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 02/11/06

Doorstop Interview
Royal Australian Mint

Thursday, 2 November 2006
11.45 am

SUBJECTS: Economy

JOURNALIST:

Can I just have a quick chat about the trade deficit?  It has gone up again, what comment do you have?  Is this another interest rate rise off the back of this is going to hurt trade once again?

TREASURER:

Oh no, this is a situation where exports were down.  It looks particularly as if exports have been affected by rural commodities.  It is too early to say whether or not you are seeing the full effects of drought flow through, but we are forecasting there will be a reduction of about 20 per cent in relation to agricultural production.  This will be very serious for agricultural producers, it will affect the export performance and it will knock something off growth.  And unfortunately until such time as we get rain, the crops are going to be depressed. 

JOURNALIST:

Will it be as bad as the 2003 drought in terms of the growth?

TREASURER:

Well production was down about 25 per cent in the aftermath of the 2002 drought.  The forecast at the moment is production down 20 per cent.  So that is the forecast at the moment, perhaps on a par, but it really depends on rains and whether or not there is going to be much of a recovery.

JOURNALIST:

Retail trade was very sluggish today, if there’s an interest rate rise next week that is going to further dampen consumer sentiment.

TREASURER:

Well retail trade was sluggish today and that shows you that there is certainly no runaway consumption occurring in relation to the economy but we will have to sit back and we will see what happens in relation to the next couple of months. 

JOURNALIST:

Do you expect these deficits to continue because of the drought?

TREASURER:

It is plain that the drought will affect Australia’s rural exports.  It could well be that in relation to crops, nearly all of such crops as we get is consumed in Australia, so that will affect Australia’s agricultural exports and we will see that starting to show up in the monthly trade figures.

JOURNALIST:

Are you any closer to appointing a deputy RBA Governor?

TREASURER:

I will let you know when I have got some news.  Thank you.