By Judith Ugwumadu | 4 June 2014

Australia’s economy grew by 1.1% in the first three months of 2014, ‘but the composition of growth continues to highlight challenges faced by the economy’, according to country’s treasurer Joe Hockey.

The figures, published today by the Australian Bureau of Statistics, show a growth rate of 3.5% over the year to June, the highest recorded in almost two years.

Growth for the quarter was driven by 1.4 percentage point contribution from net exports in the mining sector, while a 0.3 percentage point contribution from household consumption expenditure also helped to expand the economy.

However, these increases were partially offset by a 0.6 percentage point decrease in inventories held by businesses and a 0.2 percentage point drop in public investment.

Hockey said: ‘The stronger growth evident in today’s numbers is welcome, but the composition of growth continues to highlight challenges faced by the economy. 

‘The mining sector will continue to be a major contributor to gross domestic growth, but this will increasingly come from production and exports rather than construction and investment.  This new phase will be less employment intensive, highlighting the need for growth in the non mining sectors of the economy.

‘To support growth in non-mining sectors, the government needs to offer a supportive, predictable and sustainable policy environment. That is why we need to remove the carbon tax and the mining tax, and introduce practical reforms to boost participation and productivity.’

He added that the country’s May Budget was part of an Economic Action Strategy to ‘ensure government spending and taxation will be sustainable’ so future generations were not asked to subsidise the current one.