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Thursday, 29 May 2003
Page: 15462

Mr PYNE (2:10 PM) —My question is to the Treasurer. Would the Treasurer advise the House of the results of the capital expenditure publication released by the Australian Bureau of Statistics this morning? What is the outlook for business investment in Australia?

Mr COSTELLO (Treasurer) —I thank the honourable member for Sturt for his question. I can inform the House that total new capital expenditure in the March quarter, whilst showing a 5.3 per cent decline, showed that over the course of the year capital expenditure had risen by 18.2 per cent. The reason for the decline in the March quarter is that it was coming off an artificially high December quarter, which had increased by 13.7 per cent, led particularly by the importation by Qantas of civil aircraft of around $1.7 billion. You had an abnormally high build-up in the December quarter and you had a correction in March; but once you take those lumpy figures out, over the course of the year capital expenditure rose by 18.2 per cent.

In addition to that, we have released today the sixth estimate for capital spending in 2002-03, which was 16.7 per cent stronger than the equivalent estimate for 2001-02. Again, the intention for the whole of this year is a very large rise on the outcome for the previous year. This shows that there is very strong capital expenditure going on in the Australian economy. In part, this is reflected in today's trade figures, which show that imports were up, being much higher in April than previous months, whilst exports were down—and no doubt the trade minister will have something to say about that in a moment. But statistics on the international trade in goods and services for the month of April, which we have already released today, tell a story of a strong domestic Australian economy, notwithstanding a very weak international economy. In addition, of course, drought affects some of Australia's exports, particularly in the rural areas.

Coming back to capital expenditure: as I was saying yesterday, confirming the `construction work done' figures, capital expenditure has been very strong in the course of this year, both in construction and in equipment. This is continuing to drive a strong underlying Australian economy. It is supported by low interest rates. In addition, it is supported by the fact that the government has taken taxes off inputs. As I said yesterday, in the residential sector it is supported by a strong First Home Owners Scheme, which has given young Australians a chance to get a home. I thank the honourable member for Sturt for his question, and I can inform him that today's figures confirm strong underlying capital expenditure going on in the Australian economy.