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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

31 March 2013

Treasurer's economic note

As any regular reader of this note knows, I often write about how critical it is for our national debate that we have a discussion based on facts. Time and time again, our debate is let down by those determined to deliberately mislead or distort our public conversation for their own purposes. Like when a politician makes a blatantly false claim such as "after five years … our country has stood still" or "the economy is flatlining" – extraordinary when you consider our economy has grown 13 per cent since 2007 and growth remains around trend. People should rightly hold politicians to account for these kinds of blatantly false statements. Such claims are not just wrong, they are an insult to the hard work and determination of all Australian workers and businesses who work so hard every day to ensure our economy remains one of the most resilient in the world.

When it comes to the economy, the stakes are simply too high to have a debate without the facts. The flow-on impact of distortions or blatant mistruths can be enormous, not just in the market place, but also around the dinner table. That's because exaggerations and misrepresentation of our economy have the potential to undermine confidence, which in turn can have a ripple effect through our society, affecting jobs, incomes and the ability of small businesses to turn a profit.

The 9As Club

Over recent weeks, we've seen a textbook example of misrepresentations of economic data in discussions around Australia's modest debt levels. This scare campaign was torpedoed on Thursday night when global ratings agency Fitch reaffirmed Australia's gold-plated AAA credit rating, meaning we are one of only eight countries in the world with a stable AAA credit rating from all three global ratings agencies – putting us in the exclusive 9As Club. Before Labor was elected, Australia had never received the highly sought-after AAA rating – the pinnacle of credit ratings – from all three global ratings agencies. Being a member of the 9As Club is an endorsement of the Government's responsible economic and budget management over the past five years, confirming our strong public finances with what Fitch describes as our "very low debt". In reaffirming our AAA credit rating, Fitch said: "Australia has remained one of the strongest performing economies in the ‘AAA' universe since the global financial crisis began" and in reaching its determination, Fitch said it assumed "that Australia's high level of political stability and governance is maintained, which supports the country's attractive business climate." You can read Fitch's full statement here.

Interest Rates

While the accolades of global agencies like Fitch for our economic management is a big deal, it pales in comparison to the actual benefit our fiscal strategy is delivering for Australian families and small businesses through lower interest rates. On Tuesday, the independent Board of the Reserve Bank will meet to decide whether to change the cash rate. Our responsible fiscal consolidation has given the RBA room to run lower interest rates by helping to keep inflation contained, something that has been achieved alongside low unemployment and solid economic growth. Whatever decision the RBA takes on Tuesday, families and small businesses are already feeling the benefits of the lower rates they're seeing under Labor. The RBA has delivered the equivalent of seven interest rate cuts in the last year and a bit. In fact, new analysis released today shows a family with a $300,000 mortgage has saved a total of $15,285 on their home loan since Labor came to office. This year alone, on average that's an extra $100 a week in the wallets of Australian mortgage holders as a result of lower rates under Labor.

Wishing everyone a happy and safe Easter.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia