demographics. it may be that potential growth is a bit lower than we used to think – though i don ’ t think we can know whether that is so at present. but whatever the factors at work, we are unavoidably and inexorably being led to the question : how do we get more growth? the fiscal policy debate, usually framed as “ when will we get back to surplus? ” is actually about : how do we get more growth? other discussions, so often framed as about “ fairness ” – that is income distribution – might be better framed as : how do we grow the pie? that isn ’ t because distribution doesn ’ t matter. it ’ s because distributional issues surely get easier with growth but much, much harder in its absence. reasonable people get this. they also know, intuitively, that the kind of growth we want won ’ t be delivered just by central bank adjustments to interest rates or short - term fiscal initiatives that bring forward demand from next year, only to have to give it back then. they are looking for more sustainable sources of growth. they want to see more genuine dynamism in the economy and to feel more confidence about their own future income. so in your deliberations today, a key question worth asking is : how do we generate more growth? not temporary, flash - in - the - pan growth, but sustainable growth. how do we craft a credible, confidence - enhancing, narrative about growth? that ’ s actually what “ reform ” is about : making things work better for higher income and wellbeing. if there are some things of substance that you could agree on, it would be a step forward. present here in the room you have the intellectual resources, the stakeholders, the leadership and the communication capabilities. in short, you have the ingredients. over to you. bis central bankers ’ speeches

. ahead of that i can provide you with the main numbers and highlight some of the issues shaping the outlook. statement on monetary policy our central forecast is for the australian economy to expand by 2¾ per cent over 2020 and 3 per cent the following year ( graph 5 ). these growth rates are a little above our current estimate of medium - term growth in australia, so some inroad into spare capacity should be made. these growth rates are also higher than the outcomes for 2018 and 2019. as i have been saying for some time, we are passing through a gentle turning point for the better. graph 5 there are a number of factors contributing to this outlook. the expected pick - up in world growth should help us, the resources sector is in expansion mode again and we are expecting consumer spending to pick up. the outlook is also being supported by ongoing high levels of investment in infrastructure and the likelihood that the downswing in residential construction will come to an end later this year. further increases in resource exports and continuing solid growth in public demand will also help. in terms of the labour market, we are expecting the unemployment rate to remain around its current level for a while yet, before declining below 5 per cent late next year as growth picks up ( graph 6 ). one consideration here is the outlook for labour force participation. over the past couple of years we have seen a very large lift in participation, especially by women and older australians. this is a positive development but it has meant that very strong employment growth has not resulted in a lower unemployment rate : strong demand for labour has been met with strong supply of labour. graph 6 in terms of inflation, we continue to expect a gradual increase, with underlying inflation expected to approach 2 per cent over the next couple of years ( graph 7 ). the recent inflation data were in line with our expectations and show contrasting trends with higher prices for groceries and continued subdued outcomes for housing, especially rents and utilities. graph 7 with that broad overview i would like to focus on three issues : 1. the ongoing adjustment in household balance sheets 2. the bushfires, the drought and the coronavirus outbreak 3. the importance of continuing to invest in our future. household balance sheet adjustment looking back at last year, economic growth was weaker than we had expected. the global slowdown is part of the story, but the most important factor is a domestic one, and that is subdued consumer spending as households adjusted to slow wages growth and falling housing prices. the downswing in