TREASURER:
Today's national accounts is another encouraging set of numbers, reinforcing the economic strategy of this Government that is based on driving growth through increased investment to secure the better days ahead.
This has been the heart of the Turnbull Government's growth strategy – to support jobs by driving investment that in the September quarter created more than 100,000 jobs. That's more than 1000 jobs every day. So far this year, we have been experiencing the strongest jobs growth in 40 years with four out of five jobs being full-time. That's this year, 2017. This is the average of jobs growth from 2013 to 2017, month on month over the course of the year, and this is what Labor achieved – well less than half of what we are achieving this year.
The solid 0.6 per cent growth outcome in the September quarter national accounts has accelerated growth from 1.9 per cent to 2.8 per cent through the year. This is above the OECD average and puts Australia back up towards the top of the pack for major advanced economies around the world. As you can see from the contributions to growth, in the quarter, our growth story is primarily an investment story. Both on the new business investment, you can see here, and the public final demand figures. In the context of an expected soft result on household consumption, most likely impacted by concerns over cost of living pressures – and I will return to that – and the anticipated negative result in dwellings investment, the engine of our economy has been driven by investment from both the private and public sectors. For private investment, the contribution to our growth more than tripled in the quarter. The Turnbull Government's national economic plan has been targeted to move the dial on investment by encouraging businesses to grow, innovate, hire more Australians and ultimately increase their wages. Everything we do as a Government is aimed at driving investment because we understand it is business that boosts growth, creates jobs and pays higher wages. And we are seeing the fruits of our actions. In the private economy, which includes household consumption, business investment and dwelling investment, annual growth has lifted from 0.4 per cent to 2.8 per cent in the past two years under the Turnbull Government. When you look specifically at investment, taking out the household consumption in dwellings, what you can see is that new private business investment is now growing at the strongest rate since the peak of the mining investment boom in 2012, expanding by two per cent in the quarter and 7.5 per cent through the year, to now eclipse the 20 year average, as you can see here. But you can see here the strong growth in new business investment that has been turned around under the Turnbull Government over the past two years.
We have now seen four consecutive quarters of investment growth which followed 12 consecutive quarters of decline. Investment in new machinery and equipment has lifted from a through-the-year decline of around 11 per cent two years ago to a positive growth rate of just shy of 3 per cent today. In the past two years, the Turnbull Government has been turning our investment ship around, we are now heading in the right direction by making the right choices to set the right conditions to encourage investment in our economy and these numbers demonstrate the success of those actions.
Business conditions, as surveyed, are at their highest level in 20 years, last week's capital expenditure survey showed expectations for non-mining investment in 2017-2018 improving strongly to be around 7 per cent higher and non-mining firms are expected to invest $80.9 billion this financial year. Our Enterprise Tax Plan is a key part of this, which is why it must be supported, but so too are many other plans. Our positive trade agenda, our support for innovation and new start-up businesses, our investment in our defence industries to support new manufacturing jobs and our investment in important public economic infrastructure. As noted by the RBA, one of the reasons why businesses have been encouraged to go out and invest is because of the record infrastructure investment that is now under way across the country. New public final demand across all levels of government was up a solid 1.2 per cent in the quarter, to be 4.4 per cent higher through the year. This growth was driven not by increases in the size and cost of running government, which actually fell at a Commonwealth level during the quarter, but by government investment in building the capacity of our economy and our defence forces. New public investment was up 12.6 per cent over the year, with defence investment up 31 per cent over the year. Now this is all part of the Government's public investment plan, and in particular our record $75 billion investment in economic infrastructure. Two thirds of which will be provided to the states for spending on their roads, railways, water and other projects.
Now turning to households, consumption increased by just 0.1 per cent in the quarter to be a modest 2.2 per cent higher than one year ago, coming off a much stronger growth in the June quarter, household consumption contributed just 0.1 per cent to growth in the September quarter. However, through the year, as you can see from this chart, it contributed 1.3 per cent to annual growth through the year, highlighting the particular softness of the result in September. This is not a surprising result given the cost of living pressures on essentials that Australians are feeling and have been feeling. Tellingly, the results show households were cutting back on discretionary items, as you can see on the bottom part of the chart here. While at the same time, we saw growth in everyday essentials like electricity, food and transport. Clearly, many Australians were concerned about the cost of living and the pressures on their household budget, which reaffirms why it was so important that our Budget this year guaranteed essential services like Medicare and schools funding, which have been legislated, while working to put downward pressure on rents, childcare and electricity prices – positive initiatives in the area of housing affordability, which we have seen the results of more recently in the figures coming out of the Sydney and Melbourne housing markets and to provide income tax relief wherever and whenever possible. Concerns around electricity prices were at the front of mind in the September quarter and remain there. We saw large retail prices increasing coming into effect on 1 July this year and in response, the Turnbull Government has acted. We got a better deal from energy retailers, which saw customers given in some cases up to a 20 per cent reduction in their bills, and we created the National Energy Guarantee which modelling by the Energy Security Board shows a saving of $400 per year for the average household compared today's prices. More recently, we have seen some better data on retail sales since the September quarter which grew by 0.5 per cent in the month of October after lacklustre results during the September quarter – remembering those first two months back in July and August.
