Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Was it felicitous timing or a happy coincidence?
A surprise 41.5 per cent jump in government spending on defence equipment helped Australia's economy grow by 0.2 per cent for the three months to June.
If it wasn't for that spending, the economy wouldn't have grown at all.
Bureau of Statistics figures on Wednesday showed that 0.2 per cent figure helped the economy record an annual growth rate of 2 per cent, the slowest since the final days of the Gillard government in 2013.
Treasurer Joe Hockey said government spending had not been deliberately brought forward to forestall a recession.
"I can promise you it wasn't planned that way," he told the media.
He wasn't lying.
According to Bureau of Statistics officials, government spending on defence equipment is registered in the national accounts only after the Commonwealth government has taken "ownership" of a project.
That means new orders for things such as jet fighters and warships are only recorded in official data when they have been paid for in full.
The government makes numerous progress payments on large items such as warships and jet fighters, so the 41.5 per cent jump in government spending in the June quarter accounted for things that could have been ordered years ago.
But we can't say what those items were. The Bureau of Statistics isn't allowed to tell us. In order to get that type of information from the Defence Department, the bureau has to promise not to tell the public afterwards.
National Australia Bank economists wondered this week if the big increase in government spending could have something to do with the Commonwealth government's Air Warfare Destroyer project, since the HMAS Hobart was launched in May.
"Given the size of the project, and what each of those vessels is worth, that could easily account for a lot of that spending," NAB economist David de Garis said.
"But the ABS national accounts have always been a bit of a black box … the way these figures are generally accounted for is on a change-of-ownership basis, so the ABS has to make some judgment about when that occurs," he said.
The Bureau of Statistics says the largest portion of government spending on defence equipment in the June quarter was spent on "defence weapons platforms", meaning things such as warships, helicopters, jet fighters, and submarines.
But that's all it could say.
Mr Hockey said there had been seasonal fluctuations in government spending, and he was right about that too.
ABS data shows government spending on defence equipment in the December quarter last year was worth $1.7 billion (a 41.4 per cent increase on the previous quarter), then $1.4 billion in the March quarter this year (a 14.1 per cent decrease), then 41.5 per cent last quarter (worth $2 billion).
