Senator TROOD (3:03 PM) —My question is to the Minister for Finance and Administration, Senator Minchin. Will the minister inform the Senate of the very fine results of the December quarter national accounts? What do these figures indicate about the continuing strength of the Australian economy and the need for persistent, strong economic management?

Senator MINCHIN (Minister for Finance and Administration) —As Senator Trood indicated, what really matters to the Australian people is the management of the national economy and their wellbeing. Since the Senate last sat the ABS has released, as Senator Trood said, the December quarter national accounts, which indicate that the Australian economy has continued on its longest ever economic expansion. Real GDP grew by a robust one per cent in the quarter to be 2.8 per cent higher throughout the year. The figures confirm the significant impact of the drought, with farm production falling by just over 11 per cent for the quarter and almost 23 per cent for 2006. By contrast, non-farm GDP is growing at a very healthy rate of 3½ per cent per annum—one of the best growth rates in the Western world.

The individual components of the national accounts also indicate the underlying health of the economy. In nominal terms, company profits were up 10.9 per cent for the year. The profit share of the economy is at an all-time high and, while some trade unionists do not like that, the fact is that those healthy profits are what help generate continued strong jobs growth and investment. Private business investment has been at very high levels in recent years but still grew a further 2.1 per cent in 2006. Engineering construction rose 9.6 per cent just in the December quarter. The national accounts measure of inflation—the private consumption and consumer price index—was steady in the quarter, consistent with the negative headline CPI result for that quarter. That reflects the unwinding of high fruit and petrol prices during the December quarter.

The strength of Australia’s terms of trade means that real incomes for Australians have continued to grow faster than real output or GDP. Real national disposable income grew by 3.8 per cent in 2006. In fact, last year, real net disposable incomes per capita were around $7,500 higher than in 1997-98. In other words, the average Australian—that is, every man, woman and child—is now $7,500 better off in real terms than they were just nine years ago. Labour productivity measured by GDP per hour worked in the market sector rose by 1.4 per cent in the quarter, putting a lie to Labor’s claims of stalling productivity growth.

There is no more fundamental responsibility of the federal government than to manage the economy so as to ensure strong growth, low inflation, investment, jobs, profitability and rising real incomes. The national accounts indicate that all these outcomes are now being achieved under the Howard government. Of course, the challenge is to maintain that strong run of economic success. On that, we and the Labor Party agree; we just have vastly different ways of ensuring that success continues. It will require a strong and responsible budget, with a strong surplus. It requires the labour market flexibility we have introduced through Work Choices, which the Labor Party wants to tear up. It requires a balanced and measured response to the challenge of climate change, not the hysteria we get from the Labor Party. And it requires the pursuit by the Council of Australian Governments—that is, all six state Labor governments—of the national reform agenda, because the potential benefits of that have been outlined dramatically by the Productivity Commission. We call the states to join us in that very important reform agenda. Above all, it requires the consistency and discipline which has been a hallmark of the Howard government’s economic management, as opposed to the erratic and opportunistic posturing we have seen for a decade from the Labor Party.