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Tuesday, 23 August 1994
Page: 3


Senator CARR —My question is directed to the Minister representing the Treasurer. Given the recent indication of the strength of economic recovery in Australia, will the government review its economic targets, particularly for employment and business growth?


Senator COOK —No, we will not review those targets. What should be said is that the Australian economy is performing extremely well. We are now having a self-sustaining recovery in Australia which bodes well for everyone in this country. According to the March quarter statistics, the last available statistics for GDP growth, we are growing at five per cent. Importantly, on the last available statistics, that is a 1.7 per cent inflation rate, so we have high growth and low inflation.

  I might say, having talked to a number of economic ministers in OECD countries over the past month, that we are the envy of the OECD in terms of our economic fundamentals. In fact, Australia's average GDP growth of 3.3 per cent over the past 10 years is considerably higher than the OECD average of 2.8 per cent for the same period; and forecasts of growth in the coming years for Australia are well above the OECD average for that term as well.

  Given the lags in the operation of monetary policy, the increase in official cash rates last week was necessary to help underlying inflation and to keep underlying inflation at between two and three per cent over the course of the cycle in order to sustain the growth over the medium term. It will also ensure that the inflation stick, which we broke in this country three years ago, will remain broken and that inflation will remain low as well.

  If we add that factor to some of the other economic fundamentals, we see that the profit share as a percentage of GDP is high in Australia; that industrial disputes in Australia are at Depression period levels, that is, pre-Second World War levels—very low indeed, and going south as we speak; that business and consumer confidence equally in this country is very high; and that investment is on track.

  One important consequence of the strong economic growth is strong employment creation. More people are employed now in jobs in Australia than ever before. That is an important statistic to be recognised. The labour force data in July showed an exceptionally large increase in employment with a corresponding drop in the unemployment rate to 9.5 per cent. One would always say on month-to-month figures that there is some volatility which must be taken into account and that one should pay attention to the trends here, but in trend terms employment has grown very strongly and is 3.3 per cent higher than in July 1993. Nearly 320,000 jobs have been created since March 1993. This is well on the way towards achieving the government's objective of half a million jobs in the three years from the last election.

  Good news about the economy is often translated by the opposition into bad news. The 17 per cent fall in Mr Downer's approval rating during the recess is a mirror to that type of bad news. When one looks at the opposition's economic policies, one sees that it has a policy of seeking to be all things to all people—high expenditure to the interest group it is talking to, tax cuts for everyone, and a reduced deficit as well, a totally unachievable scenario.

  The way in which the opposition has been running its political line on the economy is opportunist in the extreme. When we know that this comes from someone such as Mr Downer, who was an adviser to the Fraser government which concluded its term with the trifecta of double digit inflation, double digit unemployment and negative economic growth, and when we look at the opposition's position on the economy, it can be seen that its policy could only devastate the advantages that we have so carefully built up.