Stuart Henry (Hasluck, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Will the Treasurer update the House on the latest data on the Australian economy? What does it indicate about its strengths and how does it compare with other developed countries around the world?

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

I thank the honourable member for Hasluck for his question and acknowledge his interest in national economic matters. Retail trade figures released today for April 2006 showed that retail trade rose 1.4 per cent for the month and is 7.4 per cent higher through the year. They were unexpectedly high figures, which show robust consumer growth in retail trade. Conversely, building approvals released for the month of April fell 3.4 per cent and are down 7.5 per cent for the year. That shows us that housing most probably will continue to detract from growth through the course of 2006-07.

An OECD outlook was recently released which forecast Australia’s calendar growth for 2007 at 3.7 per cent compared to the rest of the OECD at 2.9 per cent. That shows that Australia again will be picking up in 2007, outpacing most of the developed world—indeed, as we have outpaced most of the developed world over the last 10 years. Growth in Australia over the last 10 years has averaged 3.6 per cent compared to the OECD average of 2.7 per cent. We have an Australian economy which has outpaced the developed world and which is forecast in 2007 to do the same again. Importantly, the OECD says that only 10 of 28 countries in the OECD are expected to balance their budgets in 2007. Of course, one of those is Australia, which will be running the ninth surplus budget in the 11 budgets since this government was elected.

As we know, the Commonwealth is forecasting a surplus budget of one per cent of GDP in 2006-07. Unfortunately, the states are not forecasting budget surpluses either in 2005-06 or in 2006-07. Cumulatively, state and local governments are running deficits of 0.5 per cent and 0.6 per cent of GDP in those successive years.

If it were not for the Commonwealth government running a budget surplus which outweighs the combined position of the state and local government sectors, government would not be adding to saving in this country. As we know, with strong business investment, business is running down savings. As we also know, the household sector is not saving either. This is the importance of good strong economic management. We are now in the longest period of continuous growth in Australia’s history after 10 years of this government, and keeping the fiscal position in the strong position that it is is a very big part of that. We fought to get the budget back into surplus against the opposition of the Labor Party and we need to fight for good economic management in the future.