Swan talks climate as rate rise looms

As Labor approaches the second anniversary of its election win, Treasurer Wayne Swan is talking about climate change as economic experts forecast another interest rate rise before Christmas.

Official business investment data due out this week is expected to show more signs of an economic comeback.

Westpac chief economist Bill Evans said positive news on the economy since the Reserve Bank's last meeting on Melbourne Cup day made another rate rise in December more likely.

"We think the economics of the current situation will justify another move and the data developments since this meeting support that view," he said.

Treasurer Wayne Swan made no mention of interest rates in his weekly economic note, preferring to focus on the government's emissions trading scheme (ETS).

Labor has decided to wait until Tuesday, when it will tell the coalition which of its amendments the government will support.

This meeting also coincides with the second anniversary of Labor's election victory over the Howard government.

But with less time for the opposition to consider its position, Mr Swan has likened a potential failure to pass its ETS as a "setback" for economic and environmental reform.

On the economic front, financial markets are expecting capital expenditure data for the September quarter due out on Thursday to show a rise of one per cent, marking the second successive increase.

ANZ Bank economists said a stronger Australian dollar and upbeat business confidence would help drive a recovery in machinery investment and engineering construction.

Official construction work data for the same period, due out on Wednesday, is not expected to be as rosy.

Private sector projects are tipped to struggle but public sector building projects, flowing from the government's stimulus package, could post an increase, Westpac economists say.

In tough times, it helps to have China on your side.

Citigroup senior economist Joshua Williamson calculates that direct investment from the communist state into Australian resources projects will surge to a new high of $6 billion in 2009, up from $2.2 billion the year before.

With the government's 50 per cent small business investment allowance due to end in December, the government will keep a close eye on new vehicle sales figures for October when they are released on Monday.

A positive result would mark the third successive monthly increase.