A relieved-looking Prime Minister Kevin Rudd and Treasurer Wayne Swan have declared an unexpected jump in economic growth good news, but are warning Australia is not yet out of the woods.
Mr Rudd took the 0.4 per cent growth in gross domestic product (GDP) for the first three months of the year, and 0.4 per cent growth for the year to the end of March, as confirmation that the government’s global financial crisis strategy was working.
The figures released on Wednesday by the Australian Bureau of Statistics showed Australia had avoided a technical recession, defined as two consecutive quarters of negative growth.
Citing cash handouts in December, and again in the past two months, the 35,000 infrastructure projects including building in schools, new public housing and home insulation, Mr Rudd said Australia’s was the fastest growing advanced economy in the world and the only one not in recession.
Net exports contributed 2.2 per cent to growth in the March quarter while household consumption increased by 0.6 per cent during the same period.
While the government claimed the positive result had been generated by its stimulus spending, especially cash handouts, Opposition Leader Malcolm Turnbull claimed the heavy lifting was done by exports generated by the private sector.
Taking aim at Mr Turnbull, who argues Labor has racked up $315 billion in debt with nothing to show for it, Mr Swan said the GDP figures “completely shredded” the coalition position.
Mr Rudd agreed, saying Australia would be in recession had Mr Turnbull’s strategy been followed.
“Of course, had we pursued a strategy recommended by Mr Turnbull not to invest and not to provide payments, cash payments to pensioners, carers and others, Australia would be in recession today,” Mr Rudd told reporters.
“We are not out of the woods yet. There is a lot by way of difficulty and obstacles which lie ahead of us.”
Those obstacles include unemployment which is expected to rise to 8.5 per cent by the middle of next year.
But Mr Turnbull accused the government of “triumphalism”, saying the economy remains weak and warning there was still a long way to go.
He said the billions of dollars in stimulus spending had contributed “very little” to the positive growth, and that it was largely due to the efforts of the private sector in generating exports.
“I was disappointed however, to see … the prime minister claim victory for his economic policies,” Mr Turnbull said.
“It was his mission accomplished moment, missing only an aircraft carrier and a bomber jacket.”
Both Mr Rudd and Mr Swan took almost gleefully to question time throwing the opposition’s words back at them.
They were handed the platform by Mr Turnbull who opened with a question asking how cash payments had contributed to an increase in exports and a decline in imports.
“I would challenge those opposite to rise to the national occasion and be positive for at least one day in their negative campaign against the interests of Australian working families,” Mr Rudd said.
Mr Turnbull warned that the high level of debt resulting from the government’s strategy would leave Australians paying higher taxes and facing higher interest rates for years to come.
“It is said there are few certainties in life, death and taxes being two of them,” Mr Turnbull told parliament.
“But another certainty is that when a government runs up a large amount of debt it will mean higher interest rates and higher taxes in the future.”