LOUISE SAUNDERS:
To talk about the figures I'm joined this afternoon by the Federal Assistant Treasurer David Bradbury. David Bradbury, good afternoon.
DAVID BRADBURY:
Good afternoon Louise, good to be with you.
SAUNDERS:
Good to talk to you. Where is the strength in this economic growth coming from?
BRADBURY:
If you look deep within the figures you can see that there are a number of very strong indicators in the growth figures today, but one of those figures is in household consumption which is growing by 1.6% which is very strong and the through the year figure for that is 4.2% but of course where there is extraordinary strength is in business investment and of course we have a very strong pipeline of investment coming into Australia, a large part of that is going into the resources sector. Recent reports, not just coming out of the figures today but recent reports have shown that about half a trillion dollars worth of investment in scheduled to flow into the resources sector in Australia. So clearly, there is a lot of investment coming in but even on figures around household consumption we are seeing reasonably strong growth.
SAUNDERS:
Do we need to be somewhat concerned though about figures surrounding the exports and housing investment in particular?
BRADBURY:
I think one of the challenges we face is that whilst all of the figures we look at are figures which demonstrate a strong economy - so if you look at the figures, it's strong growth and that's what the figures today demonstrated - but we've got low unemployment, our inflation is contained at a time where interest rates are falling and we've got that record pipeline of investment. So when you look at those objective factors you can see that our economy is strong and certainly amongst the strongest of all of the advanced economies. But what we also know is that there are parts of the economy that are not growing as strongly as certainly some sectors and some states, particularly with the resources boom and that's why we think it is absolutely critical that our governments vision that is set out in the budget about spreading the benefits of the boom is actually brought into effect because we think it's critical. You take Tasmania, and when you look at where we are attempting to spread the benefits of the boom, a state like Tasmania has a very high proportion of its families that are in receipt of Family Tax Benefit Part A and that's obviously in part because of generally lower income levels in Tasmania than some of the other states for a whole range of reasons, in addition the benefits that are being spread to the recipients of supplementary allowances, they'll be receiving the benefits of the boom and we are doing things like supporting small business when it comes to tax relief, or investment in instant asset write-off. So there are a range of things we're doing and of course, we're very much focused on making sure the benefits of the boom are flowing on to people in the form of higher contributions to superannuation.
SAUNDERS:
It does of course raise a lot of debate, the economic situation in this state, we talk about a three-phase economy nationally, we talk about a state that has seen negative growth in economic performances and an arguable point that this is a state in recession. We do seem to suffer particularly under a need for greater levels of investment which is why I mentioned the housing investment issue and of course we are a state that does rely heavily on exports so it does see when it comes to the key issues, we do seem to be lagging behind.
BRADBURY:
There are challenges, there's no question about that. One of the things I'd make the point in relation to is that at a time where clearly there are parts of our economy that are going gangbusters. That's not everywhere, clearly, but the resources sector is going through an unprecedented boom. One of the central economy policies that we're putting in place is a mining tax that allows us to spread some of the benefits of that boom. I think most observers would be looking at what's happening in the Australian economy at the moment and would be saying why on earth anybody would be talking about repealing a mining tax in the current circumstances, taking away an income source that can be used to spread the benefits of the boom. You point to exports and the challenges that exporters in Tasmania are facing, now the strength of the dollar is an ongoing issue, there is no question about that. The relative position of our dollar is in no small part as a result of the strength in the mining sector. So it's not as if these things happen in isolation, the strong resources sector is not only meaning that some parts are benefitting more from strength, but that very strength is generating some barriers and impediments that is making it more difficult for other parts of the economy. That is why we think it's absolutely critical that we have a determined effort on the part of government to spread the benefits of the boom, the heart of that is the mining tax.
SAUNDERS:
Spreading the benefits of the boom, David Bradbury, might be seen again in Tasmania as we wait to see the outcome of the review on the distribution of GST it seems there is a very strong argument on that basis for Tasmania to receive above its proportion per capita of GST revenue.
BRADBURY:
We're going through some processes in terms of the review of GST and obviously when you go through a review of this sort, you will have a range of claims being made by a range of states. Particularly the resource rich states, many of them are arguing very strongly that there should be a recalibration in the way in which funds are redistributed. We've taken the view and some are out there saying it should be a straight per capita distribution and we've said that that is not on. There is a process that we're working through and we need to make sure there is a fair and equitable distribution of the Goods and Services Tax revenues but of course, this principle that we'll always ensure, that we won't leave any of our states behind is a principle that has very much been enshrined not only in our constitutional arrangements but at the heart of our public policy debate around these questions. So that'll continue to be something that we'll put a very strong premium on, but of course there will always be people arguing for more money when it comes to the carve up of GST.
SAUNDERS:
Just finally to the opposition reaction, Joe Hockey the opposition spokesmen on Treasury says he is struggling now to understand why the Federal Government is in deficit this year with these growth figures.
BRADBURY:
What a ridiculous thing to say. I'd ask the question well why is it that every other major advanced economy in the world is in deficit, but in much larger deficits with no prospect of returning the budget to surplus. This guy wants to set himself up as the alternate Treasurer and he comes out and makes ridiculous statements like that. Name one country, one other advanced economy in the world that has a strategy to return their budget to surplus in the next twelve months and you know who you'll come up with, there is only one answer. It's Australia. If he is suggesting that somehow people should buy this very superficial line that if the economy is as good as they say, why are we in deficit, the simple answer is: Global Financial Crisis, global economic recession. It impacted on everyone but I'll tell you what, if there is one place in the world I'd rather be at the moment, it's Australia.
SAUNDERS:
David Bradbury I'll leave it there, thanks for your time.
BRADBURY:
Thanks very much Louise, good to talk to you.