John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Hansard source

I thank the Leader of the Opposition for the question. It really goes to the heart of an understanding of what the Australian economy is doing at the present time. I can do no better than to quote from the most recent report on the Australian economy by the International Monetary Fund, in which they say:

In conclusion, the sustained current account deficit reflects private sector choices rather than public sector developments. Moreover, high levels of investment are the main cause of Australia’s historical and recent current account deficits. The investment nature of the external deficit is a source of comfort for Australia, especially as indicators such as corporate profitability suggest that investments are generating solid returns.

The statistics released today show that Australia’s foreign debt was $522 billion in the September quarter 2006, and 98 per cent of that is attributable to the private sector. The reason that 98 per cent is attributable to the private sector is that we no longer run budget deficits in this country. We stopped doing that years ago. We inherited, dare I say, a ‘bucketload’ of debt when we faced that ‘fork in the road’ in March 1996 and we went down the path of debt retirement and the elimination of budget deficits. As a result, our foreign liabilities are 98 per cent accounted for by the private sector. It is all about the nature of the economy. It is all about the fact that, historically, this country has imported foreign capital. We are running a very strong investment economy and, as the IMF reports, that is a source of comfort for Australia, not a source of concern.

See this speech in context