Interview with Alexandra Kirk
ABC Radio AM Program
7 October 2009
SUBJECTS: Reserve Bank decision; Godwin Grech; Liberal Party threat to block; CPRS vote
KIRK:
Wayne Swan for much of your time in Government you've urged banks to act with restraint. Should they pass on the full 0.25 percent rate rise now?
TREASURER:
Well it has been the case prior to the global financial crisis that when the Reserve Bank altered the cash rate the banks would follow. Now, of course things are beginning to return to more normal times in the financial system. I certainly wouldn't want to see any decision by any bank that put in place a greater increase than any change in the cash rate.
KIRK:
The manufacturing and retail sectors say the Reserve Bank shouldn't have put up interest rates yet, that it's a risky move that could kill off the first tentative signs of recovery. Do you share those concerns?
TREASURER:
Well the Reserve Bank takes its decisions independently, but it is the case that both fiscal and monetary policy are still expansionary. And both fiscal and monetary policy are in a position where support is being gradually withdrawn. You see, someone with a $300,000 mortgage is still something like $708 per month better off since August last year. So monetary policy is being withdrawn gradually as is the fiscal stimulus being withdrawn gradually as we go forward, recognising that the economy is still weak but it is beginning to grow and that is something that Australians should celebrate. We have achieved some of the best results in the advanced economy in the world and as we move forward we need to take our settings and adjust them gradually.
KIRK:
So, you see the rate rise as largely good news because it heralds the worst is over and good times are on the way?
TREASURER:
It's not that at all. The case is that the cash rate was at fifty year lows – an emergency low. And it is simply the case - and common sense to observe - that it couldn't stay there forever.
KIRK:
But just last week you said that the Australian economy was quote 'not out of the woods yet', there was still a very fragile outlook, v, verses the Reserve Bank which reckons the emergency has passed and the economy will be growing at 3 per cent this time next year. So which is it?
TREASURER:
Well, the economy is beginning to grow, but the economy still requires support which it is continuing to receive. It is continuing to receive that support from the Government's fiscal stimulus, but that fiscal stimulus is being gradually withdrawn as we move through next year. And it is also the case that there is still very considerable monetary policy support in the economy, and the Reserve Bank has taken the decision to begin gradually withdrawing that support over time.
KIRK:
It's been reported that Godwin Grech – the Treasury official at the heart of the Ozcar scandal who forged an email – has left Treasury. Did he resign or was he sacked?
TREASURER:
That's entirely a matter for the Treasury and you should direct your questions to the Treasury about staffing matters. They're not matters which the Minister handles or comments on.
KIRK:
The Opposition is toying with the idea of debating the Emissions Trading Scheme until Parliament runs out of time, thus possibly avoiding a second 'no' vote this year. Will the Government negotiate with the Opposition on that basis?
TREASURER:
Well, we'd like to see Mr Turnbull and the Liberals deal in good faith with the Government on this issue. But it appears that there are many in the Liberal Party – climate change sceptics – who are hell bent on putting in place procedural tricks to stop a vote in the Senate. And given that this legislation has been before the Parliament for well over six months, it's about time the Liberal Party demonstrated their bona fides and made a commitment not to use procedural tricks and filibusters in the Senate to frustrate discussion of this very important legislation that goes to the core of business certainty in our community, and deals with dangerous climate change which will have a dramatic effect on our country.
KIRK:
So, if Malcolm Turnbull can't guarantee the Opposition will vote this year, the Government won't negotiate with him?
TREASURER:
What I'm saying is that Malcolm Turnbull and the Shadow Cabinet must rule out using their numbers to block a vote on the CPRS in the Senate. They must do that today.
