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Thursday, 26 August 1999
Page: 9222

Mr CREAN —My question is to the Treasurer. I refer to the Treasurer's latest gold medal performance, this time on capital investment. Does the Treasurer recall saying on 1 June 1994, `You can't run sustained economic recovery without growth in business investment'? The next day he said, `Without investment you don't get real jobs.' Treasurer, don't today's investment figures show a 16 per cent fall in private investment spending in the June quarter, a 13 per cent fall in investment on equipment, plant and machinery and a 17 per cent fall in investment intentions? Isn't this the biggest quarterly fall since the series began?

Mr COSTELLO (Treasurer) —We know that the Australian Labor Party will try to jump at every perceived negative, but I am afraid that they draw a blank again, as per usual. The Australian economy is growing at about 4.8 per cent, which of course is faster than the United States, Britain, France, Germany, the OECD, G7 and all of Asia. The government has forecast that in the course of 1999-2000 economic growth will `slow' to about three per cent. Such a slowing would still make Australia probably the fastest growing developed country in the world. The CAPEX figures which were released today illustrate the reason why the government forecast a slowing in the economy. After record years of business investment in the midst of the biggest downturn in the economy that we have seen since the Second World War, the government forecast in its budget that CAPEX would slow in 1999-2000. In fact, we forecast that the rate of increase would be zero. For all those economists who have been saying in recent times that the government would be exceeding its forecasts in 1999-2000, the business investment figures which we see today reinforce the forecast which the government put out.

Mr Crean —So you expected this?

Mr COSTELLO —We forecast this. We did not expect it; we forecast it.

Mr SPEAKER —Order! The Deputy Leader of the Opposition has asked his question and will listen to the answer in silence or I will take action.

Mr COSTELLO —You open up your budget papers, turn to that part called `forecast' and you read it.

Mr SPEAKER —The Treasurer will come to the question.

Mr COSTELLO —That is normally what shadow Treasurers do rather than get themselves engaged fixing up problems with the ACTU, which is comprehensively left out in the cold by the Australian Labor Party. As stated in the budget, the weak international environment has affected business investment, particularly those parts of the economy exposed to overseas markets. This comes after six years of strong growth which carried business investment as a share of GDP to historical highs. Positive fundamentals continue to underpin investment with strong corporate profits, business confidence and low interest rates. I said yesterday in the House that official interest rates in Australia are now some 50 basis points lower than in the United States. Of course, home mortgage interest rates—

Mr Crean interjecting

Mr SPEAKER —By any measure, the chair extends to the Deputy Leader of the Opposition a great deal of latitude. If he wishes to continue interjecting, he will be treated as all other members are treated.

Mr COSTELLO —Mr Speaker, he is a hereditary peer!

Mr SPEAKER —The Treasurer will come to the answer to the question asked. Any suggestion of reflection on the chair will be dealt with appropriately.

Mr COSTELLO —Mortgage interest rates are at 6½ per cent or a little under from the 10 per cent plus that they were when the government came to office. Data released next week are expected to show that the current account deficit in the June quarter will be somewhere in the sixes as a percentage of GDP, again consistent with a budget forecast of 5½ per cent for 1998-99 as a whole. From 1 April 1999, coking coal producers are receiving prices on average 17 per cent lower in US dollar terms than they were in March, with steaming coal prices down by about 13 per cent on average.

Following two years of very solid growth in excess of four per cent on a one per cent inflation rate, with unemployment the lowest in the decade, with mortgage interest rates the lowest since man walked on the moon, with nearly 500,000 new jobs created over the last three years, with a budget now in surplus, with $24 billion of Beazley debt repaid and with a path to eliminate Commonwealth debt by 2003, a slowing in 1999-2000 to around three per cent is forecast before a pick-up with the international economy in 2000-01, with the introduction of the new taxation system, with personal income tax cuts and with a modernisation of the indirect tax base—all reforms which this government has been putting in place and which will carry Australia into the next century.