the extraordinary role of house - building in explaining the weakness of gdp. this was surprising in one sense, because house - building only accounts for 5 per cent of the economy. but its decline in the second half of 2000 was so pronounced that it meant that the figure for the total economy showed a decline of 0. 4 per cent at an annual rate. if we take out house - building and look at how the other 95 per cent of gdp performed, we see that it rose at an annual rate of over 4 per cent. this is much the same as its rate of growth in the previous year. now i do not want to suggest that there was no slowing in some other sectors of the economy, but if it was not for the extraordinary behaviour of house - building, the story would be in line with most observers ’ previous expectations. similarly, the behaviour of aggregate employment in the second half of 2000 can largely be explained by the construction sector and those parts of manufacturing supplying it. table 1 : growth rates four quarters to june 2000 two quarters to december 2000 ( annual rate ) gdp 4. 9 - 0. 4 gdp excluding housebuilding 3. 8 4. 3 why did house - building have this extraordinary pattern? i do not think there is anyone who doubts that it was due to the bringing forward of house - building pre 1 july 2000 to beat the gst, and the subsequent dearth of house - building in following quarters. we all knew this transition effect was occurring, and our forecasts showed substantial falls in house - building in the second half of 2000, but not falls big enough to outweigh everything else that was going on in the economy. the size of these falls was truly outside the range of previous recorded experience, and that is always difficult to forecast. incidentally, similar large shifts in expenditure on housing did not happen in the other countries we had looked at that introduced gst ( see diagram 1 ). diagram 1 let me make a disclaimer before i go any further, lest anyone think i am trying to blacken the name of the gst and imply it was all a horrible mistake. i have always thought that a gst is a good thing for the economy, principally because it could take some of the weight off the high marginal tax rates on middle incomes in australia. i still do support it and note that it will still form an important part of the australian tax system beyond the next election. my only point is that when making a major reform,

for instance, i learned that not even typhoon mario stopped the elimination rounds for the best finance teams. equally important, we value the agreement of the schools and finex to include ethical practices and social responsibility in the education of our finance students. i highlight this point because the natural pursuit of fostering a healthy bottom line should always be within the parameters of ethical and social responsibility standards. at work, market practitioners, leaders of banks and financial institutions have the power and the responsibility to strengthen the value of good governance among their employees by walking their talk. for institutions to be able to stay in their respective businesses for the long haul – whether they are private or government, three attributes are indispensable : excellence, integrity and good corporate governance. indeed, excellence, integrity and good values should constantly be a part of our life wherever we are, whether we are at home, in school, or at work. again, to the finalists in this 16th icfc, i salute you for being the best that you can be. while prizes go to those who top this competition, in my book, you are all winners. serve our country and our people well by developing into world - class leaders who are ethical and socially - responsible. i also thank the organizers from finex, jpmorgan chase and the other partners for making finance education and this annual icfc a truly exciting event for our schools and students across the country. this event reminds me of what the late american president john f. kennedy once said, and i quote : “ let us think of education as the means of developing our greatest abilities, because in each of us there is a private hope and dream, which, fulfilled, can be translated into benefit for everyone and greater strength for our nation. ” ladies and gentlemen, it is in this spirit that i ask that we continue to work together to nurture excellence in finance education. hanggang sa muli! mabuhay ang ating mahal na bansang pilipinas! mabuhay po tayong lahat! bis central bankers ’ speeches