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Tuesday, 3 June 2003
Page: 15744

Mr PYNE (2:24 PM) —My question is addressed to the Treasurer. Will the Treasurer advise the House of the results of the balance of payments data released by the Australian Bureau of Statistics today?

Mr COSTELLO (Treasurer) —I thank the honourable member for Sturt for his question.

Opposition members interjecting

The SPEAKER —The Treasurer will resume his seat. The level of conversation is much too high.

Mr COSTELLO —I can advise the House that the balance of payments for the March quarter showed a narrowing from the December quarter, coming in at $10.1 billion as compared to $11.2 billion in December. In percentage terms, this was a narrowing to 5.4 per cent of GDP from the December quarter's six per cent and it compares with the current account of 6½ per cent recorded in 1986, in 1990 and in 1995. It is estimated that today's balance of payments will subtract about 0.2 per cent from the March quarter GDP growth, which will be significantly less than the distraction in the December quarter.

The SPEAKER —I warn the member for McMillan!

Mr COSTELLO —The area that showed the greatest downturn was the volume of rural exports, which fell 12.9 per cent in the March quarter to their lowest level since 1996. Exports of non-rural goods increased 0.9 per cent but the volume of rural exports fell by 12.9 per cent. What this is showing is that Australia's balance of payments is being affected by the most extensive drought in Australian history, which is biting into agricultural exports. However, not only do we continue to trade strongly in terms of non-rural exports but, because the Australian economy is running stronger than comparable economies around the world, you have a strong Australian economy which is holding up imports and you have a weak world which is attacking Australia's markets. You also have the worst and the most extensive drought in Australian history.

The foreign debt figures which were released today showed that the net foreign debt was 49.3 per cent of GDP, a little below the peak of 50.2 per cent in the March quarter of 2001. As the Prime Minister has already said, the debt servicing ratio has fallen to 8.3 per cent of export income, the lowest since 1983, since the election of the Hawke-Keating Labor governments.

Tomorrow we will receive the national accounts, which come at a very difficult time. We have the international downturn, we have the SARS threat to tourism and particularly Asia, and we have the most extensive drought in Australian history. If the Australian economy can continue to grow in those circumstances, it will be one of the leading economies of the industrialised world.

I will make one last point in relation to foreign debt. One of the big differences between foreign debt today and foreign debt during the Labor Party's banana republic period is that the government is not borrowing. None of that foreign debt is a government borrowing, because this government is repaying Labor's debt. By the end of June 2000 this government will have retired, in net terms, $63 billion of Labor Party debt. What that meant was not only did we have to drive the budget back into balance against a $10 billion deficit but, having driven it back into balance and delivered surpluses, we have in net terms now been able to retire $63 billion of Labor Party debt. That is future opportunity for young Australians. Instead of carrying the millstone of Labor debt around their necks, they will have the opportunity to be one of the lead economies of the world under a low interest rate environment which gives young homeowners the opportunity to buy their own homes and gives them a start in life which only a coalition government can do.