Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Administration, Senator Minchin, representing the Treasurer. Will the minister inform the Senate of the results of the March quarter national accounts and any other indicators as to the strength of the Australian economy? Will the minister further inform the Senate what is needed to maintain a strong economy?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Fifield for his question and acknowledge his strong interest in our biggest responsibility, that of managing the national economy. It is an opportunity to draw the Senate’s attention to the March national accounts, which might not necessarily have been read thoroughly by all senators present. The March national accounts were released last week and they revealed that the Australian economy grew by 0.9 per cent in the March quarter and 3.1 per cent through the year to March. The government welcomes the fact that real GDP growth in this country has returned to a level above three per cent following the modest slowdown in the domestic economy over the past year. So the Australian economy is now once again one of the fastest growing economies in the developed world.

But if you look behind the veil, the components of that growth are very positive. Household consumption grew moderately—up 2.9 per cent through the year. Dwelling investment actually contracted by 2.3 per cent through the year, reflecting an orderly slowdown in that sector which had of course seen very dramatic growth most recently. The fall in dwelling investment in recent quarters is in fact moderate by historical standards.

The most significant thing in the national accounts was business investment, which is incredibly strong. Machinery and equipment investment has gone up 27 per cent over the year. New engineering construction has gone up nearly 14 per cent over the year. Exports, happily, have risen 1.8 per cent through the year. In other words, we are seeing a continuation of the rebalancing of growth away from the housing sector and domestic consumption and towards investment and net exports. Our terms of trade remain very high by historic standards and were up 10.7 per cent through the year to March. Our gross domestic income as a country continues to grow faster than real gross domestic production—up 5.1 per cent, in fact, through the year.

The national accounts also showed that inflation in Australia is well contained. The household price index was up 2.8 per cent through the year, within the two to three per cent band that we have set. The most significant thing, I think, is that productivity growth has also rebounded strongly. GDP per hour worked rose 0.4 per cent in the quarter and was up 2.7 per cent through the year. I think it is common knowledge that one of the keys to maintaining high living standards in this country is to ensure strong productivity growth in our economy. If you are going to maintain strong productivity growth, you do have to have a flexible, competitive national economy.

One of the most important contributors to productivity—a goal which we all share—is a flexible labour market. That is of course recognised by the British and New Zealand Labour governments, which both preside over more flexible labour markets than the one Australia now has under our Work Choices legislation. In fact, over the last 10 years the coalition government has taken successive steps to free up our labour market, after the initial steps taken by the Keating government, from the centralised, union dominated system that seems to find favour in the Labor Party. We introduced the Workplace Relations Act, which included Australian workplace agreements. We reformed work practices on the waterfront. The new Work Choices package builds on those achievements with very significant reforms, particularly to enhance employment by small business, as Senator Abetz pointed out.

Given our success in lifting productivity, keeping the economy strong, cutting unemployment to below five per cent for the first time in 30 years and raising living standards for ordinary Australians, it is amazing that the Labor Party at the weekend, in the form of Mr Beazley, announced that Labor in government would abolish Australian workplace agreements. I notice that this is a reversal of his own policy and one that he announced apparently without informing his own shadow cabinet—some of them, we read today, are dismayed by the announcement. Labor propose an extraordinary reregulation of the labour market. We hope for the sake of Australia that they never get a chance to implement it. (Time expired)