Mr PYNE (2:53 PM) —My question is addressed to the Treasurer. Will the Treasurer advise the House of the September quarter capital expenditure survey released today by the Australian Bureau of Statistics?

Mr COSTELLO (Treasurer) —I thank the honourable member for Sturt for his interest in the economy and for the work that he is doing in cleaning up electoral rorts in Australia.

Mr SPEAKER —The Treasurer will come to the question.

Honourable members interjecting—

Mr SPEAKER —The Treasurer will come to the question and the House will come to order.

Mr COSTELLO —The Australian Bureau of Statistics capital expenditure survey, which was released today, showed that private new capital expenditure rose 0.6 per cent in the September quarter after a fall of 1.9 per cent in the June quarter. This was higher than market expectations, with the median market expectation of a fall for the quarter. The increase in capital expenditure was led by plant and equipment, which increased 5.4 per cent, whilst buildings and structures investment fell by 12.4 per cent in the quarter.

The capital expenditure survey also has expectations for the year 2000-01 as a whole, and the fourth estimate is 1.3 per cent higher than the equivalent estimate for last year, 1999-2000. This again is led by estimates of a rise in plant and equipment being 4.7 per cent higher than the equivalent investment for 1999-2000. These figures do not map directly into the national accounts, but the plant and machinery figures support the government's MYEFO forecast of an increase of four per cent in business investment over 2000-01.

One of the things that have changed for capital investment for the business sector as a result of the new taxation system is that now business can claim full input tax credit for all embedded taxes in plant and equipment. That was not the case under the Labor Party's tax system. Businesses paid embedded costs, through the Labor Party's tax system, when they were investing in plant and equipment. As a consequence, for the same amount of investment, it becomes cheaper for business because they get an input tax credit. One of the reasons why the new taxation system is helping business is that it is making investment goods cheaper for business so that they can invest.

The outlook for solid investment reflects favourable fundamentals in the Australian economy, healthy corporate profitability and balance sheets, relatively high levels of capacity utilisation, strong world growth and a boost to Australia's competitiveness flowing from a stronger world economy and exchange rate effects.