STATE ECONOMY

Mr GRIFFITHS (Goyder) (14:47): Does the Treasurer's key Mid-Year Budget Review assumption of 3.75 per cent real growth in gross state product still stand? The Australian share market has now fallen by 21 per cent since the Mid-Year Budget Review, with adverse flow-on effects for consumers. Yesterday, the ABS business indicators showed that quarterly growth in sales of goods and services in South Australia was the lowest in the nation, and South Australia was the only state to record a quarterly fall in wages and salaries. The ANZ Property Outlook (released in January) described South Australia as having a 'languishing economy', and the NAB monthly survey for January stated, 'Business conditions have deteriorated—most notably in South Australia.' Today, the February 2008 Performance on Manufacturing Index was released, which found that activity grew in all states except Tasmania and South Australia.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:48): Don't they love to talk the economy down! Of course, the opposition—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: —would not recite for us the positives out of the State Bank report into the state of the state—

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: BankSA.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: The BankSA report made it very clear that this economy is in a very strong position.

Mr Venning: Which bank?

The SPEAKER: The member for Schubert will come to order!

The Hon. K.O. FOLEY: The economic growth forecasters we released in the mid-year review stand. Now, whether they will be the forecast that we will be signing off to in the budget is to be determined between now and the framing and the signing off of the budget. Obviously, if the rise in interest rates continues to dampen down the economy, that will be reflected on advice from my Treasury officials. This economy has never been in a stronger and more structurally sound position than it is today. With the employment growth that we have had—

Mr Griffiths: It was a federal initiative, though.

The Hon. K.O. FOLEY: Well, whatever—you can take credit for it, I don't care. All I know is that the economy is pretty good right now. We have some of the lowest unemployment we have seen. In terms of the equity markets, there was some scaremongering on Thursday of last week by the opposition. The member says that the Australian stock market is down 21 per cent since when?

Mr Griffiths: Since the Mid-Year Budget Review.

The Hon. K.O. FOLEY: Since the mid-year review. My latest advice before coming into the house is that the balanced fund within Funds SA is down, as at Friday 29 February, minus 6.3 per cent and our growth funds are down 7.8 per cent. With the stock market down some 20 per cent, the active management by Funds SA has been very impressive. When we look at the performance of Funds SA, the balanced product produced by Funds SA has returned over the previous five years some 12.9 per cent per annum—that is 0.65 of a percentage point above the industry benchmark—and the growth fund has returned 13.8 per cent each year over the same period—that is 0.61 per cent above the industry benchmark. Anyone who understands superannuation policy and investing in the stock market knows that we do it for the long term and that in any investment class, particularly in equities, there will be volatility on the upside and, in a cyclical fashion, often there will be volatility on the downside.

When I first came to office, from memory, I think we had two negative years on the equities market in our first two years and we had strong years since that point. I am not alarmed at the reduction in Funds SA because that is a fault well beyond this government and, over the long run, it will more than recover. Having said that, I would hope that, between now and 30 June, or at least between now and when we write the budget, there will be some improvement in that. Perhaps there will be further deterioration. Only time will tell.