Fed: Costello says drought a threat to continuing strong growth
By Jim Hanna, Economics Correspondent
CANBERRA, Aug 27 AAP - After dismissing the drought's impact last month, TreasurerPeter Costello today said it was one of the main threats to Australia's strong economicperformance.
Mr Costello said most international forecasts still tipped Australia to enjoy robustgrowth in 2002 and 2003.
A poll in The Economist magazine put Australia at the top of the industrialised world'sgrowth table for this year and next, he said.
Europe-based forecaster Consensus Economics also expected Australia to post the fastestgrowth in 2002 and the second fastest in 2003, he said.
"The threats we see to the Australian economy (are) to some degree in the rural sectorwith bad seasonal conditions, particularly in New South Wales," Mr Costello told parliament.
"(This) will have an effect on production, and of course the international situationremains weak."
Mr Costello played down the drought's impact on the economy in July, telling reportersagriculture was a small part of Australia's GDP.
That was before his three-day tour of rural Queensland this month.
The drought continues to make life tough for rural communities in Queensland, NSW andWestern Australia.
Meanwhile, a new survey found most small businesses did not have adequate plans inplace to deal with common business risks.
CPA Australia interviewed more than 700 small businesses and chartered accountantsand found insurance was their biggest risk.
Seventy-one per cent of small businesses said lack of cover was the biggest threatand 63 per cent said premium increases would hurt their performance.
Other threats identified included an economic downturn (64 per cent), a drop in sales(60 per cent), failure of major customers (53 per cent) and interest rate rises (50 percent).
"The most common response to rate rises is to increase prices," CPA Australia chiefexecutive Greg Larsen said in a statement.
"Few businesses considered options like re-financing, debt reduction or renegotiationwith their banks.
"It's time for those small businesses at risk to get smarter, take a good look at theirbusiness and develop some fallback strategies."
Around 30,000 small businesses depended on just one major customer for most of theirincome, the survey found.
"Diversification is the key to survival," Mr Larsen said.
"Many small businesses pay the ultimate price when they tie themselves to a businessthey have no control over."
AAP jph/daw/br a
KEYWORD: ECONOMY NIGHTLEAD
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