Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Prime Minister. Would the Prime Minister inform the House of the latest trade statistics released today. How do these trends compare with last year’s?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Bonner for his question. I am pleased to inform the House that today’s trade figures show that the trade deficit continues to narrow despite two things running in the opposite direction: namely, the appreciation of the Australian dollar and the dramatic effect of the drought on rural exports. The trade deficit in the 12 months to April 2007 was $2.2 billion lower than the deficit for the 12 months to April 2006. The value of exports rose by 3.2 per cent over the year to April 2007. This is despite a fall in rural export volumes by 5.7 per cent in the December quarter, driven by a 31.4 per cent fall in cereal grain exports. Australia’s trade deficit has continually improved over the past two years. The trade deficit declined from $22.6 billion in 2004-05 to $14.5 billion in 2005-06. While there are two months of trade balance figures to come for the current financial year, the trade deficit for the first 10 months of 2006-07 is less than half, indeed only 43 per cent of the trade deficit that was recorded in 2004-05.

The trade deficit narrowed significantly from $1.6 billion in March to $962 million in April, partly driven by a recovery in mining exports following cyclone disrupted production in Western Australia last month. Imports also eased in April following very strong imports activity over the past year. In the period ahead, exports are expected to pick up, supported by the recent period of record business investment. I can tell the House that private new capital expenditure statistics released today show that private new capital spending was a record $19.5 billion in the March quarter 2007. This compares with just $8 billion in the March quarter in 1996. Private businesses have invested more than $110 billion in the future of the Australian economy over the past year and a half alone.

Can I finish on this note: strong private new capital expenditure is not limited to the mining sector. With other industries accounting for $14.2 billion, or 73 per cent, of private business investment in the March quarter, those figures indicate very strongly that the Australian economy is performing in a powerful way right across the spectrum. There is the argument that it will all fall over when the mining boom ends. Of course that presupposes that the mining boom will end. We can be certain it will end if AWAs are destroyed. I think those figures indicate that it is a broadly based economic strength that we are dealing with at the present time and not one narrowly based on an admittedly stellar performing mining sector.