David Murray, the chairman of Australia’s Future Fund, has warned that the Federal Government risks following Europe into financial calamity if spending is not reined in and productivity boosted.

 

Speaking at the Australian Business Economist annual conference in Sydney, Mr Murray expressed his concern over the state of global finances.

 

"Europe, with the fiscal issues it has, will go through crisis after crisis both in the banking sector and with sovereign debt as they sort of struggle through and work through the two options, which are basically exit of members or default but no exit," Mr Murray said.

 

Mr Murray continued to warn that Australia faced similar financial issues if behavior isn’t changed in the public sector.

 

"I don't see governments trying to wind back their debt positions rapidly; I don't see governments trying to reduce their size and trim their spending. I don't see people coming off subsidy arrangements of industry, in fact new arrangements are more the norm," Mr Murray said.

 

Mr Murray continued to bemoan the state of productivity gains in the country, saying that despite strong employment figures, little is being done to ensure productivity gains.

 

"I don't see initiatives that are designed to push the productivity of the economy," ," Mr Murray said.

"In fact, I see some trends which are working in the opposite direction. I think the Qantas dispute is evidence that the industrial system is pushing back against productivity improvement with success.”