Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
The worst set of economic growth figures since the global financial crisis weren’t all bad news for Scott Morrison as he puts together his mid-year budget review.
Treasury has been holding out for the September quarter national accounts to aid its forecasts for the budget update, which the treasurer will hand down on December 19.
Economic growth contracted by 0.5 per cent in the quarter, dragging the annual rate down to 1.8 per cent – a shadow of the sprightly 3.1 per cent rate as of June.
However, nominal GDP, which gauges the national income and has a bigger impact on the budget, rose 0.5 per cent for an annual pace of three per cent.
Additionally on the income side, the terms of trade gained a further 4.5 per cent in the quarter.
Mr Morrison said Treasury has been taking a conservative approach to forecasting the budget’s four-year estimates.
“We have a trajectory which returns the budget back to balance in 2021,” he told reporters in Canberra on Wednesday.
“We will continue to seek to work to that.”
The overall growth result doesn’t mean the government is about to start putting money in people’s pockets so they can “splash it around” and boost the economy in that way, as Labor did during the GFC.
Instead the government will continue to look for strategic investments, particularly in the area of infrastructure.
“The composition of how you spend now is more important than ever because every dollar … has to work twice as hard,” Mr Morrison said.
Shadow treasurer Chris Bowen said the government’s “band-aid and rubber bands” approach could not keep Australia’s economic growth in positive territory.
He said there needs to be a plan to improve economic efficiency, productivity and growth which involves investment in the national broadband network, infrastructure, schools, human resources and young people.
“It is the sort of growth plan Australia needs, not a plan which simply, on a wing and a prayer, hopes that a massive $50 billion hit to the federal budget would deliver one per cent growth in 20 years time,” Mr Bowen told reporters in Sydney in reference to the government’s 10-year plan to cut the company tax rate.