THE Aussie economy is set for a correction but will avoid a recession, KPMG Australian chairman Michael Andrew says.
Mr Andrew was speaking after a breakfast presentation at the Sofitel Reef Hotel Casino last week.
"We are in for a short, sharp economic correction in Australia, but then our long to medium term growth strategy is very positive," he said.
"There is too much substance in the commodity boom, there is too much capacity for government to fund the infrastructure requirements that we have and commodity prices will continue to increase.
"All of those things will float back as a major dividend to the Australian economy."
Mr Andrew said the correction would slow growth but put inflation back within Reserve Bank targets.
"It will cause us to look at structural unemployment, so we will basically take resources from industries or geographies which are under pressure and put them into some of the growth corridors and industries around Australia.
"It will also cause us to address the infrastructure blueprint that we actually need to improve our productivity.’’
Mr Andrew dismissed speculation the commodities boom was ending.
"As China has to drag 10 million jobs for the next 10 years, you have India which has yet to come on stream, Indonesia is increasing its capacity, Vietnam is going well, so there’s huge demand," he said.
Mr Andrew said companies such as Rio Tinto and Fortescue were increasing production capacity and lifting net returns to Australia.
The KPMG boss also backed an Emissions Trading Scheme.
"We need an ETS, we need to price carbon into our commercial business decisions," he said.
But he suggested the scheme needed more work, saying he was concerned about the timing.
"I think the Government might be a bit ambitious by a year or two, introducing it without commitments from our major carbon emitters.’’
