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Tuesday, 12 November 2002
Page: 6073


Senator FERRIS (2:06 PM) —My question is to the Minister representing the Treasurer, Senator Minchin. Will the minister provide the Senate with an update on the Australian economy and the benefits of the government's strong economic management? Is the minister aware of any alternative policies?


Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Ferris for her very pertinent question. Australians are continuing to benefit significantly from this government's very strong economic management at a time when the world does face global economic uncertainty. As all senators will have observed, the unemployment rate in October fell to six per cent, down from 6.2 per cent in the previous month. That compares to a rate of seven per cent a year ago and the 8.2 per cent unemployment rate we inherited from Labor. We do welcome that drop in unemployment. It is on top of the very significant fact that we have created one million new jobs since we were elected some 6½ years ago.

I can also confirm that inflation in Australia continues to remain low and manageable and within the inflation target band. Our interest rates are at 30-year lows, and the Reserve Bank indicated in its quarterly monetary statement yesterday that rates were likely to remain stable well into the future. The Reserve Bank also stated yesterday that business investment in Australia has been a very big contributor to what is the world's highest economic growth for a developed economy and that future investment prospects still look good.

A very significant indicator of the health of the domestic economy is of course the great Australian car industry. I draw to the Senate's attention that figures out last week show that October this year was the best October ever for car sales in Australia. Sales of new motor vehicles were 9.4 per cent higher than a year ago. September this year was also the best September on record. So, clearly, we are on track for the best year ever for Australia's car industry, with sales up around 862,000 units. That is tremendous news for the Australian manufacturing industry and everybody who works in it. And, of course, it is a very strong indicator of continuing consumer confidence. Economists continue to forecast that we will have the strongest-growing developed economy for this year and the next.

It is clear, as I think even the opposition recognises from its previous question, that the drought is becoming serious and does pose a clear threat to growth and is going to have a big impact on the economy. Forecasts from ABARE and others indicate that, given the severity of the drought, it is going to affect the current budget forecast of 3¾ per cent economic growth. It is not something that the government itself can control—if we could make it rain, we would. Not only the drought but the international economy is still very wobbly. As you know, the Federal Reserve lowered interest rates by half a per cent recently to stimulate the American economy. We will be setting out our official view and reaction to the external impacts on our economy and the impact of the drought in MYEFO, our mid-year review, which we will release later this month. It will take account of these risks and adjust budget forecasts accordingly.

I was asked about alternative policies. Last week we had the spectacle of the shadow industry minister, Mr Craig Emerson—who most of us had never actually heard of before—coming out and, unusually, instead of attacking the government, actually attacking his own party. His line was to attack his own side for having a policy approach that Labor is all things to all people. I think, as Paul Kelly said, that Mr Emerson committed a very grave error of judgment in personally attacking our Prime Minister, but Mr Emerson is certainly right in his comments about Labor's idiotic approach to policy development. Labor really has at present a grab bag of policies that involves promising everything to everybody. Labor is promising tax indexation at a cost of some $6 billion a year, promising extra spending on paid maternity leave and innovation—you name it, Labor is going to spend more on it—and of course it will also deliver surpluses. Mr Emerson does not believe it, and nobody else does either. (Time expired)