 2017-18 4 Contributions to annual per capita income growth 4 Percentage points contribution, annual average Percentage points contribution, annual average Productivity growth to achieve long run average income growth 3 4 3 2 2 1 1 0 0 -1 -1 1960s Net foreign income 1970s 1980s Labour utilisation 1990s Labour productivity 2000 to 2013 Terms of trade 2013 to 2025 Per capita income Note: Contributions to income growth in the period2013 2013to to2025 2025 are thethe forecasts andand projections detailed in the in 2014-15 Note: Contributions to income growth in the period are consistent consistentwith with forecasts projections detailed Budget Statement Budget. Income refers to gross national income. 2. The hatched area represents the additional labour productivity growth required to achieve long run average growth in real gross national Source: ABSABS 5204.0 and Treasury. income. Source: 5204.0 and Treasury. Tax structure 1950-51 2013-14 2024-25 Personal income tax Company income tax Personal income tax Company income tax Personal income tax Company income tax Other Indirect tax Indirect tax (ex GST) GST Indirect tax (ex GST) GST Source: RBA statistics, Budget 2014-15 and Treasury estimates. 6 Personal income tax rates and the effects of fiscal drag 200 $thousands $thousands 180 200 180 Average full-time employee hits 2nd highest tax bracket (2015-16) 160 160 140 140 120 120 100 Average ordinary full time earnings 100 80 80 60 60 40 40 20 20 0 1994-95 0 1998-99 2002-03 First tax threshold 2006-07 1st tax rate 2010-11 2014-15 2nd tax rate 2018-19 2022-23 3rd tax rate Note: Based on Budget 2014-15 parameters. 7