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Monday, 5 March 2001
Page: 24912

Mr HARDGRAVE (2:12 PM) —I have a question for the Treasurer. Would the Treasurer advise the House of the results of the January retail trade figures released today by the Australian Bureau of Statistics? What does this survey indicate about the pace of economic growth in Australia?

Mr COSTELLO (Treasurer) —Retail trade figures for January were released by the Australian Bureau of Statistics today, showing that retail trade increased 0.9 per cent for the month of January and 7.2 per cent through the year to January. This comes after a 0.9 per cent increase in December and, overall, the combined increase in the two months points to considerable momentum in retail trade over the Christmas-New year period. Interestingly enough, there appears to have been some adjustment again, with recreational goods retailing recording the largest increase, largely reversing falls back in October, November and December, and department stores recording decreases unwinding the increases recorded in previous months. Overall, the retail trade figures for January indicate a strengthening in retail trade in December and January, something that the government welcomes.

Again, in relation to retail trade we saw massive transitional factors occurring back in July last year. There was a massive bring forward during the month of June as people sought to make purchases prior to the introduction of the GST, and a put back after the introduction of GST for the month of July, but a gradual unwinding over the course of the year. A point I made in relation to the building construction industry, that the figures in the national accounts over the last two quarters will have large one-off and transitional factors. It is a question of looking through those, as we will be able to do, I believe, in future quarters to get some better picture, absent those one-off and transitional factors, in relation to where the economy is going.

Households have benefited from large income tax cuts from 1 July of this year. We have had a recent interest rate cut and pensions have been increased as part of the compensation flowing from the new taxation system. All of that will be beneficial for consumption in future months. I have already remarked on the fact that the housing sector, which had a significant bring forward in the March and June quarters and declines in September's and December's, should be supported by rising housing affordability. Another thing that perhaps we have not dwelt on enough in this House is the government's First Home Owners Scheme. The government introduced from 1 July 2000 a first home owners scheme of up to $7,000 for young Australians who had not owned a home before—in fact, any Australians who had not owned a home before.

I want to make it clear, because I have seen some of the states passing this off as their own scheme, that the First Home Owners Scheme is funded out of GST revenues by an agreement and implemented by the Commonwealth government. If it were not for the Commonwealth government, the First Home Owners Scheme would not have come about. It was never put in place by Labor governments nor was it put in place by state governments. It was a first home owners scheme which came about as a result of the new taxation system, and it has been warmly welcomed, particularly by young Australians. The Labor Party flips and flops on these issues, I have noticed. Last night we saw the Leader of the Opposition claiming that the government's tax changes had been a dampener on the economy.

Mr COSTELLO —And one of their leading intellectuals intervenes in support of that proposition from the front bench now. During 2000, the Labor Party opposed the government's tax package because they said it was too generous and unaffordable. The whole Labor Party attack during 2000 was that it was a fiscal stimulus which was going to lead to overheating. For example, Mr Beazley in a press release entitled `Who do you think you are kidding' of 3 February 2000 had this to say:

The economy is now in its ninth year of expansion. Most economists recognise...growth...has been unbalanced, driven by debt-fuelled consumption, not investment or net exports.

So you will presumably be pleased at the moment that consumption is coming off and exports are booming—

Mr Crean —Booming?

Mr COSTELLO —Exports are up 21 per cent over the course of the year which, in anybody's language, even the member for Hotham's, is booming exports. If 21 per cent is not booming exports, I would like to see what they are. Yes, booming is the fact, and no amount of interjection takes away from a 21 per cent increase in exports over the year. Then the Leader of the Opposition had this to say:

...the net fiscal stimulus in this tax package of more than $6 billion in the first year alone, and around $20 billion over three years, runs the risk of fuelling consumption and overheating the economy.

All through the year 2000, the government was being attacked for fuelling consumption and overheating the economy. The Labor Party was against the government's income tax cuts because they said they were too large. That was the attack that the Labor Party had on them. Now of course the Labor Party wants to run the completely contrary argument and say that the new tax system was not stimulatory enough. The new tax system put more money back in the pockets of Australians. With the largest income tax cuts in Australian history, we can now see why that was a good policy. We can see why the Labor Party was wrong to oppose it and we can see the complete opportunism of the Leader of the Opposition who opposes everything the government does but on completely contrary and opposite grounds simultaneously.

Mr Beazley —It does seem that the Governor of the Reserve Bank agreed with me.

Mr SPEAKER —The Leader of the Opposition will come to his question.