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Wednesday, 10 December 1986
Page: 3699

Senator JONES —Has the attention of the Minister representing the Treasurer been drawn to a publication released by the Australian Bureau of Statistics last week headed `Private New Capital Expenditure, Australia, September Quarter 1986'? What light do the figures in that publication shed on the outlook for the Australian economy during the remainder of this financial year?

Senator WALSH —The short answer to the question of what light these figures shed on the economy is that they shed a rather favourable light on the outlook for the economy for the rest of this financial year. The publication is a survey conducted in October and November of business investment spending and expectations about the level of investment that had actually been undertaken in the September quarter and the anticipated investment for 1986-87 as a whole. The former, that is, the actual investment spending in the September quarter, was very favourable, up by 7 per cent in real seasonally adjusted terms on the preceding quarter, indicating an annual rate of close to 30 per cent if that level were to be sustained. This confirms the figures contained in the September quarter national accounts which were published last week.

Probably more important than what actually happened in the September quarter is what firms anticipate doing for the rest of the financial year. Anticipated 1986-87 investment spending has increased by 6 per cent since the ABS survey, which was conducted only two months before. To get a clearer picture of what these figures mean, it is normal to apply what I think the Statistician calls realisation factors; that is, an adjustment which measures the extent to which anticipations regarding investment spending have been realised in the years during which these surveys have been conducted. According to the expectations revealed in the July-August survey, which was published in mid-August, and applying that average realisation factor for the past five years, total business investment was set to rise by about 7 per cent in the 1986-87 financial year. The equivalent figure for the October-November survey is 9 per cent. I think one could say fairly confidently both from what has been recorded to have happened and what has been recorded as an expectation that there should be a significantly higher level of private investment this financial year than has been anticipated and forecast in the Budget.