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Monday, 6 December 1999
Page: 12807

Mr BARRESI —My question is addressed to the Treasurer. Would the Treasurer advise the House of the results of the Australian Business and Colonial State Bank survey of manufacturing released today?

Mr COSTELLO (Treasurer) —I thank the honourable member for Deakin for his question. He may have seen the survey of manufacturing in New South Wales which was released by Colonial State Bank and Australian Business . It found that in the December quarter manufacturing business conditions were the strongest for five years. Of further encouragement is that production, sales, orders and profitability were all seen as improving in the March quarter of 2000. The Chief Economist of the Colonial State Bank, Craig James, said that the manufacturing sector could look forward to a new century with optimism. The Managing Director of Australian Business , Philip Holt, said that manufacturing was entering the new millennium with optimism based on strong sectoral performance in the December quarter and that the most striking feature of the survey was the comprehensiveness of the recovery across the industry sectors.

I think most members of the House will welcome the fact that manufacturing conditions are in such good shape. Of course that has a lot to do with the strength of the Australian economy and the low interest rates that manufacturers are benefiting from. The external recovery will be of benefit to manufacturers. Can I also say that one of the great benefits for the manufacturing industry will be the new tax system because Labor's wholesale sales tax penalises manufacturing. Wholesale sales tax falls on the manufacturing sector hardest and makes it harder for manufacturers because it taxes them at such high rates. By modernising Australia's taxation system, we will be giving manufacturers a better go and that will lead to better conditions for manufacturers and their employees.

Part of the good story for manufacturing has also been the increase in productivity which has occurred over recent years. Since the government has come to office, productivity has been growing at 2.9 per cent per annum compared to a growth of 1.5 per cent per annum under the Labor Party. That poor productivity performance under Labor meant that real wages were depressed, prices were outstripping wages and living standards were going backwards. If we can have the growth of productivity standards which you get out of a new tax system, out of low interest rates, out of new industrial relations, out of capital gains tax changes and out of good economic policy, that is good for the manufacturing industry, good for productivity and good for jobs, and that will be good for business into the next millennium.