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Thursday, 27 May 2004
Page: 29382


Mr HUNT (2:25 PM) —My question is addressed to the Treasurer. Would the Treasurer outline to the House official data which confirms that the strength of the Australian economy remains at historically high levels? Are there any risks to economic growth which would impact on the job prospects of Australians, particularly workers in my electorate of Flinders?


Mr COSTELLO (Treasurer) —I thank the honourable member for Flinders for his question. I can inform him that the capital expenditure survey for the March quarter was released today. Measured by chain volumes, it showed that capital expenditure fell 2.5 per cent in the March quarter but it remains 3.9 per cent higher over the year. The volume of capital expenditure remains at historically high levels following six per cent growth in the last six months and 14.8 per cent growth in 2002-03. The decrease in the March quarter appears to have been caused by a decline in the importation of civil aircraft, and abstracting from those aircraft it appears that underlying capital expenditure was broadly unchanged for the quarter.

For the current financial year, 2003-04, businesses are expecting to reduce capital expenditure by 1.7 per cent. But this would convert to solid growth in volume terms when you take into account the recent appreciation in the exchange rate and the significant falls in the price of imported machinery and equipment as a result of that. Business investment will make a solid contribution to economic growth in 2003-04. Looking at the expectations for the next financial year, 2004-05, businesses are expecting to increase the value of their capital expenditure by between three per cent and six per cent. Again, the fall in the price of imported equipment will contribute to very solid growth in volume terms. This is showing that business investment will be a big part of our growth in 2004-05.

Can I just give a comparative figure the member for Flinders would be interested in? In the last eight years of the Labor government business investment grew 3.6 per cent per annum. Over the term of this government, private business investment has grown 8.2 per cent per annum. That is more than double the rate of growth under the last eight years of the Labor Party. Why? Interest rates are low. I was asked about people in Flinders. I know that home buyers in Flinders and small businesses in Flinders will appreciate the fact that interest rates are low.

Profitability of business is very high. The profit share to GDP is as high as it has ever been in Australian history. We have taken taxes off Australia's exports. We have cut capital gains tax; we have cut company taxes; we are cutting income taxes. We have locked in low inflation. None of this is an accident. It is not something that happens by fluke. It is not something that failed mayors with their nostrums of various economic theories could produce by accident if they were put into positions of trust in the Australian economy. It takes consistent economic policy to produce outcomes for Australia's businesses and for Australia's families and for the employees who depend upon them. That economic management is something that this government has fought hard to put in place and will not be surrendering.