Mr HAWKER (2:28 PM) —My question is addressed to the Treasurer.

The SPEAKER —I warn the member for McMillan! The member for Wannon has the call. He will start his question again.

Mr HAWKER —My question is addressed to the Treasurer. Would the Treasurer advise the House of the results of the latest survey of the Australian Bureau of Statistics quarterly business indicators, and what is the outlook for gross domestic product growth within Australia?

Mr COSTELLO (Treasurer) —I thank the honourable member for Wannon for his question, and I indicate to him that the business indicators released by the Australian Bureau of Statistics today show that inventories increased by 1.6 per cent in the March quarter after falling 0.5 per cent in the December quarter. This suggests that inventories will be substantially contributing to growth in the March quarter, with the national accounts due to be released on Wednesday. In addition, company gross operating profits increased by 1.4 per cent in the March quarter to be 8.6 per cent higher over the year. Company profits were up a very strong 20.7 per cent in the March quarter and are up 44 per cent over the year, which is pretty extraordinary really when you think about the year that the Australian economy has been through in relation to the international downturn, the war in Iraq, the threat of SARS, the increase in oil prices that were brought on by the war and, in addition to that, the drought.

Detracting from the March quarter national accounts, however, will be the rural sector. The impact of the rural sector is still flowing through into national accounts and, as has been pointed out before in this House by the Deputy Prime Minister, the minister for agriculture and others, the drought has not yet ended. The drought will be showing up in relation to the March quarter. It is a once-in-a-century drought; the worst ever recorded, according to Australian meteorological records. The main impact is that farm production in 2002-03 is expected to fall by 27 per cent and to detract one per cent from GDP growth. That is an extraordinary detraction from a once-in-a-century drought which has not yet ended. The fact that the Australian nonfarm economy continues to grow so strongly means that Australia continues to lead the industrialised world, notwithstanding such a significant downturn in relation to drought.

We hope that the drought will end. It has ended in some parts of Australia but not in all parts. Unless it rains very shortly, winter crops will not be able to be planted and will go through another season without contributing. In terms of farmers, that means that their incomes again will be very subdued and they will be drawing down on the assistance that the government has put in place in relation to drought assistance and farm management deposits.

The picture we get of the Australian economy again is this. In the midst of an international downturn and a once-in-a-century drought, the Australian economy continues to grow because the nonagricultural product is strong, led by company profits, underpinned by low interest rates and also underpinned by the fact that the new tax system takes taxes on business inputs out of the system and gives them an opportunity to invest and to grow. We have seen that those factors have been very significant in relation to the figures which have been released today.