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Monday, 20 May 1985
Page: 2122

Senator MAGUIRE —My question is directed to the Minister representing the Treasurer. Do the latest retail sales figures suggest that consumption spending this financial year will exceed the forecast made in the August 1984 Budget? Is the $7.60 weekly reduction in personal income tax from last November now acting to increase the level of retail sales?

Senator WALSH —With regard to the last part of the question, it is somewhat speculative to attribute the level of retail sales to the increased after-tax income which all Australians, particularly wage and salary earners, enjoy as a result of the November 1984 tax cuts. However it would be reasonable to conclude, as Senator Maguire has, that that would be one factor. That may be speculative, but it is a fact that retail sales in the March quarter of 1985 were, in nominal terms, 8.9 per cent higher than they were in the March quarter of 1984. That means a real increase-one cannot be positive about this because the deflated figures have not yet been arrived at-in retail sales of something between 3 and 4 per cent, and probably closer to 4 per cent, for the March quarter of this year over the March quarter of the previous year.

Another major indicator of consumer demand, vehicle registrations, also points to buoyant conditions. In Senator Maguire's State of South Australia motor vehicle registrations in the March quarter of this year were a massive 17 per cent higher than they were in the March quarter of the previous year. That reinforced and indeed extended the very firm growth in consumption spending which was recorded in the December quarter. All of those indicators suggest that the 1984-85 Budget forecast of 2 3/4 per cent growth in consumption spending is likely to be exceeded.

With that sort of consumer demand providing a firm base for real growth in its own right, and with investment demand very strong and the forecast of private investment rising, we look forward to a third successive year of very strong economic growth, in marked contrast to the dismal record of our predecessors throughout their term in government on average and in particular in the last one year or two years of their term in government.