We have also seen improved measures of consumer confidence which have recovered after falling to low levels during the September quarter and let's not forget households will be out there spending in the Christmas season. Our exports continue to go from strength to strength. Mining exports have seen a recovery from the impact of tropical Cyclone Debbie. Service exports rose almost 10 per cent over the year on the back of the strong education and tourism exports. But it was in the agricultural sector again where you've seen the most impressive growth – with record crops underpinning export growth of more than 20 per cent through the year. The tremendous news for our regional towns and a welcome reward for years of hard work and readjustment following periods of drought, it is also a resounding vote of confidence in the Turnbull Government's trade agenda that is a key component of our national economic plan. The rural growth story has been particularly bolstered – you may be interested to know – by strong chickpea exports to India, strong citrus exports to China and a strength in our meat exports – quite a banquet.
After taking account of imports, net exports recorded a flat contribution to growth in the quarter. Imports grew by 1.9 per cent in the quarter. Now, this is important about imports, it was driven by capital imports which rose 6.6 per cent and that reflects the broader investment story that is occurring in the economy. Looking at today's results by sector, show it was broad-based, 17 of the 20 industries posting growth this quarter. The service sector, our largest employer, contributed 0.3 percentage points in growth in the quarter and 2.1 percentage points over the year. There was also good growth in manufacturing in the quarter.
Turning to the income side, pleasingly compensation of employees – what is paid out in wages and salaries, not the wage price index as we know it – rose 1.2 per cent in the quarter and 3 per cent through the year. This is an encouraging improvement and you can see it continuing to build, particularly in more recent times. This has been predominantly driven by the increase in employment and, in particular, full employment. As I said, 100,000 jobs were created in the September quarter and that's more than 1000 jobs a day. As the labour market continues to strengthen, wages will improve and as noted by Governor Lowe, there have already been encouraging signs of this in high demand sectors. But there must also be a sustained improvement in profits and productivity. Profits, or the gross operating surplus, rose by one per cent in the quarter with through-the-year growth moderating to 11.8 per cent from a previous surge linked to commodity prices that I flagged earlier this year when I spoke to December quarter accounts. And you can see that from the earlier set there and it's moderated back as we anticipated that would once those commodity price impacts moved through the system.
Once again, and in conclusion, it's clear that from today's national accounts that our economy is strengthening and that the better days ahead that I spoke of in the Budget are indeed emerging. They will continue to strengthen with the right policy decisions in place. That's why we continue to implement our national economic plan – driving growth through policies based on the economics of opportunity, not the politics of envy – a politics of envy that would reap a $164 billion increase in taxes on the Australian economy that would only choke our economy as it is getting back into gear. The Turnbull Government is getting on with the job and the national accounts provide further evidence of the outcomes from doing just that. Thank you.
QUESTION:
Treasurer, everything seemed to be positive leading into these figures – you had retail sales, business inventories, company profits on the rise and GDP still missed the expectations – what's the missing link here? Are you confident that growth will continue to rise?
TREASURER:
Through-the-year growth has just gone from 1.9 per cent to 2.8 per cent. That's an encouraging set of numbers – to 2.8 per cent, 1.9, 2.8 per cent. So, I'm pleased to see that very strong growth increase over the course of this quarter and the lifting in overall levels of growth. And as I said, on the back of 1000 jobs a day in the September quarter, it was a pretty good quarter for jobs and growth – further evidence of the impact of our policies. The area that softened in the quarter was household consumption and I think I've gone through some of the reasons for that and I think after a strong quarter previously on household consumption and moving into the December quarter, well, we'll see what those figures say when the December quarter figures are finalised and we talk about those next year. But what this shows is the strategy of seeking to drive investment in this country has been the right one and the alternative is to choke investment through higher taxes on investment – and I think this gives Australians a very clear choice about the two alternative approaches.
QUESTION:
Do you have any concerns about Christmas spending, based on those consumption figures from the previous quarter?
