Interview with Bloomberg TV
Tokyo, Japan
30 March 2009
SUBJECTS: Bilateral Visit to Japan, G20 Leaders' Meeting, Global Economy, Foreign Investment, Australian Economy, Interest Rates
JOURNALIST:
Good to have you with us, Treasurer Swan. It's the first bipartisan visit by an Australian Treasurer since 1995. What are you hoping to achieve before you head off to London for the G20 Meeting?
TREASURER:
Well, it's good to be with you, Cathy. I think the first thing I want to do is to talk to my Japanese counterparts about the agenda of the G20, but also to underscore not only with the Japanese Government but also with investors here, the underlying resilience of the Australian economy in the midst of this global recession. Certainly the Japanese Government and the Australian Government will go to the G20 Meeting with a pretty firm agenda – one that supports fiscal stimulus, one that is very much in favour of doing something about the toxic assets in the banking system, one that supports reform of the International Monetary Fund in particular, and I think also the whole agenda of what regulations are put in place for the future to deal with the problems of the past.
JOURNALIST:
Mr Swan, the big question here is the fact that we've a leaked G20 Communiqué where the agenda seems to be pretty clear - $2 billion of additional stimulus, 19 million jobs are to be created – that's the aim of Prime Minister Gordon Brown of the UK, wanting growth targets to be set to regulation tightening. The interesting part is what you just said. How exactly does Australia intend to balance what the EU wants versus what the US wants?
TREASURER:
Well I was at the G20 Finance Ministers' meeting only a couple of weeks ago where we did agree on objectives of fiscal stimulus. Most developed countries have put in place a fiscal stimulus of around two per cent for 08/09, that is the case. And certainly we also agreed at that meeting to look to have the IMF to examine the impact of that fiscal stimulus and perhaps assist us with the quantum that countries might aim for in the year after 2009. That's where the discussions got to. But I think there was general agreement about the need for fiscal stimulus, measures to stabilise the international financial system – in particular dealing with toxic assets in the banking system, the urgent need to deal with multilateral organisations, particularly the IMF, and those regulatory issues I was talking about before.
JOURNALIST:
Mr Swan, don't you think at some level and some point, a number of analysts in a number of economists are saying, that the build up to this meeting is so much that maybe it just will not meet all the expectations that have been set for it? There are a number of topics to be discussed here.
TREASURER:
Well, there certainly is a very broad agenda and the agenda needs to be broad, given the scope of the challenges we face. I mean, there is the prospect of further global downgrades and forecasts coming through from bodies like the OECD. So, there is a big challenge that global economies face – both developed and developing. There was a good mood at the G20 Finance Ministers' meeting a couple of weeks ago and I certainly hope that is repeated at this Leaders' meeting in a few days time.
JOURNALIST:
Well Treasurer Swan, the depth of the challenges aside, there's another raging issue in the news now – Australia blocking China Minmetals takeover offer for OZ Minerals. What is going to take for China Minmetals to win approval, because the Chinese company is now possibly going to change the terms of that deal to get it right through?
TREASURER:
I don't speculate about any particular foreign investment application that is sitting on my desk. What I can say is that Australia welcomes foreign investment from whatever the source, including Chinese investment, but we don't make any apologies for applying our national interest guidelines. And in this case there was a particular national security issue to do with one of the mine sites, and as a consequence of that, I said I could not support that mine site in the current application. They've gone away to have a look at it all. I can't provide any further comment apart from that.
JOURNALIST:
But let's say if the bid excludes the Prominent Hill mine, which is in question here, will the Government approve the deal?
TREASURER:
I'm not speculating about what decisions will be taken. We have our guidelines out there and the company is dealing with the Foreign Investment Review Board. I certainly don't speculate about those matters.
JOURNALIST:
Mr Swan, let's talk about the Australian economy for a second. You're heading for a recession. You're talking about stimulus plans. What exactly is it going to take to make sure that Australia does bounce back?
TREASURER:
Well, to begin with, the Australian economy is in much, much better shape than many other advanced economies. But it is true that there was a contraction in the December quarter but by far less than the contractions that are being experienced in other advanced economies. But we'll see what the forecasts are when they come through from the OECD. But if there are continual downgrades then it is inevitable that Australia will face a period of negative growth. But having said that, the Australian economy is still much stronger than many of its peers because we have a number of things going for us. The Government has more room to move when it comes to fiscal policy and monetary policy. Our banking sector is in very good shape. We have well regarded regulators. These are things that are in our favour and in particular, we have a housing sector that is stable, not like the housing sectors that are causing problems in other advanced economies.
JOURNALIST:
Mr Swan, then the question arises, what will it take, do you believe, that the Reserve Bank in Australia, needs to (inaudible) more interest rates to support what you're doing in the government itself?
TREASURER:
Well, I don't speculate about future decisions of our independent Reserve Bank either. I simply make the point that the Australian Government and the Reserve Bank do have more room to move when it comes to both fiscal policy in terms of the government and monetary policy when it comes to the Reserve Bank, than many other countries in the world.
JOURNALIST:
Alright, Mr Swan. Thanks very much for joining us.
