Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on today's balance of payment numbers and what they mean for the economic outlook?

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

I thank the member for Blair for this very important question. Today's balance of payments figures do show the very dramatic impact on both the economy and our exports of recent natural disasters, particularly in Queensland. It is appropriate that that question is asked by the member for Blair, and there are plenty of members on this side of the House whose communities were dramatically impacted—not just the economic impact but the social impact. And there are many on the other side of the House who also felt the full brunt of not just the floods in Queensland but also the impact of Cyclone Yasi in Far North Queensland, the rains in Western Australia—in the north-west—and the bushfires in Victoria. This was a traumatic time and a dramatic time in our economy.

The March quarter balance of payments show a sharp fall in export volumes in the first three months of this year. Export volumes fell by 8.7 per cent in the March quarter. This is the biggest quarterly fall in export volumes in 37 years. This contributed to a widening in the current account deficit of $2.3 billion to $10.4 billion, representing three per cent of the December quarter GDP. It is no surprise after those disasters that the biggest factor behind today's results was a very significant reduction in coal exports. Coal export volumes fell by $4.6 billion in the March quarter, which were down 26.8 per cent on the previous quarter. A large part of this lost coal production did occur in Queensland, with the Minerals Council estimating that 85 per cent of Queensland's coalmines suffered production losses in the quarter, mainly due to flooding. But of course there were also significant disruptions particularly to rail. And, as I said before, we had cyclones and heavy rainfall in north-western Australia earlier this year. Iron ore export volumes were down $1.3 billion or 7.7 per cent less than the previous quarter. So, of course, the impact of the summer floods and the cyclones and the events in Western Australia will take a heavy toll on GDP growth in the March quarter. Overall, net exports are expected to subtract around 2.4 percentage points from growth in the quarter. This is estimated to be the largest quarterly subtraction from GDP growth since records began in 1959. So there has been a dramatic impact on our economy from these natural disasters, and it is somewhat larger than the Treasury initially estimated.

But whatever the outcome for the national accounts, the one thing we are absolutely certain of is that the fundamentals of our economy are strong. We still have low unemployment, at 4.9 per cent—lower than just about every other advanced economy. There is strong job creation, with over 700,000 jobs having been created since we came to office. And, of course, there is a record terms of trade and an unprecedented pipeline of investment. That is why it is important to bring the budget back to surplus in 2012-13. That is why it is important to invest in our workforce, to build a bigger and better trained workforce. This government is absolutely determined to get the fundamentals right for our economy so that we can turn our success into a stronger economy for all Australians.