TREASURER:
We've already seen, Phil, in October, we saw some improved retail figures. July and August were negative on the retail sales. Now, retail sales figures only account for about a third of what ultimately goes into the consumption figures for national accounts and so I'm one not to predict but to wait and see what the evidence is but those October figures were better and I think we have seen some clear action being taken on energy prices, we've seen things happening in the housing affordability side of things and that's welcome and I would hope that Australians are feeling in a position where they go out and celebrate this Christmas and holiday season and I'm sure their kids are hoping that they'll be spending.
QUESTION:
Treasurer, would you say that this growth is encouraging for the Budget outlook?
TREASURER:
Well, that will happen prior to Christmas and that's when I'll hand down the Budget outlook and one of the reasons you know that the mid-year update is delivered so late in the year is that there needs to be time for these figures to be consumed and worked into the modelling and into Treasury and I'll be updating those figures when I do that.
QUESTION:
Treasurer, there's a compensation figure to employees, [inaudible] what's driving that and how does that play into these arrangements about people needing to get out and demand higher wages?
TREASURER:
What is driving the compensation of employees is 100,000 people and more getting a job in the September quarter, 1000 people getting a job and more every day this year. That is what is actually increasing the size of the wages bill in this country because there are more people working and, importantly, four out of five people getting that job are working full-time. So, what we're seeing in those figures is a very strong jobs resurgence in this country. On this chart, it says it all, this is record jobs growth, we haven't seen a year like this since labour force statistics have been collected in this country. Congratulations to the Australians who went out and got a job and congratulations to the Australians who gave them a job.
QUESTION:
This figure rely on the company tax cuts, when are you going to introduce your full enterprise tax cuts? The full plan…
TREASURER:
I did that in May.
QUESTION:
When are you going to reintroduce it and are you confident that you'll be able to pass it this time?
TREASURER:
Look, that's a matter for the Labor party, they oppose it. They continue to oppose it. Bill Shorten has gone to the business community in this country and decided that he wants to pick a fight with them, not because he thinks it's good for the economy, not because he's got some sympathy with Australians suffering from lower wage growth that they anticipate because he thinks it's in his political interests. This bloke is shifty as, 'Shifty Shorten' is totally shifty. This is a guy who will always pursue his own interests over everybody's – that's the one thing you can trust in Bill Shorten, that he backs Bill Shorten every time.
QUESTION:
Do you think you'll still be able to meet surplus if you introduce the income tax cuts and the corporate tax cuts?
TREASURER:
Yes.
QUESTION:
Can you give any enlightenment as to whether those…
TREASURER:
We wouldn't do it otherwise. Everything I've said about income tax cuts and the Prime Minister has said, has been in the context of not compromising one iota on retaining our AAA credit rating which is obviously linked to maintaining the projection to go back to Budget balance in 2020-21.
QUESTION:
Can you give any clarification Mr Morrison on the Prime Minister's weekend statement about the introduction of the income tax cuts as to whether they would actually start before the election or whether they would be announced and started after?
TREASURER:
We've indicated the direction we're heading in, Michelle, and when I've got more to add to that I will.
QUESTION:
How much of this jobs growth has been a result of some of the free trade agreements that you have managed to get over the line in the past couple of years?
TREASURER:
I think particularly in the agricultural sector – you go into the regional towns of Australia that have particularly benefitted, I mean, we just saw a part of that last weekend in Tamworth. I remember being up with Barnaby in Tamworth earlier this year and I could see it and new businesses being created off the back of stronger revenues, new plants being established, we are seeing that, we are seeing it in trade, we are seeing it in the services trade. The strong growth we've seen in the services sector particularly when it comes to it, it's a very employment rich sector the services sector, and so, our economic plan is about driving investment by having lower taxes and that is becoming increasingly important as the rest of the world is moving towards lower taxes. It's driven by a public infrastructure investment program and the biggest recapitalisation of our defence forces since the Second World War to support high tech manufacturing jobs, start-ups, innovation and of course, the work that is being done in trade. This is the plan that I have been hectoring you about in this room for years now. That's the plan and the plan is delivering 1000 jobs a day.
QUESTION:
How do these results today – the national accounts – compare to Treasury's own forecasts and have you set a date for MYEFO?
TREASURER:
I have and it hasn't changed. It has always been the same and you'll be advised of that in due course and the updates to the Budget and the impacts of these numbers on the Budget will be taken into account when I give that update.
QUESTION:
Will you in that Budget update perhaps be able to give us an indication of what kind of tax cut you can afford…
TREASURER:
When I have more to add on the issue of income tax cuts, I will.
QUESTION:
And will that be on the MYEFO day – that Monday?
TREASURER:
No. I said that the other day.
