The Organisation for Economic Co-operation and development (OECD) has forecast a 3 per cent growth for the Australian economy in 2016. The barely positive figure is due to an expected rise in non-mining and export investment.

But it’ isnt all good news.

In a report released on Wednesday, from Paris, the OECD warned that should the prices of commodities continue to slide the overall fall in production would worsen.

Because of this outlook the OECD were advising the Reserve Bank of Australia to maintain interest rates until the immediate outlook appeared a little clearer.

The OECD report also drew attention to the larger-than-expected deficit. It urged the government to change its fiscal policy and continue to support to those worst off.

But treasurer Joe Hockey was having none of it. He insisted boosts to residential construction would yield benefits to the economy as a whole and scoffed at concerns about a housing bubble.

“You’ve got to get the stock up,” he said on ABC radio on Thursday. To back his claim Mr Hockey cited figures pointing to an 18 per cent increase in the number of constructions in 2014. He went on to say that housing bubbles only happened when supply exceeded demand, and this was not happening in Australia.

“It’s not inflated demand,” said Mr Hockey to Fairfax media. “We’ve got very low vacancy rates in places like Sydney. “We have put in a much stricter regime in real estate for foreign investment

“If you look at what happens around the world, bubbles burst in real estate where there is too much supply. We are a very long way from that in Australia.”

The OECD has backed domestic calls for further tax reform and cuts to red tape to boost business investment.

It has also backed calls for a shift to the widening and increase of GST and the introduction of land tax and a lessening of reliance on personal and corporate income taxes.

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