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Wednesday, 27 May 1987
Page: 3399


Ms FATIN —I direct my question to the Treasurer. What do the national accounts figures released today by the Bureau of Statistics show for Australia's performance in economic growth, exports and imports, wages growth and business investment?


Mr KEATING —Broadly, they show that the Government's strategy is on track and on target. Today's national accounts figures show that in the year to March the Australian economy grew at a rate of 2.3 per cent and, also, they indicate that the general strategy of the Government in dealing with the current account deficit is working just as the Government said that it would. In the six months to March, export volumes climbed at an annual rate of 29.8 per cent and imports were static over that period. As a result, the current account deficit as a percentage of gross domestic product was 4.5 per cent in the March quarter of 1987 compared with 6 per cent in the same quarter of 1986, so the current account is coming down in a trend way, export volumes are up 30 per cent on an annual rate over the six months to March and imports are static.

All of the growth in the last three quarters came from net exports. There is no contribution from demand; it all came from import replacement and exports, which is again indicative that the Government's strategy is working, that our secondary structures are being rebuilt, that we are finding the niches in export markets and that we are about pulling down our current account and hence our reliance on overseas debt.

Inflation, as measured by the non-farm product deflator, declined from a peak of 8.9 per cent in the six months to June to an annual rate of 7.6 per cent in the six months to the end of March, so again, if honourable members look at another important indicator, they will see that it is coming down, just as the Government said that it would. Wages are a further confirmation of our continued success with the accord as a method of achieving economically responsible wage outcomes. Wages, salaries and supplements, including superannuation, grew by 4.8 per cent in the year to March which is, of course, in line with our trading partner average. We are maintaining all our competitiveness. In the six months to March the profit share recovered to 12.6 per cent from 11.3 per cent in the six months to September, so again we find that the business community's faith in the Government is being endorsed by a lift in the profit share. We have seen public sector demand fall at an annual rate of 1.9 per cent in the six months to March, so the public sector demand is coming down.

In addition, today the business investment expectation survey lifts the business expectation outcome over the year, but, of course, none of these impacts and none of these outcomes have experienced the effects of the May economic statements made last Wednesday week or the Premiers Conference of Monday, which involve a further reduction of $4 billion off the Budget deficit in prospect and $1 billion off the State authorities borrowing program. That is a massive recasting of fiscal policy which has seen already very large declines in short term interest rates. As the Government provides scope for further falls in interest rates, we will see better expectations by business about investment and then better investment numbers.

Looking across the gamut of the indicators, at this time the national accounts show that the Government's strategy is entirely on course, on trend, on track and on target. Export volumes are up, import volumes are static, inflation is coming down, the profit share is going up and earnings growth is 4.8 per cent. There could not be a better confirmation that the Government's policy is working and, if the nervous giggles from members on the other side are any indicator of their state of anxiety and nervousness, this outcome can only enhance their concern.