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Wednesday, 6 June 1984
Page: 2612

Senator CHILDS —I remind the Minister representing the Treasurer of the frequent assertions of Opposition spokesmen that the economic recovery under Labor is fragile and is set to fizzle out. Are these assertions supported by the facts? Are there grounds for having confidence that the recovery will be sustained?

Senator WALSH —The assertions made by the Opposition were, of course, politically motivated at all times and they have now been shown to be completely without foundation. At a more responsible level, the Australian Financial Review in the past has also questioned whether the recovery is sufficiently broadly-based to be sustainable, or whether it is a temporary phenomenon. But the Financial Review today, in the first paragraph of its editorial, said:

The evidence provided by the national accounts figures released yesterday that the economic recovery is in fact very strong is something which should be welcomed without reservation. The uncertainty which surrounded the last quarter' s figures has, to a considerable extent, been dispelled.

A wide variety of statistical facts could be cited to support that assessment, but I will mention just three. There has been a massive increase in dwelling constructions. The figures released at the end of May for the December quarter show that in seasonally adjusted terms the total number of new dwelling commencements increased by 12 per cent. That was a 38 per cent increase on the level of new dwelling commencements which applied just one year earlier. Total manufacturing production figures show that in seasonally adjusted real terms manufacturing output increased by 2.3 per cent in the March quarter to a level which was 6 per cent higher than it had been in the March quarter of the previous year.

Private capital expenditure, again in seasonally adjusted terms, increased by 7 per cent during the March quarter. That was the first increase in private capital expenditure since the June quarter of 1982. If preliminary estimates of expenditure in the June quarter of this year are realised, there will be a further increase in private capital investment of the order of 10 per cent; that is on top of the 7 per cent increase already recorded. The expectation for private capital expenditure for the year ending June 1985 is 9 per cent higher than the expectation for the same period reported in the December 1983 survey. The evidence is quite clear that a recovery in private capital expenditure is occurring at about the time in the recovery cycle which is normal. It shows that there has already been a very significant increase in private capital expenditure and that expectations of the business community about capital expenditure in the future have risen considerably and risen very substantially even on the expectations held by the same group at the end of last year.