Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the latest economic figures and what they say about the need for an economic agenda focused on productivity?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for his question. The December quarter national accounts released last week show that growth eased in the quarter but it still remains very solid. Growth was 0.6 per cent in the December quarter and it was 3.9 per cent over the year, and domestic demand continues to grow strongly. It is driven by strong growth in consumption. Domestic final demand rose by 1.6 per cent in the quarter to be 5.7 per cent higher for the year. Australia’s net exports continue to weigh on growth, reflecting ongoing weakness in export volumes and strength in imports. This strong growth in imports is further evidence that domestic demand continues to outpace domestic supply, highlighting the importance of the government’s supply-side policies.

While domestic demand has been growing strongly, it has not been matched by increases in the economy’s productive capacity. The national accounts show that productivity growth in the last year of the Howard-Costello government was zero. This reflects the pattern of long-term decline in Australia’s productivity performance, with average productivity growth over the last five years lower than in any other equivalent period in the last 16 years. Precisely at this time, when Australia’s productivity growth was declining, underlying inflationary pressures in the Australian economy were building. These figures paint a valuable portrait of the economic landscape that we inherited—an economy with strong demand but shackled by poor productivity growth and capacity constraints in the economy. These figures underscore the need to modernise the Australian economy and to lift our productivity—

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

Mr Dutton interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Dickson!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

to lift the productive capacity of the Australian economy.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Link to this | Hansard source

Mr Dutton interjecting

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Dickson is warned!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

This is absolutely the case when there is international uncertainty in the wind, so the Rudd government is prepared to modernise the economy, to make the investments in skills and to provide the political leadership when it comes to infrastructure. We do acknowledge the challenges, but, sadly, those opposite do not acknowledge the challenges. The coalition has lost its way. On Sunday the Leader of the Opposition said that the economy was first rate.

Opposition Members:

Opposition members—It is!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

Is that right? Yesterday—three days later—the member for North Sydney said it was heading for recession. Of course, the member for Wentworth cannot agree with himself. He has been out there criticising others for talking down the economy, and this morning on Neil Mitchell’s program he said a recession is a possibility. The member for Wentworth will say anything and do anything to get a headline because he has one job in mind—that is, the Leader of the Opposition’s job—no policy to deal with inflation and no policy to do with productivity. This is a government that is facing up to the challenges. They are a divided rabble.