Doorstop Interview
Farrer Place, Sydney
Monday, 19 January 2009
SUBJECTS: Lance Armstrong's LiveSTRONG, Access Economics report; global financial crisis; Economic Security Strategy; New South Wales Government; First Home Owners Boost
TREASURER:
I’ll keep my remarks brief because I have to get a flight to Adelaide to launch Lance Armstrong’s LiveSTRONG global initiative. The Access Economics report underscores the very difficult global conditions that Australia is facing at the moment, and in particular, it draws attention to a slowing economy in the United States, and most particularly to China. That does have implications for growth in the Australian economy, and there are no quick fixes here.
But as we look at reports like this, we should keep in mind the underlying strengths in the Australian economy, and most particularly, the fact that the Australian Government has perhaps more flexibility in responding to these events than just about any other country in the world. Maximum flexibility when it comes to fiscal policy, maximum flexibility when it comes to the level of interest rates through the Reserve Bank, a strong banking sector, a depreciation of the Australian dollar and low petrol prices, all mean that there are underlying strengths in the Australian economy, which mean that if you are to be in any country in the world in these very difficult global circumstances, the country you would want to be in is of course Australia.
JOURNALIST:
With that, are we headed for a recession?
TREASURER:
There’s no doubt that the dramatic slowdown in the United States economy, and also the more than expected slowdown in the Chinese economy, will certainly produce in time a profound global slowdown and a global recession.
What the Australian Government has been doing through its Economic Security Strategy is everything we possibly can to strengthen growth, to support business and to support jobs. And the Australian Government has on the table a range of options which we can put in place should conditions require that. We’ve made it very clear that we will take whatever action is required to strengthen growth in this country, to support jobs and to support Australian businesses, given the conditions internationally.
JOURNALIST:
Do you expect that New South Wales is already in recession, and if so, is the New South Wales Government doing enough to (inaudible)?
TREASURER:
I don’t speculate about any of the figures in this report. There’s no doubt that a slowing of the global economy, the impact upon commodity prices, certainly has very significant ramifications for growth here. It will certainly impact upon the budget bottom line in terms of the Commonwealth Budget and also State Budgets. But of course there will be a private sector forecast out every day of every week as we go through this year. So I don’t intend to respond specifically to any individual assertion that is contained in reports such as this.
JOURNALIST:
Treasurer, how concerned are you at the way the New South Wales Government is handling the slowdown, given that everywhere else is spending money, and New South Wales is sticking its hand in everybody’s pockets?
TREASURER:
Well, I think it’s very important that governments across the country do everything they possible can to support jobs, to support business and to strengthen growth. That’s particularly important in the housing sector, and the New South Wales Government is certainly supporting our initiative to boost support for first home owners, for example.
JOURNALIST:
Will that support go further and support funding for property finance, as it’s being speculated in the press, Treasurer?
TREASURER:
Look, what we’ve said is that we will analyse all of these challenges as they come along. It’s important to ensure there is a flow of credit to business in the Australian economy, and at the moment that credit is flowing through the banking system. But if there were to be a change in that area, particularly say in relation to the activities of foreign banks, we would respond at that time. But that is not something that’s occurred at this stage.
JOURNALIST:
(inaudible) the New South Wales Government back in November with the Rees mini-Budget, that while the Federal Government has tried to inject a stimulus into the economy, the New South Wales Government is putting the brakes on the economy? Do you think this report (inaudible) that?
TREASURER:
No, I think the New South Wales Government, like all governments around the country, will do everything that it possibly can to support growth and to support jobs. That’s what we need in this environment. They’re certainly supporting our initiative when it comes to housing, and that’s important. But I don’t intend to go into detail of the New South Wales Budget.
But what I can say from the Commonwealth’s perspective is that we will put in place every responsible measure that we can to support jobs, to support business and to support growth. Because there is a dramatic shock coming through the world economy, a dramatic slowdown in terms of growth, and what we have to do here is to support jobs and to support growth. And we’re doing that. We’ve done that through our Economic Security Strategy. Interest rates have come down something like 3 percentage points. There’s been a depreciation of the dollar and lower petrol prices. All of those things strengthen growth nationally, including in New South Wales.
JOURNALIST:
Treasurer, how concerned are you about the impact on company profits, and the impact that might have on employment and also the budget bottom line?
TREASURER:
Well, there’s no doubt there is a very substantial impact from the slowing of the world economy, most particularly the slowing of the US economy and the slowing of the Chinese economy to growth around the world. That will impact upon company profits in this country. It will also impact on the budget bottom line. Thanks very much.
