The West

New austerity affecting economy: RBA boss
New austerity affecting economy: RBA boss

The mining boom is not to blame for Australia's multi-speed economy, Reserve Bank of Australia Governor Glenn Stevens says.

Speaking at the federal government's economic forum in Brisbane, Mr Stevens said a major shift in household spending and saving patterns was the overriding influence on the economy.

"I actually think that a lot of the disquiet and dissatisfaction that we see isn't really related to the mining boom at all," he said.

"I think it's got a lot to do with changes of household behaviour, which come after a very unusual period of strong spending, leveraging up and saving nothing out of current income.

"And that was bound to end sooner or later, and it has.

"In fact, it ended about five years ago.

"And we are still, I think, coming to grips with the importance of that now, and I think it's a significant factor that is behind some of the disquiet we see."

Mr Stevens said it was normal for some parts of the economy to be weaker than other sectors.

"The economy is always a patchwork, it's never a seamlessly woven garment," he said.

"It's very rare that all sectors and all regions go at the same speed at the same time.

"Usually, if that's happening it's a recession or an unsustainable boom.

"Most of the time when things are normal there are differences."

The RBA governor also said he expected Australia's terms of trade to remain high for a long period due to Asia's demand for resources.

The high Australian dollar was proving a benefit to consumers, an example of how the benefits of the mining boom were spread across the economy, Mr Stevens said.

He did not comment on movements in the cash rate.

The West Australian

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