QUESTION:
Are you looking towards the Budget next year?
TREASURER:
Again, when I'm in a position to tell you what that is, I will.
QUESTION:
Can I ask about citizenship?
TREASURER:
Is there anything more on the national accounts?
QUESTION:
Could you give us an idea of how the various states are faring? Obviously, New South Wales is doing very well…
TREASURER:
Thanks for that. New South Wales topped the growth pack again this quarter. New South Wales had an increase in the September quarter of one per cent. Now, this is a telling reminder, in the House yesterday I talked about the stunning turnaround in the New South Wales economy following the many Labor years which took them to the bottom of the pack. New South Wales is back at the top of the pack and they're there consistently has also been continued with strong growth out of Victoria which I'll acknowledge as well. And what we're seeing in New South Wales with the biggest, longest run in construction boom in New South Wales and the infrastructure programs that have been run there and the support that has been receiving from the Commonwealth Government has been a big part of our national growth story. Now, Kristina Keneally was one of the many architects – but certainly the signing-off architect as Labor left government all those years ago – that put New South Wales at the bottom of the pack and I cannot understand why you'd want to revisit that to this Parliament by her coming here as the Member for Bennelong or why the good electors of Bennelong would want to see that sort of incompetence representing them as their local community member here.
QUESTION:
As a New South Welshman [inaudible], what's your view on the decision to bulldoze those stadiums and build new stadiums in New South Wales?
TREASURER:
I tend to let the New South Wales government focus on their decisions and I focus on mine. The stadium I visit most often is Shark Park and I'm looking forward to many happy Saturdays, Sunday and Friday evenings there next season.
QUESTION:
We saw Katy Gallagher potentially, or ask to be, referred to the High Court, is there discussion about potentially the Government referring Labor MPs in the Lower House to the High Court?
TREASURER:
What we've done here is gone through a declaration process and there are some clear facts that have emerged and I think Senator Gallagher's facts are clear. There are other members from Labor where the facts are clear – it's not a matter of opinions or advices or things like this. There are just simple facts about what people did at particular times. What we have is Bill Shorten saying, "It's all good. Nothing to see here. Move on. No problems." And what has been revealed is massive problems. Now, this means that Bill Shorten was either lying then or didn't have the faintest idea and thought he could bluff his way through. And this is why I called Bill Shorten so shifty – he thinks he can just say something that you won't examine too closely, he'll get away with it and we'll all move on. Now, you can't do that as a Prime Minister, you can't do it as a Treasurer and that's why he's unfit to serve in the Prime Minister's office and others who continue to support him serve in the other ministerial offices. This has been a very shifty approach from Bill Shorten and that's why he cannot be trusted. He basically said, "Nothing to see here." And he's been proved to be completely exposed on this issue. Whatever happens in the High Court will be up for the High Court to determine, it's not for us to pre-judge that. What is necessary though is on the sheer basis of facts, he has been found to be caught in a lie.
QUESTION:
Are you going to refer those Labor MPs?
TREASURER:
Others will be making decisions on those matters but I think on the clear issue of facts and on the clear issue of the court decision that is already in place, what you see here is a clear contrast. Coalition dealing with the issue, wanting to have it resolved by the end of the year, we've just gone through one by-election, we're about to go through another with our own members. We've referred our own members, the Coalition has been upfront with the Australian people in dealing with this very difficult and unforeseeable issue. It could have happened to any Parliament in the last 50 years but we've dealt with it in an upfront way. Bill Shorten's being shifty. This could have all been done, these other by-elections, they could have all been held on the same day as John Alexander's if Bill Shorten had not been shifty and if he had been upfront with the Australian people. He was just hoping he would get away with it, he was hoping that Labor would get away with it and the electors of Bennelong should send him a message and say, "Good on John Alexander for doing this the honest way and being upfront with us." And rewarding John for his integrity and the Government's integrity for dealing with this matter and punishing Labor for their dishonesty.
QUESTION:
Can I just ask a question on the Bank Royal Commission?
TREASURER:
Yes.
QUESTION:
Are you prepared to be flexible with the terms of reference? I mean, Chris Bowen sent you a letter on Friday suggesting some changes and the Greens have got a view. Is there are flexibility in those terms of reference?
TREASURER:
I responded to Chris Bowen on those matters. They haven't had a terms of reference for two and a half years. I mean, taking economic advice from the Labor party is like asking a drunk driver to give you driving lessons. I don't think they have a lot to offer here, they have not been able to offer a terms of reference for two years. I've responded to his letter and if he wants to release that, he's welcome to, but we are finalising the terms of reference and the letters patent and that's been done through the normal process. Okay, thank you very much.