Kevin Rudd (Griffith, Australian Labor Party, Shadow Minister for Foreign Affairs and Trade and International Security) Share this | Link to this | Hansard source

My question is again to the Prime Minister and relates to his previous answer in which he placed all blame on the drought for low growth figures released today. Prime Minister, isn’t it the case that the national accounts today show that productivity has not grown for the past 2½ years and has in fact fallen by 1.7 per cent in the last six months?

Christopher Pyne (Sturt, Liberal Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Pyne interjecting

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! The member for Sturt!

Kevin Rudd (Griffith, Australian Labor Party, Shadow Minister for Foreign Affairs and Trade and International Security) Share this | Link to this | Hansard source

Prime Minister, don’t these figures show that your industrial relations policies are failing to deliver the productivity required to deliver tomorrow’s prosperity?

Honourable Members:

Honourable members interjecting—

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

No, it is not a good question because, firstly, I did not attribute all of the result to the drought. I made that very clear. But, significantly, if farm production is down by 10 per cent and if it is 11.4 per cent down over the year, it is a major factor. In relation to productivity, the fall in the quarter of 0.4 per cent is largely accounted for by the large employment growth of 1.2 per cent or 117,000 people in the September quarter. So I suggest that the Leader of the Opposition should read the accounts more closely.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Would the Treasurer inform the House of today’s national accounts release? What does this information indicate about the economic outlook for Australia?

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

I thank the honourable member for Moncrieff for his question. Today’s September quarter national accounts showed the Australian economy continuing to grow, and in the non-farm economy growing very solidly indeed—

An incident having occurred in the gallery—

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer will resume his seat. That will be removed from the gallery.

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

In the non-farm sector, GDP grew by 0.6 per cent, to be 2.6 per cent higher through the year. The national accounts feature article, ‘Impact of drought on agricultural production’, suggests that the drought will directly subtract around 0.5 per cent from overall economic growth in 2006-07. Let me say that that is direct subtraction. Of course, it is not just the fall in farm production that has an effect on the economy. Once farm production falls, transport to the rural economy, wholesaling from the rural economy and services to the rural economy also detract. The detraction will be greater than 0.5 per cent once you take into account indirect effects as well as the direct effects.

To give you some idea of the effect of that, Mr Speaker, the ABS notes that production of wheat, barley and canola could fall by over 60 per cent, and agricultural income in the September quarter fell by 51.7 per cent. A 51.7 per cent fall in agricultural income is a very, very substantive fall indeed.

Outside the rural sector, however, consumer demand was considered to be at a moderate and sustainable pace. There is evidence of some recovery in relation to the building sector. Production in the mining sector increased quite substantially. We saw a redirection of the economy from the domestic sector towards the export sector—a welcome reshift.

Not only were incomes high—and the Prime Minister has already referred to the fact that the jump in incomes now means that the increase in real wages has been 17.9 per cent under this government—but corporate profits reached the highest share of GDP on record. That means we have a very, very profitable business sector in Australia which is supporting increased job creation—the strongest job creation we have seen in a generation. Indeed, in the last year, 245,000 new jobs were created in Australia. That means 245,000 of our fellow Australians are now in work as a consequence.

In the national accounts, measures of inflation were around three per cent lower than the consumer price index. The consumer price index has been knocked around by one-off factors in recent quarters. We would expect those to unwind in the quarters to come. What we have here is a picture of an economy which is still growing strongly in the longest expansion that Australia has ever experienced, knocked around by a very significant drought which is affecting rural production, but made up for by other sectors of the economy which are continuing to keep the economy growing and jobs being created.