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Friday, 15 June 1984
Page: 3130

Senator ROBERT RAY —I direct my question to the Minister representing the Treasurer. To what extent has Treasury raised the preliminary estimates for fixed investment by business in the April figures? To what extent have these figures in the past been clouded by the treatment of the Australian Bureau of Statistics of sale-leaseback transactions between State governments and the private sector?

Senator WALSH —I am not able to give a definitive answer to that, but it is a fact that sale-lease back transactions have distorted the figures in the past. I did read a minute on this some days ago. I believe the forecast investment for the next year is some 12 per cent above what it was in the previous year, but I am really not certain about that. I will have to refer either to the Treasurer or to the documents which the Treasurer has already provided me to give Senator Ray a more definitive answer. One thing can be stated quite unequivocally as a result of more recent statistics. There has been a significant increase in capital investment in recent months. It had been claimed by the Jeremiahs of the Opposition-I do not know whether they should be called dismal Jeremiahs or hopeful Jeremiahs of the Opposition-that the very strong economic growth which has been apparent for some time was illusory because there was no evidence of increased capital investment.

The Opposition has been told consistently that until a few months ago it would have been quite consistent with previous economic recoveries that capital investment does not pick up until a year or perhaps 18 months after the initial impetus to economic growth in general has taken place. The fact that there has been a recession clearly entails a good deal of surplus capacity and the initial reaction of business to economic recovery is to utilise the surplus capacity rather than to embark on new investment programs. The most recent statistics show that the investment has turned around. Private investment is rising appreciably. That is consistent in timing or in terms of lags with previous economic recoveries. It is an additional indicator that the Government's economic policies are successful. I believe it has now been generally accepted that those policies have been successful and will continue to be successful, with the one very important proviso, that the prices and incomes policy continues to be observed by those who ought to observe it.