Mr Oliver said while the mining investment boom has deflated rapidly, this has allowed interest rates to fall to more appropriate levels and the Australian dollar to decline.
According to Mr Oliver, low interest rates and a weaker Australian dollar have enabled sectors of the economy, which were in a virtual recession a few years ago including home construction, manufacturing, tourism and higher education, to begin to recover.
“This return to more balanced growth is to be welcomed,” he said.
“While the ‘easy days’ of the last decade prior to the GFC are long gone, as evident in the Budget woes in Canberra, the Australian economy is not set for ‘dog days’ or the ‘danger zone’,” he said.
Mr Oliver said the Australian economy has in fact provided some positive surprises in the past couple of months.
“While September quarter construction activity fell pretty much as expected, plant and equipment investment surprisingly rose and capex intentions for 2014/2015 implied a slightly less negative outlook than was the case three months ago,” he said.
Although investment in mining and manufacturing is continuing to decline, Mr Oliver said investment in other selected industries has been growing for three quarters in a row.
“Capex intentions point to further growth ahead,” he said.
“Business investment overall is not collapsing as many had feared and there is clear evidence that a rebalancing from mining investment to non-mining investment is underway – this is good news for continuing growth in the economy,” Mr Oliver said.
Mr Oliver said home sales also picked up in October and continue to run at a solid level consistent with ongoing strength in dwelling investment, despite a temporary setback in the September quarter.
Credit growth, he said, is also continuing to pick up, however, lending to housing investors remains too strong for RBA comfort.
