Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the impacts of the global recession on business investment and jobs?

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

I thank the member for his question. As we have been saying earlier in the day, this country is experiencing the full impact of a global recession, but it does remain the case that we are better placed than most other countries in this environment; nevertheless, we cannot completely resist the pull of global economic forces.

We certainly do welcome today’s CAPEX data. The numbers are stronger than were expected for the last three months of 2008, and that is certainly welcome. The figures show that new capital expenditure—that is, investment in business machinery and equipment and in building and structures—rose by six per cent in the December quarter. But unfortunately the figures also confirm a slowing in business investment plans for the period ahead. The figures show that business expectations for capital expenditure in the first half of 2009 are 8.5 per cent lower than businesses had planned for in September. Of course, we said in the Updated Economic and Fiscal Outlook that the global recession and the unwinding of the mining boom would see falls in business investment. Indeed, UEFO forecast that business investment will fall substantially through this year and next. We have seen substantial falls in business investment elsewhere in the world. In the UK business investment fell by 3.9 per cent in the last three months of last year; in the US by 5.2 per cent; and in Japan it fell by 5.3 per cent in December.

The government is going to do everything within its power to support jobs and growth in the face of this global recession. That is why we are so determined to put in place swiftly our Nation Building and Jobs Plan to support demand, given the expected fall in business investment. That is why almost three-quarters of our Nation Building and Jobs Plan is direct investment—direct investment in our schools, direct investment in our homes, direct investment in our roads and direct investment in our communities. That is important direct investment given the shock to our economy being imposed by this synchronised global recession which is now occurring across both developed and developing countries. It is also why we put in place the small business and general business tax break to provide greater incentives for business to invest in the future. It is also why we put in place the bank guarantee to ensure that our banks have the capacity to continue to fund business investment. If businesses cannot get access to credit they cannot invest. So that bank guarantee has been very, very important to ensure there is a flow of credit to the Australian economy.

What do those opposite say? What is their alternative approach? We heard from the shadow Treasurer on Lateline last night that his policy is to sit and hope. The policy of those on this side of the House is to take action, to be very active in the face of this global recession and to put in place a direct investment which will support Australian jobs, build our community and leave lasting benefits for the nation. Nothing could be more important for this country at the moment than for government to take an active role to combat what is being imposed upon us so savagely by the rest of the world. That is why I do welcome the CAPEX figures that came out today. They are a surprise on the upside, but of course we have the other news on the other side—that expectations are for less investment. What that shows is the wisdom of the government’s action to put in place this direct investment through our Nation Building and Jobs Plan.