Mr MELHAM (2:29 PM) —My question is to the Treasurer. What do today’s national accounts say about the success of Australia’s economic policies, the need for ongoing reform and the prospects for our economy into the future?

Mr SWAN (Treasurer) —I thank the member for Banks for his question. As the Prime Minister said before, the Australian economy grew by a solid 0.5 per cent in the March quarter and 2.7 per cent through the year. I think all Australians should have confidence in this very solid outcome and confidence in the fact that we do have one of the best economies in the developed world. We can see that again in these national accounts today. It is an economy which is gradually in transition from support provided by policy stimulus to support provided by private demand. Of course, as the Prime Minister also said before, that stimulus is withdrawing at a rate that ensures appropriate support remains targeted at softer sections of the economy. Infrastructure projects in particular have helped plug the hole in private sector building activity, while stimulus payments and tax breaks for business have been unwound.

Stimulus projects contributed 12.5 per cent to the increase in new public investment in the quarter. Public investment has now risen by more than 40 per cent over the past year. As the Prime Minister also said before, this is keeping tradies in employment and it is keeping the doors of small business open.

Mr Robb interjecting—

The SPEAKER —Order! The member for Goldstein!

Mr SWAN —But, on cue, we get the shadow finance spokesman over there saying that somehow this did not play an important role in our economy and it is not important as we go forward. I can tell you that this pipeline of activity is absolutely essential to employment in this economy, is absolutely essential to confidence in small business and is keeping the doors of small business open in circumstances where it is quite difficult and remains very difficult for many small businesses out there. It is indeed ironic that the party opposite, which claims to be a party of small business, does not understand that essential fact—the ongoing importance of that infrastructure stimulus to support demand in our economy as the rest of the stimulus is being wound down.

The national accounts today are an important reminder of what Australians have achieved over the past year. Certainly the greatest achievement was that we did avoid recession when many other countries faced recession. The consequence of that has been the creation of something like 235,000 jobs in the past year. Other nations were shedding jobs. Other nations have unemployment rates of nine and 10 per cent; if you go to Europe, unemployment is as high as 16 per cent in some countries. That in itself is a fundamental drag on growth and a cause of great concern. You would think that in this House today they would be celebrating this very important outcome for all Australians—the fact that we have been successful in supporting small business and supporting families.

One of the lessons that this country has learnt through the experience of the last couple of years is that we do need to take the hard decisions to support our economy. They were not capable of taking the hard decisions to support us when we put in place fiscal stimulus, which is responsible for the outcome that we are seeing today. They squibbed it. They came into this House and they voted it down and they voted it down in the Senate in the first passage. That fiscal stimulus was absolutely important to the financial security of every Australian. On that occasion they did not display any understanding of the threat.

Equally, they have no understanding of what we need to do now to build on that success to put in place the essential economic reforms that can create prosperity as we move forward. They were wrong about stimulus and they are wrong about tax modernisation because they are simply out of touch and have no grasp of economics whatsoever.