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Wednesday, 26 May 1993
Page: 1319

Senator SHORT —My question is directed to the Minister representing the Prime Minister. He will recall that during the election campaign Mr Keating said of investments in the pipeline:

There's 130,000 million dollars of investments . . . It's all about to move like a big avalanche.

Given that today's private capital expenditure figures have confirmed that private capital expenditure has continued at a depressed level for the last 15 months, following a massive fall in the preceding 2 1/2 years, when is investment about `to move like a big avalanche'?

Senator GARETH EVANS —A fall in business investment was expected in the March quarter purely because of the strong December quarter result. Abstracting from the large one-off elements in the December quarter, the latest capital expenditure release does suggest that investment in plant and equipment has turned around and has grown in the last two quarters. So what Senator Short is trying to do with that question is extrapolate from a particular quarter's figures, which are not appropriate to draw the conclusions that he has drawn from them. We are very confident that the conditions have been established for a sustainable recovery, including major new investment expenditure, with the assistance, encouragement and incentive of the investment allowances that were an essential part of our campaign platform, and we fully expect that situation to be realised.

Senator SHORT —Mr President, I ask a supplementary question. I assume from that answer that Senator Evans is not aware that, taking the last 15 months as a whole, investment has been absolutely flat and that that followed a massive fall in private investment in the preceding 2 1/2 years. What impact will the further fall in investment for the March quarter, announced today, have on next week's national accounts? In particular, does the Minister agree that the accounts could show a return to negative growth?

Senator GARETH EVANS —I repeat, because I do not think Senator Short was listening very carefully, that although there was a large fall-off in the March quarter, 9.2 per cent under the just released capital expenditure survey measure, this did follow a very strong rise in the December quarter that was due unquestionably to large one-off factors. Overall we are very confident that there are signs that over the last two quarters investment in plant and equipment has begun to grow again after falling—it is readily acknowledged—for the previous 12 quarters, and that total business fixed investment may have bottomed. That is the assessment of the Treasury. I am not going to second guess that. I am certainly not going to make any judgments about what will or will not show up in the national accounts figures to which Senator Short refers. I am not going to pre-empt that judgment.