Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister update the House on recent developments in the Australian economy and the impact of the government’s nation building on the recovery strategy?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Robertson for her question. I would report to the House today the NAB’s monthly business survey shows a strong increase in business confidence. Business confidence increased by six points to a reading of plus 10. This is the best reading since August ‘07. The National Australia Bank also noted the importance of the second phase of the government’s stimulus package, medium-term infrastructure and improving confidence in a number of sectors. To quote the NAB business survey:

It was notable that particularly strong gains were made in manufacturing and construction. These sectors have previously lagged and—

I draw the attention of members of the House to this point—

are now benefiting from the infrastructure phase of the Government’s stimulus package.

This comes on the back of strong results in the June quarter. The NAB’s business survey recorded business confidence rising sharply—in fact, up 20 points. In particular, the NAB noted that confidence in retail, property and the construction sectors was supported by the government stimulus. Again, I quote the NAB in its survey produced then. It said:

Retail, reflecting government stimulus packages reported confidence readings as did property and construction with the latter two sectors benefiting specifically from the first home owners package and low interest rates.

Furthermore, today’s D&B business confidence survey presents a positive picture of business confidence and expectations. Sales and profit expectations have recorded their biggest one quarter increase since the survey began in 1988. Forty-four per cent of businesses expect an increase in sales and 31 per cent expect an increase in profits.

This is in response to the government’s nation building for recovery plan but also in response to the actions and decisions taken by individual businesses large and small across the country and the great efforts made by Australian employees in what has been an extraordinarily difficult time for the Australian and the global economy. The government’s nation building for recovery plan is built on three phases: initially, cash payments for pensioners, carers, veterans and families to provide that much needed injection into the economy in the last quarter of last year and the first two quarters of this year when, frankly, the global economy was falling through the floor; secondly, the phase which is now underway through the investment in medium-term infrastructure, in particular the largest school modernisation program the country has ever seen; and, thirdly, the long-term infrastructure investment which will include also the rollout of the National Broadband Network. On that point, I note with some pride, as I was recently in the great state of Tasmania, having played a part of the ceremony which saw the beginnings of that rollout happening across Tasmania, and it was good to see the response from those individual local communities who will be connected first through this particular rollout.

That is the government’s nation building for recovery plan. It is underway. We are implementing it systematically, but it is important also to note for the House and for the country at large that we are by no means out of the woods yet. The global economy is still taking an enormous battering from the impact of the global financial crisis and, therefore, the road to recovery for Australia and the global economy will have many twists and turns and it will be a road where we experience many bumps along the way. The challenge for us all is to make sure that we are laying down the building blocks for the future, the foundation stones for long-term, sustainable growth for the Australian economy. Nation building for recovery is important for the here and now.

I acknowledge the fact that there are going to be bumps in the road, as the path to recovery, including rising unemployment, as employment is a lagging indicator, will be with us for quite a while yet, but also it is important to lay in place the building blocks for long-term economic growth, and that means productivity growth. We cannot simply afford to return to the boom and bust economic cycle of the past. We must instead build an alternative model for economic growth for Australia’s future. That means investing radically in the long-term drivers of productivity growth. If you dovetail so many of the measures that we have taken—investing in our schools, investing in our universities, investing in our research institutes as well as the other initiatives contained in education, skills and training, the other investments in infrastructure all designed to lift productivity growth and the other work being done by the Minister for Small Business, Independent Contractors and the Service Economy and others in reducing over time the regulatory burden faced by Australian business as we draw together the different regulatory environments of the Commonwealth, the state and the territories—this is part and parcel of building a strategy of long-term sustainable economic growth for Australia which is anchored in raising productivity growth for the long term. The global economy, I believe, faces a very rough period ahead. We cannot simply assume a return to the growth models of the past. Therefore, Australia is going to have to work harder and more effectively and with greater productivity growth to carve a greater slice out of what may be—

Honourable Members:

Honourable members interjecting—

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

The House will come to order. Could the chamber show a degree of maturity while the lights are out. I am urged by some to say that because the microphones are not on it might help if people just sat there quietly. I will yell and I will clear the chamber of those who appear to be frightened of the dark. I see no reason why the chamber cannot continue with its business if members of the chamber show a degree of forbearance and maturity.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I gather that outside this place there is currently storm and tempest. Can I just say that it pales into insignificance compared with the storm and tempest which rages within the ranks of the Liberal Party and the National Party—and, Mr Speaker, there is more light in this chamber now than is currently being brought to bear on the policy on climate change on the part of those opposite.

The question I was asked dealt with the confidence data which was out today and its impact on our nation building for recovery plan. My point to the House was this: nation building for recovery is being implemented; we intend to get on with the job of doing that. Secondly, we have to be prepared as a nation and as an economy for the fact that it will be a rough and difficult road ahead and, thirdly, if we are being responsible about it we will also put in place the long-term building blocks for a sustainable economic growth model for Australia for the future.

The reality we confront with the global economy is this: we cannot assume that the world will continue to grow for the next decade as it has for the last, because so many of the underpinning assumptions in the global economy for the previous decade will no longer be present in the future—in particular, the global financial imbalances which have underpinned so much of the activity that we have seen over the last decade. Therefore, how do you build a new model of economic growth for the future? The responsible course of action for Australia, the only sure answer to that, is productivity, productivity, productivity. That is the cornerstone of this government’s long-term economic development strategy. It is the one we went with to the last election, it is the one we have continued to implement since the election and it is the one that we will now embrace with full vigour going forward to the future as well. It is the right strategy for Australia. We are encouraged by the data which has been released today, but this country is by no means out of the woods yet.