Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance and Administration (Senator Minchin) to questions without notice asked by Senators Sherry and George Campbell today relating to the economy.

The Labor Party posed two questions—as it did yesterday—about disturbing and worrying aspects of economic trends and development in this country, and again we saw from the Minister for Finance and Administration, representing the Treasurer, an arrogant, lazy and very complacent attitude towards what are significant economic issues and dark clouds on the economic horizon for this country.

In terms of today’s national accounts, while the minister was keen to trumpet and draw attention to issues such as economic growth and other matters, what he did not want to deal with until it was drawn to his attention by the Labor Party in question time were the three years of negative household savings by Australians. At the present time, as disclosed by the figures, in the calendar year 2004-05, Australian household savings were negative 3.5 per cent. In other words, Australian households are spending and consuming more than they are saving. That does have significant long-term implications both for households and the Australian economy.

What is very worrying is that that is not the first year that household savings have been negative. In fact, for the last three years household savings have been negative—and the level has grown. The level of dissaving in 2003-04 was minus 3.2 per cent and in 2002-03 it was minus 2.2 per cent. So the level of dissaving by households is getting worse and worse each year. Compare that to the record in 1995-96—10 years ago—when the Liberal government was elected. At that time, household savings were positive in Australia—by 6.4 per cent.

The minister apparently does not believe that this is a significant problem long term for the Australian economy. But one should relate the negative household savings to a number of issues that we referred to yesterday, particularly Australia’s quarterly current account deficit—that is, the deficit on imports and exports. Imports over exports for the last quarter of last year had grown to almost $14½ billion. In the last three months of last year, we were importing almost $14½ billion of good and services more than we exported. Put that together with the increase in national debt. Australia’s national debt has now reached the truly staggering figure of $473 billion. That is up $22 billion on the last calendar year. That $473 billion is now more than half the total value of the Australian economy. Of all the goods and services we produce, over half the value is represented by that $473 billion in national debt.

These economic statistics do matter. They have very important implications for the long-term development of the Australian economy because, given that Australian households are dissaving, we have to pay for the exploding national debt in some way. Clearly, if Australian households are not saving, we have to import capital in order to cover the ballooning national debt. There is nothing wrong with importing capital. I do not have any particular philosophical disagreement with that, but the consequence is that the more capital you import to cover that ballooning national debt, the more exposed Australia is to changes in the international economy. If there is a downturn in China or the United States or adverse happenings overseas, because we are importing increasing amounts of capital because Australian households are not saving, it will hurt Australia much more. (Time expired)