The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 17/10/06

Doorstop Interview

Australian National University

Tuesday, 17 October 2006
4.45 pm

 

SUBJECTS: Trade Practices Act, East Asia, drought funding

JOURNALIST:

Treasurer, just on the mergers Bill, how confident are you that you will get support from the Nationals and Family First?

TREASURER:

Well, this is a Bill that the Government has already enacted through the House of Representatives. It was gutted in the Senate and we have consulted extensively with small business organisations now and we want that reform to go through and we have made substantive amendments which we hope will ease its passage. The Government has refined it and we have extensively discussed this with small business organisations and I think every small business organisation is now supporting it, and given the fact that it has the support of all of the small business organisations we hope that the Senate will pass it, that the Senate will realise that this is necessary for small business. It helps small business particularly in relation to collective bargaining and there is no reason for any of the Parties in the Senate to block it.

JOURNALIST:

If you can’t get the support you require would you consider splitting it to get the collective bargaining provisions through?

TREASURER:

No, this is an integrated package of reforms as recommended by High Court Judge Daryl Dawson, it is integrated, it won’t be split, it will go through as a whole, we hope.

JOURNALIST:

Have you had any discussions with Senator Joyce or do you plan to have any discussions with Senator Joyce?

TREASURER:

Well of course we have had some discussions with him and it was discussed in the Party Room today and I think anybody who studies it in a fair mind will realise that this is an important reform for Australia. And when you see every small business organisation in Australia come out and support it and call for it to be enacted on the grounds it will help small business, then you know that it has widespread support and you know that it is going to be good for small business and good for the economy.

JOURNALIST:

Treasurer, China has so far been I think rather restrained in throwing its political weight around, it hasn’t really exerted its political weight in the same way it has economic ways, when it moves to more assertive stance, what will the world look like, what will China throw at (inaudible) and how will China, do you think, shape the east Asian region?

TREASURER:

Well, we are seeing the emergence or the re-emergence of China in our lifetime and over the next 20 to 30 years it will become one of the world’s major economic powers. It will, on some measures, have an economy greater than the United States and what that means is that it will be the most important market that most other economies have to deal with and certainly the most important market in east Asia. This is not something to be feared, I don’t think, I think this is something particularly for Australia to be welcomed because our economy is quite complementary with the Chinese economy. But with the growing economic strength you will see growing influence in diplomacy, in the regional architecture as you would expect with a country that becomes either the greatest or the second largest economy in the world.

JOURNALIST:

Will it be a force of good?

TREASURER:

Well, China was a force for stability in the region in 1997 when most of the region went into economic collapse, I am sure it will be a force for economic development and I am sure that in partnership with other global powers, China wants to see a stable east Asian region.

JOURNALIST:

On your speech, the one problem with the speech, if Asia actually woke up tomorrow morning and said, Peter Costello is right, we should be investing our savings at home, let’s build our own (inaudible) market, what happens when the United States economy collapses and crashes for lack of that Asian savings?

TREASURER:

Well the United States would either have to pay more for its borrowing or it would have to adjust its economy in other ways. And I think that you would have an orderly adjustment, I think you wouldn’t expect these things to happen overnight but I think over time you would have an orderly re-adjustment. Now, it wouldn’t just be on the financing side, this would also have implications for our currencies.

JOURNALIST:

Can you have an orderly adjustment of an $800 billion annual deficit?

TREASURER:

Of course you can have an orderly adjustment. What happens is that the inflow, the rate of inflow starts slowing, this is the flow, the stock is still there and what I would recommend is that these matters be telegraphed well in advance. It is going to happen and I think we should begin preparing ourselves for it.

JOURNALIST:

When do you think Asia will start turning off the tap?

TREASURER:

I think, it is already clear to me that in some respects the Chinese are looking for different investments now. I think the strategy has changed and I think the Chinese themselves are beginning to readjust.

JOURNALIST:

What (inaudible) the idea for an East Asia currency unit which one People’s Bank committee member has been floating (inaudible) recently?

TREASURER:

Look, I think it is a long way off. If you don’t even have sophisticated domestic financial markets how can you move to the most sophisticated regional instrument of a regional currency? So I think there is going to be a progression here – domestic markets, domestic bond markets, domestic equity markets, domestic derivative markets, cooperation – and then you want to see how far it will go. But that will take a few decades.

JOURNALIST:

Treasurer are you in favour of moving some of the Government’s drought funding into exit payments to get farmers off unviable land as suggested by Professor Cullen?

TREASURER:

Well in fact the Government does have an agriculture package that does make available in certain circumstances exit payments for farmers. We already do that but that will never take the place of assisting people in drought. Drought is an exceptional circumstance where you see people through the circumstance and when they resume very profitable trading. That is what most farmers will want to do. There may be some farmers that voluntarily want to exit, we already have a programme that caters for that.

JOURNALIST:

What do you say to West Australian wheat farmers who are concerned that they are being paid much less than the current spot market for wheat, for the wheat that they sell through AWB and that they are required by legislation only to sell through the AWB?

TREASURER:

Well look it is a very complicated issue and when I say something about it I will say it at great lengths. Okay, thanks.