Concetta Fierravanti-Wells (NSW, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Administration, Senator Minchin, representing the Treasurer. Will the minister inform the Senate of the results of the most recent update on the Australian economy and the government’s financial position?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Fierravanti-Wells for her very good question—a most appropriate question. Since the Senate rose last December, the government has released its Mid-Year Economic and Fiscal Outlook for 2005-06, and that document confirms the ongoing strength of the Australian economy and the very healthy position of the government’s budget. Our underlying cash surplus was revised upwards to $11.5 billion, or 1.1 per cent of GDP, and we are now on track to eliminate altogether our general government net debt in the next six months. So the $96 billion debt we inherited from Labor will very shortly be completely eliminated.

While we project a budget surplus of around one per cent of GDP, the US is going to run a deficit of 4.2 per cent of GDP, the UK will run a deficit of three per cent of GDP and Japan, six per cent of GDP. While we are set to eliminate net debt entirely, the US has an accumulated debt of 47 per cent of GDP and the OECD economies have an average of 47½ per cent. It would have been very easy for Australia to have gone down the path that so many Western nations have gone down. In their last four years, Labor trebled our level of general government debt. It has been the decisions of the coalition government that will lead to the complete elimination of debt in the course of this financial year.

Of course it is not just the government’s budget that is in a strong position; the average family budget has benefited from 10 years of strong economic management. Unemployment is down to just 5.1 per cent. Real wages have grown by 15 per cent since we came to office. Income taxes have been cut, boosting real disposable income. Workers on average ordinary-time earnings are $7,000 a year better off in real after-tax income than they were when we can to office. Mortgage interest rates remain low.

The Mid-Year Economic and Fiscal Outlook indicates that the economic performance that we have shown can be maintained into the future, but we have to continue to manage this economy as prudently as has been the case. The independent Treasury forecast is for real GDP growth of three per cent for this financial year, which if achieved will represent the 15th consecutive year of economic expansion in this country. Headline inflation is forecast to rise slightly. The Treasury expects underlying inflation to remain within the target two to three per cent.

Maintaining this very strong run of economic success does require us to maintain our efforts to reform the Australian economy. That is what the difficult debate that we had last year about improving our workplace relations arrangements was all about: improving the performance of our economy. That is why we are reforming the welfare system. It is the reason the Prime Minister will sit down with the eight state premiers and chief ministers on Friday to further a national reform agenda for infrastructure, energy, transport, training and the delivery of health services. It is why we have introduced legislation to create the Future Fund.

On this side of the chamber, we are very focused on getting on with the business of delivering real benefits to Australian families and Australian workers. Those opposite really do have a clear choice to make as we now enter the year before an election year. We wish they would join us in developing really good policy for this country to improve the lot of Australian families and the lot of Australian workers, and not engage in the cheap political stunts which are so much their want and which have kept them in opposition for 10 years.