Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. I refer the Treasurer to the fact that state final demand in Australia’s largest state contracted in the June quarter. I also refer to the fact that, nationally, household spending contracted. I ask the Treasurer: why is the government increasing the prices that households will pay for cars, private health insurance and alcohol?

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

I thank the member for his question. The member has great difficulty in welcoming any good news when it comes to the economy. But today’s growth figure is a solid 0.3 for the quarter and 2.7 for the year. Given the international circumstances that we face and given the impact particularly of 10 straight interest rate rises under the Liberals, the economy is certainly slowing. That is there for all to see in the national accounts today—the impact of 10 consecutive interest rate rises under the member for Higgins and the global difficulties that we experience.

The member for Wentworth is living in cloud-cuckoo-land if he thinks slugging families with a $400-a-month interest rate bill does not make much difference, because that is what 10 interest rate rises in a row under those opposite have done to Australian families—the Costello interest rate bill: $400. And that has an impact on consumption. I know the member for Wentworth does not think that an interest rate rise has an impact on consumption because, when interest rates went up for the seventh time, he said their impact was overdramatised! That is what he said. He does not think $500 a year means a lot to families. But it certainly does. And $400 a month—which hit families, particularly in New South Wales, and hit them hard—has a very, very big impact on consumption.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

So why are you putting up taxes?

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

Order! The question has been asked.

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

So it is true: consumption in New South Wales did take a hit. And the reason is simply this: there are more people in New South Wales under housing stress because they borrow a lot more to get into the housing market, and it has, unfortunately, impacted there. So the member opposite really ought to be much more truthful about what is going on in the economy, who is responsible for what has occurred and what needs to be done to address this problem. Last night, the member for Wentworth was on The 7.30 Report, and this is what he said:

I am not exaggerating. Look, all I’m saying is this: had we been governed by leaders who were responsible, and who had the economic interests of this country at heart, we would have had lower interest rates …

Isn’t that an awful thing to say about Mr Howard and the member for Higgins—particularly on the night that Mr Howard is in the House! That is a terrible thing to say about them because it is so true. And New South Wales is now living with the consequences of the neglect by the Liberals of capacity constraints, particularly in infrastructure, and the consequences of their reckless spending. But we on this side of the House accept our responsibility to put in place a disciplined fiscal policy that deals with inflation and to make the investments for the future that deal with the capacity constraints so that we can generate growth with lower inflation and lower interest rates.

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the national accounts released today?

Opposition Members:

Opposition members interjecting—

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

You could not welcome the rate cut yesterday, and you cannot welcome these figures today. These are solid figures. The government acknowledge that we are not out of the woods yet. But these figures are very solid: 0.3 per cent in the June quarter and 2.7 per cent over the year. The non-farm economy grew by 0.5 per cent. These are very solid numbers, particularly when you compare them to the other major developed economies in the world. In the June quarter, Japan recorded minus 0.6, Germany recorded minus 0.5, France and Italy recorded minus 0.3, and the UK did not grow at all. In fact, over the past year our economy has grown stronger than those of the US, the UK, Japan, Germany, France, Italy and Canada. But we are not immune from these difficulties, and that is why we have to do everything we can to address the fundamentals in our economy, do everything we possibly can to put downward pressure on inflation and downward pressure on interest rates and do something about that bill that hangs around the neck of everyone with a mortgage—the $400 Costello bill from the 10 interest rate rises in a row delivered by those opposite.

The good news, particularly, in the figures today comes from business investment. Business investment rose by a strong four per cent in the June quarter and 9.9 per cent over the year, and Australia is well positioned for stronger increases in business investment in future years. Last year’s capex figures show that businesses are planning to invest $100 billion in our economy this financial year. And of course we are also benefiting strongly from record commodity prices. All of these things mean that we do have grounds for optimism. But what we have to do is to go back to the foundations of our economy and deal with all of those issues that were left to us by those opposite. We have to put in place a disciplined fiscal policy. We have to build our surplus, which is why it should not be eroded by those opposite in the Senate. We have to put in place our investment for the future through our investment funds, through our $76 billion infrastructure program, to do something about the capacity constraints left to the people of Australia by those opposite. This government will not make the mistake that those opposite made. The mistake they made was to pat themselves on the back for prosperity and do nothing to sustain it.