Kerry Rea (Bonner, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline for the House the important role stimulus is playing in propping up investment in our economy until private sector investment returns?

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

I thank the member for Bonner for that very important question. One of the areas where the global recession is hitting Australia’s economy hardest is, of course, in business investment. The last national accounts showed that new private business investment fell by 6.3 per cent in the March quarter. That is the largest single quarter fall in the 23-year history of the series. The latest ABS capex survey found that expected investment in 2009-10 was 11.7 per cent below the equivalent estimate for 2008-09. Of course, it is the government’s economic stimulus that is filling this gap. It is absolutely critical to support business. It is absolutely critical to keep the doors open in thousands of small businesses. It is absolutely critical to support employment. Of course, 70 per cent of our stimulus spending will go to infrastructure. It will employ thousands of tradies. It will reverberate right through the supply chain. The latest Access Investment monitor found that, of 118 new projects announced in the June quarter, 104 came from the public sector.

Under the previous government, public investment spending averaged a miserable 3.9 per cent of GDP—two-thirds of the rate that the Hawke and Keating governments delivered. This was a period of neglect that left us with a huge infrastructure deficit. The Rudd government have set about redressing that imbalance. We are making massive investment in health, education, transport, clean energy and so on. These investments, as I said before, are critical for small business, tradies and contractors. Growth around the world this year is heavily dependent on the monetary and fiscal stimulus which is being delivered by governments around the world, including ours. A large proportion of the growth next year will come from inventory restocking, as firms around the world rebuild inventories that they ran down during the global contraction.

The challenge will be: where will the impetus for growth and investment come from after that? Of course, that is where this Gorgon investment is so important. This $50 billion investment is important because it is an investment for the long term. It is an investment which will enable us to take our share, or a larger share, of earnings from the growth of Asia. So it will deliver more investment, more jobs and more profits to Australian industry. That is why we welcome the news. It does say a lot about our economic prospects. I certainly congratulate all of the partners, because we on this side of the House welcome the good news. We welcome the good news, but all those on the other side can do is talk the economy down. We on this side of the House will get on with the job of investing in the nation for the future.