Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

Today the National Accounts for the March quarter presented a more sobering picture of the Australian economy than the Treasurer would have us believe. I have three observations. Firstly, it is clear that economic growth is slowing. Growth in the quarter was just 0.6 of one per cent, half of what it was a year ago. A year ago the Treasurer described the 1.2 per cent result for the March quarter:

I think the country should have a bounce in its step today. What a great day for Australia and what a stunning set of figures.

Today he said, 'The Australian economy continues to expand at a solid pace …' I seem to recall he was a little more graphic than that. He described it as 'an incredible achievement'. It is an incredible achievement to have 1.2 per cent growth in the March quarter last year and 0.6 per cent this year. That is an incredible achievement from a Treasurer who is never short of praising himself.

The second thing about today's numbers is that when you look at them you see that all of the growth was in net exports, which contributed one per cent to growth. This is due to rising exports but weak imports. Of the 0.6 per cent in economy growth in the quarter, a full one per cent came from the improvement in net exports. What is concerning is that domestic activity went backwards, with domestic final demand falling by 0.3 of a per cent. This was the first fall in domestic demand since the darkest days of the financial crisis in late 2008 and early 2009. That is a significant issue. Domestic activity went backwards in the March quarter of this year for the first time since the financial crisis.

The third issue to be aware of is that it is clear that households are cautious. Consumption growth was modest, increasing by only two per cent over the year. Dwelling activity remained muted, increasing by just 2.7 per cent over the year, and household savings continued to rise to 10.6 per cent. What is happening is that people are hibernating—and what a surprise! We have a government that cannot hold policies from budget to budget, week to week or day to day, and that is creating this massive unease in the community which came through in rising household savings and the overall deterioration in domestic activity.

What is clear is that since the March quarter consumer confidence has remained fragile at best. The Westpac Melbourne Institute index of consumer sentiment fell by seven per cent in May to 97.6 per cent, below the break-even 100-point line, and now the number of pessimists in Australia outnumbers the number of optimists for the first time since October last year. Two-thirds of the survey was conducted after the federal government released its budget. Bill Evans, the Chief Economist at Westpac, said:

Of course, the remarkable aspect of this result is that it is the first read of the index since the Reserve Bank cut the cash rate by 0.25% on May 7. Absent any other major influences, we would have expected a solid boost to the Index following that rate cut.

We have had the extraordinary situation where the Reserve Bank has cut interest rates to record lows and consumer confidence falls. And why? Because consumers have been spooked by Wayne Swan, the Treasurer, previously describing three per cent as an emergency level. Now that it has gone beyond three per cent, they are alarmed. Well, why wouldn't they be? The narrative from this government is totally confused. The narrative is, on the one hand: 'Aren't we good? We've got a AAA rating. We're doing really well. The rest of the world wishes they had the Australian economy,' but, on the other hand: 'Oh, the budget's hit by terrible circumstances beyond our control, and it's so bad out there, we can't balance the budget. It's so bad with an unemployment rate with a five in front of it. It's so bad with growth around trend. It's so bad with the best terms of trade in 100 years. We can't get our budget back to surplus—and, by the way, aren't we good?'

The Treasurer is proud of mediocrity. That says everything about this Treasurer. He is proud of mediocrity but, what is more, boastful of mediocrity. There is no grand word in the Oxford English Dictionary that the government have not used as a superlative to describe their own performance. 'The biggest reforms', 'the grandest reforms', 'the most significant reforms in a generation', 'the most significant reforms in history', 'the biggest change'—all these big superlatives. They are never short of patting themselves on the back—when they're not stabbing each other in the back! They are not short of patting themselves on the back, but the Australian people are not prepared to pat them on the back, and they cannot understand why. It is because their narrative and their words do not match their actions. That is the fundamental point. Their words and their actions are at odds.

Bill Evans, Westpac chief economist—so it is not just me; this is Bill Evans—went on to say:

… weakness in confidence is being driven by a sharply negative response to the Budget—

and—

… the sharp deterioration in the fiscal position, indicating renewed fears about the overall state of the economy.

Finally he said:

… the budget and the associated fiscal deterioration have been the dominant drivers of this sharp drop in confidence.

This is a government that on more than 500 occasions promised to deliver a surplus. This is a government that on more than 500 occasions said that the test of economic success is whether they can deliver a surplus. This is a government that said that pensioners would be worse off if they meandered back to surplus. This is a government that said the measure of its economic performance would be whether it gets the budget back to surplus and starts paying down the debt. That was the benchmark they set.

And they boasted of it. They did not just boast about promising it; they even had the hide to boast they had actually delivered it. The Prime Minister herself in her own words claimed credit for having delivered a surplus.

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