George Brandis (Queensland, Liberal Party) Share this | Link to this | Hansard source

My question is directed to the Minister for Finance and Administration, Senator Minchin. Will the minister update the Senate on today’s national accounts data from the Australian Bureau of Statistics? What conclusions can be drawn about the significance of today’s figures for the ongoing management of the Australian economy?

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

I thank Senator Brandis for that topical question. Indeed, today’s national accounts—just released this morning—show that in the June quarter of this year the Australian economy grew by 0.3 per cent in real terms. This means that for the 2005-06 year the economy recorded real growth of 1.9 per cent. This represents the 15th consecutive year of positive economic growth in the Australian economy, a remarkable achievement by Australian historical standards or indeed by international historical standards. We have had an extraordinary run of economic growth, combined with low inflation, low and stable interest rates, rising real wages and falling unemployment—a very stark contrast to the high unemployment, high interest rate boom and bust cycle we experienced in the late 1980s and early 1990s under the former government.

The June quarter saw a continuation of high levels of private business investment. Private investment was up just under 12 per cent for the year. New engineering construction grew by 21.6 per cent. Household consumption grew by 0.6 per cent in the quarter, despite a decline in spending on the operation of vehicles, obviously affected by petrol prices. There was firm growth in household consumption in those figures, reflecting rising household incomes. Household disposable income actually went up 6.2 per cent through the year. Labour productivity, a very important measure for Australia, grew by 2.3 per cent in the year 2005-06. Again, Australia’s terms of trade continued to improve. They have now reached their equal highest level since 1959.

These figures deal with just the June quarter in the year completed. They do not reflect the fact that we have had substantial personal income tax cuts from 1 July which, in light of the moderate growth in today’s national accounts and the comments this week by the Reserve Bank governor, can now be seen as tax cuts which represent an appropriate macroeconomic response to our circumstances.

The key imperative for us, going forward, is to maintain that strong economic growth for a 16th, 17th and hopefully 18th consecutive year. That has to be the goal but we can only achieve it with a commitment to sound economic management. It has been good management that has delivered these good outcomes and it is the same good management that will deliver these benefits to Australian families.

We could just rest on our laurels. We could sit back and reflect on what a good job we have done, but we want this growth to continue. We want prosperity to increase, so we have taken the difficult decision to further reform industrial relations, aiming to boost employment and labour productivity and keep real wages growing. That is the reason we are keeping the budget in surplus. It is the reason we have eliminated government debt and created the Future Fund to address other government liabilities. It is the reason we cut personal income taxes and it is the reason we are reforming welfare to encourage work and boost participation. It is the reason we are eliminating taxes on superannuation benefits, as confirmed by the Treasury yesterday. It is the reason we are continuing with the microeconomic reform agenda of this government, including the further sell-down of Telstra and the privatisation of Medibank Private.

Unlike the Labor opposition, the government is serious about continuing economic prosperity. We are continuing the economic reform agenda of this government. We have a very big agenda ahead of us and we hope to continue to ensure this economy prospers well into the future.