Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I thank the honourable member for La Trobe for his question. Today we had the release of the September international trade in goods and services figures, which showed that the trade deficit in September increased to $646 million. This was principally caused by a decrease in exports of 1.5 per cent and resource exports were down, including coal, coke and briquettes, which fell 7.6 per cent. That is unfortunately a downturn in exports in the month of September. We also had retail trade figures released for September of this year which showed, in seasonally adjusted nominal terms, retail trade rose 0.1 per cent and was 5.9 per cent higher through the year. This is well down on the growth rates of eight to nine per cent that we saw in 2003 and 2004.

The annual national accounts, which I referred to in the House yesterday, gave annual figures for the state of the economy and, amongst other things, revised up the household savings ratio which shows that households are saving more than they were thought to be saving. One of the reasons for the retail trade figures could well be that households are saving more of their income. When one looks at savings rates, however, the important thing to look at is savings rates in relation to assets. We have lived over the last 10 years through an enormous increase in private sector wealth—in fact, the largest increase in private sector wealth that we have ever seen in Australia. This is a point that was made by Mr Battellino of the Reserve Bank recently where he said:

... conventional measures of saving do not take into account capital gains. This has a particular bearing on Australian households because ... they now hold a high proportion of their financial assets in investments such as shares and superannuation on which a significant part of the return is in the form of capital gains. In the May 2006 Statement on Monetary Policy, we showed that once allowance is made for capital gains, the saving rate of Australian households ... is neither low nor falling ...

In other words, what the Reserve Bank has shown is that many Australians have decided to put their savings into shares or superannuation where they get a better return than they do in relation to an at-call bank account. Traditional measures of savings that only look at at-call bank accounts and then compare that to income miss the real story of what is going on in the Australian economy, which is people investing in higher yield, higher return mechanisms. This is something we believe will be thoroughly encouraged when Australia gets the biggest reform to superannuation that has ever been proposed in this country. The reforms that take place from 1 July next year mean there will be no tax on a pension or a lump sum when it is paid out of a taxed superannuation scheme. This makes superannuation the most preferred model of saving in the Australian economy. It will set many Australians up for a standard of living in their retirement which they would not otherwise have had. It is a reform that is being brought to the Australian people by the coalition government and we urge again that the Australian Labor Party get out of the way and support these reforms.

See this speech in context