Govt spending, handouts prop economy: oppn

5 Sep 2012, 7:56 pm   -   Source: AAP
Shadow Treasurer Joe Hockey says government spending and handouts are propping up the economy. (AAP)

Shadow Treasurer Joe Hockey says government spending and handouts are propping up the economy. (AAP)

Shadow Treasurer Joe Hockey says government spending and handouts propped up the economy in the June quarter as it begins to slow down.

Government spending and cash handouts are underpinning the economy while businesses cope with the onset of onerous taxes such as the carbon and mining imposts, Shadow Treasurer Joe Hockey says.

Australia's gross domestic product (GDP) expanded by 0.6 per cent in the June quarter for an annual rate of 3.7 per cent, official data showed on Wednesday.

Mr Hockey said much of the growth was down to government spending in the June quarter.

"The government sector directly contributed 0.5 per cent to growth in GDP through its consumption and investment," he said in a statement on Wednesday.

He noted government payments for the schoolkids bonus and the carbon tax compensation package boosted household spending in the quarter.

Mr Hockey said company profitability fell for the third straight quarter, where it would be further hit by rising input costs such as higher electricity and transportation costs.

"The latest national accounts show that the government has introduced their onerous new taxes on carbon and mining just as the economy is slowing," he said.

He said Australian businesses were becoming angrier as Treasurer Wayne Swan continued to talk up these headline numbers.

"Their (company) profits are coming down, confidence is dropping and the fact is the government is introducing new taxes," Mr Hockey told reporters in Perth on Wednesday.

"This is a look in the rear vision mirror - it's not a look at the future."

Mr Hockey said the decline in the terms of trade highlighted the risks to the nation's prosperity and to the budget from the end of the boom in commodity prices.

"Wayne Swan must immediately come clean about how he will fill this impending black hole in his budget," he said in a statement.

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