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Business expectations survey blows government's confidence rhetoric out of the water

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^ Media Release Hon Gareth Evans QC MR Deputy Leader of the Opposition and Shadow Treasurer

Business Expectations Survey Blows Government's Confidence Rhetoric Out of the Water

Today's Business Expectations Survey from the ABS blows out of the water the Government's claims that the Budget would boost confidence.

This is the survey which was described by a senior Treasury official in Senate Estimates last week as "technically the best" of the business surveys.

The Business Expectations Survey shows that firms expect to increase their sales of goods and services by 1.6 per cent in the December quarter. But this is a time when sales should be going through the roof ahead of Christmas.

It is the worst December result since this survey commenced in 1993.

The survey throws considerable doubt on the Government's hopes for a 14 per cent increase in business investment this year. Capital expenditure is expected to rise by just 2.6 per cent in the December quarter - the worst December result since 1993.

This enormously disappointing result is consistent with the trend decline in capital imports recorded since the Coalition came to office.

Looking ahead, the medium term picture is just as bleak as the short term. Medium term expectations of sales of goods and services continue to decline, as they have ever since the Coalition took office. Medium term profit expectations are also down.

The most discouraging thing about these figures is they come at a time when business expectations should be soaring following the interest rate cut in late July.

The survey was conducted after the cut in interest rates and overlapped the release of the 1996 Budget on 20 August.

Mr Costello's claim that a surge in business and consumer confidence will offset the effects of savage cuts to government services is set to go down as one of the most cruel confidence tricks in Australian political history.

The victims will be ordinary Australian families who need greater job security, and unemployed people who desperately need jobs.

25 September 1996