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Wednesday, 31 August 1994
Page: 674

Senator MURPHY —My question is directed to the Minister representing the Treasurer in the Senate. I refer to the release today of the national accounts for the June quarter, which fill out the economic picture for the 1993-94 financial year. I ask the minister: What do the accounts tell us about how the economy is travelling? Are the economic policy prescriptions, outlined in the May budget and white paper, to stimulate further growth and development in Australian industry still on track? Do the national accounts confirm the view he expressed earlier this week in the Senate that indicators of investment are showing that Australia's manufacturing sector is gearing up to harvest the possibilities of the Asia-Pacific market?

Senator COOK —The national accounts were published at 11.30 this morning. They show that the economy is travelling very well. It does augur well for all Australians that we are in for a period of sustained economic growth in this country. The budget predictions are all on track and the manufacturing sector of the economy has been performing in an outstanding manner. All those things are clear from the national accounts. I guess the public of Australia is now waiting to see whether the directions statement of the opposition, to come out next week, will have any detail as to its economic prescriptions or whether it will be simply an empty, vacuous document like many of the policy utterings of its leader, whoever he might be today.

  Today's June quarter national account figures confirm the strength of the Australian economy. They show a growth of GDP of 4.3 per cent in the year to June 1994. This figure has been greeted with approving noises from the market and the stock exchange. Market economists have welcomed the figures, noting that the economy is growing strongly but without significant inflationary pressure. Dr Chris Caton, the economist for Bankers Trust, said, `We have got the best of all possible worlds: growth and low inflation.' Today's results show growth in the June quarter of 0.9 per cent, following strong growth in December and March quarters. This shows solid sustainable growth, slightly above the budget forecast. The implicit price deflators are again subdued, reflecting the continued absence of general price pressures in the economy. The GDP deflator was flat for the quarter, resulting in growth in the year to June of 0.9 per cent.

  As well as painting an extremely good picture overall, these national accounts show very positive pick-up in investment in plant and equipment. Abstracting from one-off factors, new private plant and equipment investment increased by 13.4 per cent in the June quarter. Over the year to June, new plant and equipment investment increased by 14.8 per cent. This is a welcome reinforcement of other indications of growing business investment, which are seen in the trade figures and the capital expenditure statistics.

  We have heard from the opposition calls for a mini-budget and allegations that the economy is overheating. These figures today put a lie to both those propositions. These figures show that we are on track in terms of our budget forecasts and that we have the support of the market and the economists working in the market. There is no need for a mini-budget. There is no need for the fear and trembling that the opposition is trying to engender in the Australian economy because this is a solid sustainable recovery.

  The Bureau of Industry Economics, in advising me on the outcome, said that the moderation and activity in the June quarter 1994 is to be welcomed as the slowing of growth in private consumption and dwelling investment will reduce inflationary pressures—hence, the need for a further near term rise in interest rates. We can now look forward to a more balanced recovery with business investment playing a greater role in both short- and long-term economic growth. These are very good figures that all Australians should be pleased with.