Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on consumer confidence data released this morning?

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

I thank the member for Braddon for his question, because the Westpac and Melbourne Institute consumer confidence data today shows that consumer confidence rose again in August, up another 3.7 per cent. Over the past three months consumer confidence has increased by 27.8 per cent—the biggest three-month gain in the history of the series. So the government certainly welcomes this substantial lift in confidence and, of course, the impact it has had on our prospects for recovery. It is a heartening sign that, despite the massive global challenges we all face, Australians are pulling together and looking to the future with confidence. I will just quote some of the lines from the report this morning from the senior economist. He has this to say:

The rise extends what had already been an extraordinary rally in confidence over the previous two months.

He goes on to make this comment:

The current surge … has seen sentiment rise back into solidly optimistic territory. The Index is now up a staggering 43.6% from its 2008 low, to its highest level in nearly two years. Remarkably, sentiment is now just 1.6% below its 2007 average.

If we look at some of the other data, I think we can see the impact of economic stimulus. Retail sales have increased by 5.2 per cent since November last year, and, of course, in other countries they have fallen. The first home owner boost is providing important support to the housing market. Finance for the construction of new houses has increased by 55 per cent since October. And in recent months first home buyers have made up a record share of the housing market. These are the direct impacts of the government’s stimulus packages.

But we know what makes the stimulus greater than the sum of its parts, and that is the indirect impact that it has on confidence, and I think that is what we are seeing today. As Westpac’s Chief Economist, Bill Evans, said last month:

The key is not the direct impact of increasing spending capacity … The key is to restore confidence—

and everybody has a role to play in building confidence and working together to meet all of the challenges that are imposed on our nation by this global recession. Ultimately, it is the confidence of Australian consumers and businesses that will provide the spark for the sustained economic recovery. That is why the second and third phases of the government’s stimulus package will support this recovery, by providing much-needed infrastructure investment in health, education, transport and clean energy. As the Prime Minister said yesterday, it is pleasing to see the impacts of these investments on business confidence as well. That is particularly the case in the construction and manufacturing sectors.

I have made the point before that we will receive much more news in the weeks ahead. There will be good news and there will be bad news before this crisis is behind us. There will be a bumpy road ahead. But it does remain the case that the lift in confidence we see today gives us some heart that Australians have the capacity—that Australians have the resilience—to withstand the worst that the world can throw at us.