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Monday, 29 November 2004
Page: 28

Mrs BRONWYN BISHOP (2:19 PM) —My question without notice is to the Treasurer. Would the Treasurer inform the House of today's balance of payments data? What are the economic implications arising from these data?

Mr COSTELLO (Treasurer) —I thank the honourable member for Mackellar for her question. Today, the Australian Bureau of Statistics released the balance of payments for the September quarter of 2004. The current account deficit widened by $1.9 billion in the September quarter to $13.7 billion—around 6½ per cent of GDP. While import volumes only rose by 0.8 per cent, they are up 13½ per cent over the year. For the quarter, export volumes fell 3.2 per cent, but remain 4.7 per cent higher over the year. In particular, exports of rural goods fell 3.9 per cent, which was driven by lower exports of wool and sheepskins. In addition to that, non-rural goods fell four per cent for the quarter. As Australia emerged from drought, we had a very good wheat crop in the earlier part of 2004. Indications for 2004-05 are that the wheat crop will be lower than it was for 2004, which means we are coming off a higher base in relation to rural commodities.

One of the things that is undoubtedly challenging Australia's exports at the moment is the level of the Australian dollar, which is currently about 10c higher than its post-float average over the last 20 years in US dollar terms. This was the subject of discussion at the G20 meeting of finance ministers and central bankers in Berlin last weekend. The United States, with its own current account problems, has the US dollar falling against most currencies in the world, particularly the euro and the yen. While that will be advantageous for the United States, those other currencies which are appreciating against a falling US dollar will, as a consequence, find that their export competitiveness has been affected and that will make things harder for their exporters.

I acknowledge that the level of the currency has made things harder for Australian exporters. In part, this is because of commodity prices but, largely, it is because of a falling US dollar which, as I said, is falling against the major currencies of the world. It would certainly be helpful if that adjustment on the US dollar were shared by a wider range of currencies than is currently the case at the moment. We expect that it will be a challenging year for exporters. As a consequence, net exports will detract from the national accounts, which are going to be released on Wednesday of this week. It is important that we make all efforts to keep our economy competitive so that Australia's exports can cope with those difficult trading positions.