John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is directed to Senator Minchin, the Minister for Finance and Administration. Is the minister aware of recent statements by the OECD in relation to the Australian economy, and are these OECD statements supported by any recent surveys regarding business confidence in Australia? What conclusions can be drawn about federal and state government policies from these surveys?

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

I thank Senator Watson for that timely question because, in fact, the OECD last night released its latest economic outlook presenting forecasts for the OECD economies, including our own. It found that Australia’s real GDP will grow by 2.6 per cent in 2006 then accelerate to three per cent in 2007 and 3.4 per cent in 2008. The OECD predicts a rebalancing of Australian growth away from domestic demand, following strong private investment growth in recent years, towards increased exports as the large resource projects of recent years come on stream.

The OECD expects the labour market to remain strong and the unemployment rate to remain at its current low levels and expects inflation to ease back in 2007 after its peak this year. In other words, the OECD is predicting that the Australian economy, having had 15 years of continuous economic growth, will now achieve at least a 16th and 17th year of solid growth combined with low inflation and low unemployment.

I was asked about other surveys, and the latest Sensis small business index was also released yesterday. It shows continued growth in confidence amongst small and medium enterprises, the backbone of the economy: 65 per cent of SMEs surveyed felt confident about the next 12 months compared with only 15 per cent reporting feeling worried. So that is a net 50 per cent feeling positive, feeling confident about the economy and their prospects, an increase on both the August and May surveys of this year. The confidence of SMEs was broadly based across states and across industries, although of course confidence is particularly high in Western Australia and somewhat lower in areas affected by the current disastrous drought. Since the last quarter expectations about sales, employment, profitability and capital expenditure have all increased among SMEs.

The Sensis survey also asked small businesses about whether government policies were supportive or worked against the interests of their businesses. When they were asked about the federal government, SMEs that saw current policies as supportive far outweighed those that saw them as working against small business interests. On the other hand, when asked about all the state Labor governments, these were seen on balance by SMEs to be working against the interests of small business, not surprisingly to us. The worst offender of course was the Iemma government in New South Wales where only 14 per cent of SMEs felt the government was supportive, whereas 38 per cent felt that the Iemma government was working against their interests.

The survey also found a positive reaction to Work Choices, our new industrial relations arrangements, amongst small and medium enterprises. Those SMEs that stated that Work Choices was having a positive impact on the businesses outnumbered those who had a negative view by a ratio of two to one in favour of Work Choices. When asked what changes business had made as a result of Work Choices, the Sensis survey reported:

The main changes that businesses reported having made were having a new workplace agreement, employing on a contract basis, hiring new employees, and increased pay and remuneration of employees.

In other words, the main changes being reported to Sensis by small business as a result of Work Choices are: more jobs, higher pay.

What has Labor been doing? It has been running around scaring the living daylights out of everybody and accusing the government of engineering mass sackings and reduced wages. The backbone of the economy, the businesses that hire people and pay their wages, are reporting that as a result of Work Choices they are increasing pay and they are hiring more people. The OECD report and the Sensis small business index reinforce the strength of the Australian economy and the results of the strong economic management of the Howard government.