Consolidated Taxation of Wholly Owned Groups – Exposure Draft LegislationDecember 8, 2000
Doorstop Interview: Housing figures, interest rates, US economy, RACV car survey, petrol prices, CabinetDecember 15, 2000
|NATIONAL ACCOUNTS: SEPTEMBER QUARTER 2000
The Australian economy continued to
post solid gains in the September quarter. Todays National Accounts show that, in
seasonally adjusted terms, GDP grew by 0.6 per cent in the quarter and by a
strong 4.2 per cent through the year. In trend terms, which removes some of the
short term volatility in the data, GDP grew by 0.9 per cent in the quarter and
has been relatively steady at around 1 per cent growth per quarter for an
Australia is in the longest run of continuous positive growth in the history of the
Quarterly National Accounts (compiled since 1959).
The September quarter National Accounts are consistent with the Budget and Mid Year
Economic and Fiscal Outlook (MYEFO) forecasts for 2000-01 as a whole that pointed to a
rebalancing of the components of growth. Net exports are expected to grow more strongly
than in recent years, boosted by the lower exchange rate, robust world growth and the
Olympics. At the same time, a moderation in domestic demand growth is expected, following
several years of very strong growth.
Net exports contributed 0.7 percentage points to GDP growth in the quarter,
reflecting strong growth in export volumes and only a slight rise in import volumes. The
Olympic Games contributed to this result, largely through tourism-related services exports
and the sale of overseas broadcasting rights. More recent data point to a continuing very
strong trade performance into the December quarter.
Household consumption grew by a moderate 0.7 per cent in the quarter, down
from the recent average of around 1 per cent growth per quarter. Retail sales in
the National Accounts declined in the quarter by 2.8 per cent, following an
increase of 1.5 per cent in the June quarter ahead of The New Tax System.
However, household spending on services grew strongly, in part reflecting Olympic Games
ticket sales. Purchases of motor vehicles also increased sharply in the quarter as
consumers responded to lower taxes on motor vehicles.
Investment in new plant and machinery increased by a strong 4.8 per cent in
the quarter, supported by lower business costs associated with the introduction of The
New Tax System. New investment in buildings and structures fell in the quarter,
although as a share of GDP it remains around its long term average, and higher than the
1990s average. The outlook for business investment is positive, reflecting strong
profitability, sound balance sheets, the strong world economy and a boost to
Australias competitiveness from the lower exchange rate.
Dwelling investment fell by 21.5 per cent in the quarter. This decline largely
reflects the unwinding of the very strong bring forward of building activity ahead of The
New Tax System, which saw dwelling investment increase by almost 16 per cent
over the March and June quarters. The decline in dwelling investment was widely
expected, with the MYEFO forecast being for an 8 per cent year-average decline
in dwelling investment in 2000-01.
The household consumption chain price index, which is a broader measure of consumer
prices than the CPI, increased by 3.2 per cent in the quarter, to be
4.5 per cent higher through the year to the September quarter. (The
corresponding CPI figures were 3.7 per cent in the quarter and 6.1 per cent through the
year.) The introduction of The New Tax System is likely to have accounted for a
large portion of the quarterly increase in this deflator, in a similar way to the one-off
impact of The New Tax System on the September quarter CPI outcome. The relatively
moderate overall increase in the quarter points to the impact of The New Tax System
on consumer prices being less than expected earlier.
Average earnings increased by 1 per cent in the quarter, and by a moderate
3.4 per cent through the year to the September quarter. This outcome includes a
significant contribution from the increase in the superannuation guarantee charge on 1
July 2000. Increases in average earnings remain in line with most other wage measures
which point to continued moderate wage growth, consistent with ongoing inflation pressures
remaining well in check.
Private corporate profits in the non-financial sector increased by
4.4 per cent in the quarter, and by more than 17 per cent through the
year to the September quarter. Labour income continued to grow solidly in the quarter,
rising 2.5 per cent, reflecting strong employment growth and a moderate increase
in average earnings.
Production was particularly strong in the cultural and recreational services sector,
which recorded growth of 23 per cent in the quarter largely as a result of the
Olympic Games. Production also grew solidly in the agriculture and mining industries.
The prospects for the economy remain very favourable with business investment picking
up, net exports contributing strongly to growth, solid employment growth expected for the
year as a whole and ongoing inflationary pressures remaining in check.
13 December 2000