Senator TIERNEY —I direct my question to the Leader of the Government in the Senate. Today the Australian Bureau of Statistics published its business expectation survey where businesses comment on their expected performance for the short and medium term from the June quarter through to the March quarter next year. What do these figures indicate; and what do these figures tell us about how small business in Australia is faring?

Senator HILL —These figures are very important to the government, because this is a government that is interested in the wellbeing of small business—business in general, but small business in particular, because we know how hard small business had to do it under the previous Labor government. The figures are quite pleasing. Bear in mind, Madam President, that this survey covers some 3,000 firms of various sizes. So it is a reasonable indicator of what business in Australia is feeling at the moment.

What is pleasing is that the survey is demonstrating that businesses are now more confident about their performance and their future. That is not surprising, because of the economic reforms that have been put into place; in particular, our willingness to cut expenditure to keep pressure off interest rates and the industrial relations changes we have made—all changes that help Australian businesses. Also, of course, they will now have more reason to be confident because of the small business reform package that was announced by the government this week.

The survey shows us that businesses believe that their profit expectations are improving. Firms expect profits to be 7.8 per cent higher in the June quarter than in the March quarter but, more importantly, to then rise 12.2 per cent higher in the next March quarter. So that is an expectation of reasonable profits now, but growing profits. Similarly, in relation to new capital investment, firms expect capital expenditure to rise by 3.4 per cent in the June quarter, and to continue to rise.

Unemployment or employment prospects are not as good as we would like them to be. But I am pleased to note that they are expecting growth to the March quarter of next year. And at least that is positive, because one of the reasons we want business to do well is to create employment opportunities for more Australians, particularly those who missed out under Labor.

These results, Madam President, are consistent with other economic intelligence that we have had of recent times. I remind you of the national account figures, which showed continuing growth; retail sales figures, which showed as being 2.7 per cent higher in January than in December; and the business investment outlook figures, which showed that real business investment grew by 20 per cent last year. The latest survey shows that expectations remain robust and, in fact, the budget forecast for business investment has been revised upwards from 14 to 17 per cent.

Looking specifically at small business, there is no doubt that it continues to do it—according to these figures—tougher than large business, but again the expectations are quite reasonable. Small business expects profits to rise by 4.2 per cent in the June quarter, compared with this current March quarter. But it then expects profits to rise by 9.4 per cent in the March quarter next year—again very positive. It expects its capital spending to grow 1.3 per cent in the June quarter, but 2.9 per cent in the March quarter—again continuing to invest, continuing to grow. It also expects to be employing more during the next 12 months, so that is pleasing. Finally, it is expecting its exports to grow in the next 12 months—and that is very important for the trade accounts.

So business is telling us that it is reasonably confident about the future and, when we look a little further into the future, it is even more confident. What that does is demonstrate that the policy reforms instituted by the new Howard government have been correct and have given business an opportunity to grow and employ as it was not able to under Labor—and that is good news for all Australians.