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Wednesday, 13 August 2003
Page: 18399


Mr PYNE (2:33 PM) —My question is addressed to the Treasurer. Would the Treasurer advise the House of the results of recent surveys of business and consumer sentiment? What do these indicate about the strength of the Australian economy? What measures underpin this strength?


Mr COSTELLO (Treasurer) —I thank the honourable member for Sturt for his question on such a significant day in the parliamentary year. I can inform him that the recent NAB business conditions index, which was released yesterday, rose six points to a reading of plus 14, the highest since November of last year, which the NAB noted was consistent with the ongoing strength of the local non-farm economy—growing, they said, at four to 4½ per cent.

In addition to that we had released today, on this significant day in the parliamentary calendar, the Westpac consumer sentiment index. Although it showed that there had been a fall of around 3.4 per cent—and that was coming off nine-year highs—the consumer sentiment index was at a high of 112.5 per cent, about 12 per cent above its long run average. As Westpac noted, part of the fall could be due to a correction from previous months, partly it could be due to reaction to employment figures and partly it could be due to reaction to the bombing at the Marriott hotel in Jakarta.

These indications of the strength of consumer sentiment are consistent with ongoing retail strength and, indeed, record motor vehicle sales in Australia. I would just like to underline this point. Last year there was an all-time record for motor vehicle sales in Australia, and the sales of motor vehicles for July 2003 were higher than for July 2002, when we had the all-time record. So it could well be that Australia is now coming up for a second all-time record in relation to motor vehicle sales. What has underpinned that? The fact that one million additional jobs have been created means that people are in work and can afford to buy motor cars. Secondly, of course, lower interest rates make it easier to buy motor cars. But thirdly—and let us not understate this—the tax reform which this government implemented was one of the biggest benefits to the motor vehicle industry that there has ever been in this country. We abolished a 22 per cent wholesale sales tax and replaced it with a 10 per cent GST—and in relation to fleet sales the tax rate is zero, because business gets all GST reimbursed. So for fleet sales you came from a situation where Australian producers were paying 22 per cent tax to a situation where they are paying zero. No wonder fleet sales for Australian manufacturers have been so strong and the motor vehicle industry has been running so strongly.

Of course, all tax reform in this country was opposed by the Labor Party. If the Labor Party had had its way the Australian motor vehicle industry would not have had the benefit of tax reform. I was asked what other policies have underpinned our strong results.



The SPEAKER —The member for Swan!


Mr COSTELLO —Yes, taking taxes off exports was also part of it, and if the Labor Party had been successful we would still be taxing exports in Australia today. A big part of the story was—



The SPEAKER —The member for Swan defies the chair!


Mr COSTELLO —The member for Swan defies logic, Mr Speaker, not just the chair, if I may say so. A big part of it was also the way in which this government underwrote a fiscal policy. I said earlier that Saturday week ago Paul Kelly had a piece quoting the new shadow Treasurer as `discovering fiscal rigour'. Unlike the Howard government, Labor was the party of the budget surplus, not the deficit. Poor old Paul; his hands must have been shaking as he tried to type those words. This is a Labor Party that had $80 billion worth of deficit, and this government has turned it around and reduced Commonwealth debt to GDP to five per cent. I want to explain to the House that, notwithstanding all those changes, Labor has not discovered fiscal rigour—not for a moment. If you want any evidence of that, look at the questions that were asked here in question time. What were they about? They were about more spending on health care agreements. Where is the fiscal rigour in that? This is a government which has increased spending by $10 billion—a 17 per cent real increase. The shadow minister says that it is not enough and Labor is going to be the party of fiscal rigour. We have a situation where all the Labor Party—the frontbench and the backbench—

Opposition members interjecting


Mr COSTELLO —with the shadow minister now intervening—want more spending and the shadow Treasurer wants to criticise the government over fiscal rigour. It is schizophrenic. Two spaces up the frontbench and we are into the height of schizophrenia in a political policy. You can either be for fiscal rigour and support the government's moves on health care funding, or you can be for health care funding, in which case you do not stand for fiscal rigour. But please let us know which side of the street the Labor Party want to walk, because we will meet them on either and we will do them on either, because there is only one side that stands for decent economic policy in this country and it is the coalition government.