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Tuesday, 5 June 1984
Page: 2483


Senator CHANEY —My question is addressed to the Minister representing the Treasurer. I pass over his quaint notion that the non-farm sector is not related to changes in the farm sector. Has the Minister seen the Treasurer's Press release issued today in which he claims that the 2.4 per cent increase in non- farm product in the March quarter reflects strong growth in housing, private sector investment, stocks and the public sector? Is it a fact that, contrary to the Treasurer's statement, public sector spending, which is paid for by taxpayers, and a huge borrowing program made up 1.9 per cent or the great bulk of the quarterly gross domestic product rise, while private sector consumption growth was halved to 0.4 per cent and private sector capital spending growth was slashed from 5.1 per cent to 0.4 per cent?


Senator WALSH —I am very glad that the Leader of the Opposition has seen fit to draw attention to the question of capital investment. The dismal Jeremiahs of the Opposition, or the jealous Jeremiahs, perhaps, have stood back aghast over most of the last 12 months watching the highest growth rates ever recorded by the Australian economy, I believe-certainly the highest growth rates recorded for more than a decade-under a Labor Government in marked contrast to what was happening when they were in government. The jealous Jeremiahs of the Sinclair- Peacock Opposition have continually pointed to the fact that, although there was a high rate of economic growth, there was no increase in private sector capital investment, which they said, with some justification, ultimately would have to happen if the economic recovery and the fall in unemployment rates were to be sustained. That displayed perhaps some wishful thinking, or possibly ignorance of the pattern of recessions and recovery of the past.

In the early stages of a recovery private sector capital investment does not normally respond, firstly because the very fact that there has been a recession- negative growth such as we saw under the Fraser-Howard Government-means that very considerable spare capacity is already in existence and the increases in demand which come initially are more likely to be met from that existing spare capacity than from additional investment. A secondary factor which is probably equally important was that stocks held by business continued to run down right up to December 1983. In the most recent quarter that run down in stocks held has been reversed and stocks have increased to some extent.


Senator Chaney —Mr President, I raise a point of order. I asked the Minister a question about public sector spending. I asked whether public sector spending made up the great bulk of the quarterly GDP rise. The Minister seems to be totally unable to address himself to that question.


The PRESIDENT —There is no point of order. The Minister can answer the question in any way he so chooses. The Minister might take note of the point of order raised by the Leader of the Opposition and afford him with a reply on that aspect.


Senator WALSH —As I recall the Leader of the Opposition's question, he referred to private sector capital investment, which has been the main point of the answer which I have been giving. On that question of private sector capital investment, the most recent statistics show that the seasonally adjusted private capital investment figure for the March quarter is 7 per cent higher than the figure for the December quarter, and that, if the expectations derived from business surveys for the June quarter of 1984 are realised, that will be some 10 per cent higher in seasonally adjusted terms than it was during the March quarter.

So there has been an increase in private sector capital investment of 7 per cent recorded for the March quarter, seasonally adjusted, and an anticipated further increase of 10 per cent, seasonally adjusted, for the June quarter. That is a quite satisfactory figure and the sort of figure which the Government anticipated would occur at a later stage.

The first question which I think the Leader of the Opposition asked was whether I had seen the Treasurer's Press statement. The answer is no, I have not yet seen it.