Mrs BAILEY —I address my question to the Treasurer. Could the Treasurer outline to the House recent economic indicators on the current state of the Australian economy? In light of recent economic data, what are the prospects for continued economic growth? What effects are developments in the region likely to have on the Australian economy?

Mr COSTELLO (Treasurer) —Unquestionably, international developments in our region and elsewhere have been very difficult. This has been a very difficult international environment over the last 12 months. As we look around this particular region, we see Japan is in recession, Singapore moved into recession yesterday, Korea is in an IMF program, Thailand is in an IMF program and Indonesia is in an IMF program. I can report to the House that, whilst nearly all of Asia, bar China, is in recession, the Australian economy continues to grow strongly. As the RBA semi-annual statement on monetary policies said:

The Australian economy has also weathered the first year and a half of a very difficult international environment exceptionally well. . .

The statement says that this was due to good macro economic policy, combined with the success of exporters in finding new markets.

On an unadjusted basis—and the Prime Minister has just referred to the adjusted basis—the Australian economy grew by four per cent in 1997-98, faster than the United States, faster than the United Kingdom, faster than France, New Zealand, faster than our OECD major partners and, of course, faster, outside of China, than any economy in the Asian region.

Mr Speaker, these kinds of results do not happen by chance. I would like to pay tribute to the Australian exporters who have shown remarkable ingenuity in switching their exports to different markets. It has in part been a result of allowing an adjustment in relation to the exchange rate to help those exporters find those new markets, but it has also been a response of this government which decided to repair the Australian budget, to take a $10.3 billion Beazley deficit and put the Australian budget back into surplus. When we did that, we were fought every single step of the way by the Australian Labor Party. Having created the mess, the Australian Labor Party tried to stop all efforts to fix it again.

Today we can report that inflation in Australia is well within the band set by this government with the Reserve Bank. We can report that home loan mortgage interest rates are as low as they have been in Australia for 30 years. The small business indicator overdraft rate is the lowest recorded by the Reserve Bank.

Mr Speaker, I also note in passing that the Westpac index of consumer sentiment, which was released at 11 this morning, was headed `Consumer sentiment surges' and reads:

The Westpac-Melbourne Institute index of consumer sentiment rose by 6.2 per cent in November. Westpac's General Manager Economics, Bill Evans, commented, `This is undoubtedly a strong result which has probably been supported by a clearly benign interest rate outlook.'

Mr Howard —They like the election result, too.

Mr COSTELLO —And, as the Prime Minister says, no doubt contributed to by the election result as well. Mr Speaker, you do not get that kind of economic management without taking the hard decisions and the tough decisions. This was a government that was prepared to take the big decisions in relation to the Beazley budget deficit of $10.3 billion so as to put the Australian economy back on track, and this is the government which is prepared to take further decisions in the national interest in relation to tax reform to set Australia up for opportunities in the future which it will never get otherwise.