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

My question is to the Treasurer. Will the Treasurer inform the House when Australia’s current account deficit will go down?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Australia’s current account deficit is governed by both exports and imports. The period in which the current account was last in surplus was around 2000-01, when the Australian dollar was at 47c or 48c. One of the features of having a very high exchange rate, as we have at the moment, is that imports are much cheaper in Australian dollar terms and exports are much more expensive in Australian dollar terms. Because of the high commodity prices and the high exchange rate, the Australian economy is sucking in a lot of imports which, except in commodity areas, are affecting our exports. We expect that the rapid investment in Australia’s mining industry over recent years, where there has been something like $30 billion of investment, will boost capacity and ensure that volumes of those exports go up. As a consequence of that, exports will be stronger in the years that lie ahead.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline the results of the latest world competitiveness report? How have we improved our performance?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for his question. He is referring to the release of the IMD World Competitiveness Yearbook in 2006. I inform the House that, according to the world competitiveness scoreboard, in 2006 Australia moved from ninth place to sixth place as the most competitive economy. According to this survey, the No. 1 competitive economy in the world was the United States, followed by Hong Kong, Singapore, Iceland, Denmark and Australia. On the world competitiveness scoreboard of large countries—countries of 20 million people or more—Australia ranked second, because Hong Kong, Singapore, Iceland and Denmark were not included.

The World Competitiveness Survey has four broad areas: economic performance, government efficiency, business efficiency and infrastructure. Australia has moved up in the rankings on economic performance. Australia performs extremely well on the ranking of government efficiency and business efficiency. Australia is also ranked in relation to infrastructure.

The IMD began preparing this competitiveness survey in 1989. In 1989, Australia was ranked 10th in the world. Over the next six years, we declined to 16th in the world, in 1995. In 1995, the current Leader of the Opposition became Minister for Finance. When he became finance minister in 1995, we dropped from 16th to 21st in the world, which was our lowest ranking ever. The Australian economy bottomed out to 21st in the world under the Labor Party government—a period which the Leader of the Opposition seems to have completely erased from his memory, but he has a history and he has a record, and he will be reminded of his record over and over again in the years to come. Anyway, we bottomed at 21st in the world, the government was thrown out of office, the Deputy Prime Minister and Minister for Finance was thrown out of office, and Australia has been coming back ever since, reaching the sixth position this year.

Comparing Australia with other developed economies in the world such that we came in sixth—or, as a large country, second—is a comparatively new thing. Back when the Labor Party was in office, the Labor Party did not like to compare Australia with other developed economies. Who could ever forget the report that was given by the then Assistant Treasurer, the then member for Canberra, Mr McMullan, when he attended the IMF meetings in Washington in 1991? He reported as follows on his return from Washington:

Three things struck me during the course of the meetings:  first, we should never forget our relatively favourable situation.

I read the words published by the Assistant Treasurer:

As I have said before in these articles, when compared to the problems of Mali, Peru or Bangladesh, all Australians should rejoice in our good fortune.

We do not compare ourselves with Mali, Peru and Bangladesh. These days, we tend to compare ourselves with the developed economies of the world. Australia has moved from the ninth to the sixth position, and that is a result of strong economic management.