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Wednesday, 31 August 1994
Page: 683

Senator SHORT —My question is directed to the Minister representing the Treasurer. I refer the minister to today's national accounts figures and to his answer earlier in question time when he said that the figures showed that Australia was in for a period of sustained economic growth. Whilst welcoming the GDP growth figure, I ask the minister: is he aware that the accounts show a negative contribution to growth from net exports in the six months to June, and that almost all the growth in the last quarter came from an increase in stocks and in public investment? In light of the significant worsening in the balance of payments over the past year, the further worsening that is forecast as imports boom and continue to outstrip export growth, and the rises in interest rates that have already occurred and will continue to occur, what is the government doing or proposing to do to prevent a repeat of its boom-bust policies that have caused such great harm to all Australians over the past decade?

Senator COOK —It is pretty hard, it is said, to make a silk purse out of a sow's ear. What Senator Short in this question is trying to do is to turn a silk purse into a sow's ear. The national account figures that I referred to earlier today are the silk purse. They are, as the market economists have said, indicative of a period of sustained growth with low inflation in Australia. That is what the market economists have been saying. I agree with them, and so does the government and any reasonable commentator.

  When one looks at some of the elements of Senator Short's question, one realises that it is not surprising that he wants to try to denigrate the significance of the national accounts which came out today. Without denigrating the economic situation, the opposition does not have a feather to fly with and does not have a policy to rub together that the Australian people would recognise as being responsible.

  One of the references that Senator Short has just made is to the level of imports. It is true that in the recent figures the level of imports has been up. That is a fact, and that does reflect on the balance of payments. But when we look at the nature of the imports, we see that a large part of those imports is in new plant and equipment. That new plant and equipment represents investment in refurbishing the industrial capacity of Australia.

  We heard from the opposition at the time of the budget that the investment figures would not be realised. We see now in the latest statistics coming through every likelihood that those investment figures will be over-achieved. One of the indications of that is the level of imports of capital goods into Australia. That is not a sign for commiseration. That is a sign that the economy is on the move; that it is growing; that it is refurbishing its productive capacity; and that it is positioning itself to capture the opportunities for export, particularly in this part of our market in Asia and the Pacific.

  Senator Short also made reference to exports. Of course the accounts show a slight negative on that. But, as I made the point yesterday to Senator Sid Spindler, one has to look at the direction of export growth for Australia—for elaborately transformed manufactures the figure has been in the order of 19.1 per cent every year for the last five years.

  All the data that we have had over the last week and late the previous week clearly shows a manufacturing boom in Australia. That is the strength of the recovery and that is what will carry it through on a self-sustaining basis while we maintain a climate of responsible management, low inflation and prudent assessments and settings of interest rates.

Senator SHORT —Mr President, I ask a supplementary question. I am amazed that the minister is not aware that the growth in consumer imports in recent months has well outstripped the growth in capital goods. Whilst accepting that capital goods imports will increase, that will simply compound the problem which on recent trends will surpass and is surpassing that forecast in the budget anyway. Why should the Australian community have any confidence that the minister's high-sounding claims of sustainable economic growth can be believed more than the similar remarks by government leaders, and particularly Mr Keating, that preceded the 1986 and 1990 recessions and which proved to be so monstrously inaccurate?

Senator McMullan —Because that is what every independent commentator is saying.

Senator COOK —Exactly, that is right, it is not just what we are saying. Let me pick up that interjection from Senator McMullan: it is because every other independent commentator of any standing in this country supports that. I quoted the senior economist of Bankers Trust, Chris Caton, to that effect, about the conjunction of circumstances in high growth and low inflation that these figures today show.

  In essence, I am being asked why the government should be believed. We should be believed because the runs are on the board for all to see and there is a body of economic viewpoint consistent with that of the government's. However, in this debate one could equally ask why should the opposition's assertions be believed. The last time the opposition was in government we had double digit inflation, double digit unemployment and negative economic growth. Alexander Downer was an adviser to the then Prime Minister, Malcolm Fraser, in delivering that type of result. We do not know the opposition's economic prescriptions, so why should anyone believe anything the opposition ever puts in this debate, particularly given its record.

Senator Kemp —Mr President, on a point of order. It is very clear that Senator Cook seems to have forgotten that his government caused the worst recession in 60 years. So why should we believe him?

The PRESIDENT —There is no point of order, and you know that.