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Business burns while government spending rises

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Today's National Accounts figures unfortunately do not signal a recovery from recession in the Australian economy. Economic growth was flat during the March quarter 1991 and was significantly contributed to by Government consumption spending increases of 3.5 per cent.

Business investment during the March quarter, fell by 6.9 per cent - the 7th consecutive quarterly fall in private sector investment. Over the year private investment has fallen a very large 12.2 per cent. Businesses have been hit for six as a result of the Government's scorched earth policies.

The 0.1 per cent increase in GDP during the March quarter, for all intent and purposes, was a flat result. Indeed the trend estimate of GDP, which is calculated to remove irregular components of the normally quoted series, registered a fourth straight decline in the March quarter - a -0.2 per cent fall.

As well, it is very important to note that the statistician questioned the accuracy (when measuring living standards) of using the straight GDP calculations that are normally quoted. On page 5 of the National Accounts bulletin the Statistician points out:

"If the terms of trade have changed significantly from the period of comparison, then [gross domestic product figures unadjusted for the terms of trade] will not provide an accurate reflection of the changes of the real purchase power of the income generated by domestic production."

Given that the terms of trade fell 3.2 per cent in the March quarter the Bureau of Statistics has calculated that, with the terms of trade deterioration taken into account, GDP fell -0.5 per cent, - the third straight quarterly fall.

The Government simply cannot claim that Australia has unambiguously moved out of recession.

The Prime Minister and Treasurer today claimed that today's National Accounts figures showed an impressive record on exports. On the face of it exports of goods and services rose by 1.6 per cent in seasonally adjusted terms. However the statistician noted that far from being a good result the figures showed that:

"Excluding the sale of aircraft by Qantas the volume of exports of goods and services would have fallen by 0.5 per cent rather than rising by the 1.6 per cent actually recorded"

This is a poor result on exports considering the parlous state of Australia's foreign debt problem. Indeed foreign debt statistics, also released today by the Bureau of Statistics, showed that net foreign debt grew to $133,490 million in the March quarter 1991. The ratio of net foreign debt to GDP was 35.2 per cent.

It is very worrying that a country that is in its deepest recession for 60 years should be accumulating even more foreign debt. The Government's policy to stabilise the growth in foreign debt has been an abject failure. We can only fear the worst when recovery does come because there is every indication that the growth in foreign debt will rapidly increase. ________




Finally, there are more recent indications of our current position including today's building approval numbers for April 1991. These figures show that the building industry is still in the doldrums. There was an 8.5 per cent fall in the value of total buildings approved in the month of April 1991, and the number of dwelling unit approvals showed only a very small increase.

These figures come on top of an April unemployment rate of 9.9 per cent - another devastating example of a recessed economy.

It would be a shame if the Government were to consider that today's statistics confirm their very over- optimistic views on the economy.

The Australian economy is in a very sick and fragile state and is in need of major structural reforms. Every opportunity should be taken to push for better fiscal management and micro economic reforms such as in the areas of industrial relations and taxation.




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