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Tuesday, 1 February 1994
Page: 7

Mr STEPHEN SMITH —Can the Prime Minister inform the House of the prospects for Australia's further economic growth? Can he advise the House how the current recovery differs from the growth experienced in the late 1980s?

Mr KEATING —We have just had a very comprehensive answer from the Treasurer, one which I thought there would have been great interest in this House in hearing. There was much mumbling and chortling on the opposition side while the answer was being given. Obviously those opposite are politically embarrassed, having predicted a double-dip recession a year ago. The Leader of the Opposition said this month one year ago that Australia was heading for a double-dip recession and maybe even a depression. We are now outstripping growth in the OECD area and growing in terms that the Treasurer just mentioned; that is, growing strongly.

  The Treasurer made two very telling points. One is that this is not a chance recovery. We did not just happen upon this. A quality, low inflation recovery was not something that just happened overnight but was something to which the whole nation had been put as a consequence, he said, of everyone pulling together. That definitely does not include the opposition, which has done everything to stall any growth in confidence. It has watched every good economic number come out to its chagrin and has not in any way participated in or, as a consequence, been party to, that recovery.

  Last year, the Leader of the Opposition did everything to knock over the government's budget—a budget which is consolidating fiscal policy for the recovery. He wonders after a year of negativism on the budget, Mabo and everything else why his leadership is in trouble. It is in trouble because basically he stands for nothing and the whole country, including his party, knows it. Let me deal with this question about whether the recovery has not come about by chance. The growth that we have seen since the middle of 1991 can be directly traced back to three main factors. The first is the impact of low interest rates on housing and consumer debt.

Mr Tuckey —No, it came about by Jeff Kennett and Richard Court.

Mr SPEAKER —I warn the honourable member for O'Connor.

Mr KEATING —The interest rates are at their lowest level for 20 years. Interest rates are in part a reflection of the inflation rate, which we now see at 1.9 per cent—our inflation rate has been under one per cent—a combination of the government's fiscal, monetary and wages policies having produced it. Those low interest rates have contributed to economic growth.

  The second area has been strong growth in exports, flowing from the low dollar, an increased focus on Asian markets and because we are 30 per cent more competitive than we were a decade earlier. That is a very healthy number—30 per cent more competitive than we were a decade earlier. As a consequence, we have seen a tremendous growth in exports, particularly in elaborately transformed goods.

  The third reason is the boost provided directly from the budget through the One Nation statement, the youth and employment packages and the statement, Investing in the Nation. The total direct stimulus from these packages to date has been more than two per cent of GDP.

  At the time I announced these things, the Leader of the Opposition said they were going to wreck the country's finances and that we were trying to buy jobs and votes. We are now seeing the Japanese government urgently introducing a stimulatory package of the same variety to do the very same thing that we did two years earlier in this country. As a consequence, we are now sitting with a strong, broad recovery that, as the Treasurer says, is running this year at about 3 1/2 per cent and we have seen those contributions to growth.

  The One Nation statement took some stick from commentators about its appropriateness. The conservative financial commentators—the McCranns of this world—and others pooh-poohed it. I hope that they will now eat their words and at least admit that the cyclical stimulus put into the economy and now withdrawn was absolutely right and that the results are there for all to see. Basically, this sort of dreary, conservative view of the world just does not work when a need for innovation becomes very clear.

  So we have a broad and durable recovery of quality. We are seeing plant and equipment investment pick up. We are also seeing the rewards go to people who are investing in things and employing people and not to the speculators, which we have formerly seen.

  As an indication of the breadth of the recovery, it is worth referring to the share price indexes of various categories of stocks in various sectors of the economy. There was a 25.8 percentage point change in building materials from 30 July 1993 to now; for alcohol and tobacco, 12.3 per cent; food and household goods, 25.2 per cent; chemicals, 40.8 per cent; engineering, 40.5 per cent; paper and packaging, 36.6 per cent; the retail sector, 16.9 per cent; media, 27.4 per cent; banks, 27.7 per cent; insurance, 29.6 per cent; entrepreneurial investment, 28.7 per cent; investment and financial services, 29.8 per cent; and developers and contractors, 18.9 per cent.

  There is obviously a very broad spread of growth in profits and prosperity across the sectors. The speculative ones are doing less well than would have been the case in, say, the 1980s. So there is a broad recovery—as the Treasurer said, in part because we have seen the whole country pulling together to make the place competitive and, as he put it, to rejig the whole economy. The point can best be driven home by that unity and cohesion in the community.

  I simply say to the opposition that it is about time it came on board, did a bit of cheering and gave support for the kind of recovery the country has achieved. It should rejoice somewhat in the fact that, as the Treasurer said, the forecast for jobs this year will be 200,000, not 100,000. We have seen 123,000 jobs already created. The opposition should stop its foreboding and negativism and rejoice in the change which we believe all Australians are about to enjoy.