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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

28 February 2008

Interview with Paula Tapiolas

ABC Radio, North Queensland

Thursday, 28 February 2008

SUBJECTS: Visit to Townsville, Townsville Election Commitments, US Sub-Prime Crisis, Tax Cuts, Inflation

TAPIOLAS:

Mr Swan, good morning.

TREASURER:

Good morning, Paula. How are you going?

TAPIOLAS:

I’m well. Now, what are you doing here, apart from campaigning for the local mayoral candidate?

TREASURER:

Well, I promised during the election campaign to return as Treasurer should the Rudd Government be elected, and I’ve done just that.  It’s only been about 87 days so I thought it was important to get out into one of Australia’s great regions – and North Queensland, I think, is a very important region when it comes to our national economy.  So, I thought it was a good opportunity to get out there and talk to Townsville Enterprise and talk to people like Mayor Mooney (inaudible), a partnership the Commonwealth Government can now have with state and local government and local business communities to attend to the infrastructure constraints that we have in the economy that are holding back our capacity to supply and are pushing up inflation.

TAPIOLAS:

So, what was the message from local business leaders?  Did they come at you with a long list of what they’d like to see for this area?

TREASURER:

Well, I think they were pretty happy to hear that we will be meeting all of our local election commitments.  Our commitments to major new road works.  Our commitments to essential community infrastructure.

TAPIOLAS:

You’ve got a big ask in the Budget with $31 billion in tax cuts to deliver.  So, if you’re delivering on these promises, can we see them in this term?

TREASURER:

You certainly will see them in this term and I’m making that very clear.  We’ll deliver the tax cuts that we promised because they play an important role in enhancing labour force participation and rewarding the labour force that’s worked very, very hard in recent years to make our economy strong.  They deserve some incentive.  And we will be delivering those commitments, absolutely.

TAPIOLAS:

Delivering on the tax cuts, but what about the local promises – money for the Bruce Highway, money for the Port Access Road?

TREASURER:

That’s right.  We’re delivering on all of those because that’s very important economic infrastructure that’s absolutely essential for the long-term economic development of this region.

TAPIOLAS:

Mr Swan, will you commit money to the Flinders Mall in Townsville, the $20 million?

TREASURER:

We didn’t make that commitment during the recent campaign and neither did the then government.

TAPIOLAS:

No, but will you?

TREASURER:

No, I’m not making that commitment because I’m up here delivering on the commitments we made during the election campaign.  The commitment we made to the Murray Sports Stadium.  The commitment we made to Reid Park.  The commitment we made to the Riverway Stage 2 and the Upper Ross.  They’re the commitments we made.  I’m really pleased we can deliver on those.

TAPIOLAS:

You’re heading to Riverway.  What’s happening there this morning?

TREASURER:

Well, we’re just reaffirming our commitment to that project out there.  It’s very important in Thuringowa.  But we’ve also committed to the Reid Park development.  You might recall I was up here in the campaign and made that commitment to the V8 Super Car Series.  So, I’m just repeating the commitments we made during the campaign, making sure that people really understand that we’re very serious about meeting them.

TAPIOLAS:

So, you came to North Queensland to let people know that you’ll be meeting your promises?

TREASURER:

Well, not only that, but to listen to the local business community.  I’ve come through this region regularly over the years.  I’ve been coming here every year for over 20 years.  I understand how important North Queensland is in the Australian economy.  Today was a really good opportunity to catch up with Townsville Enterprise and local business.  It’s all part and parcel of listening to what regional Australia has got to say and taking it back and putting it into national policy.

TAPIOLAS:

Mr Swan, there’s a council merger happening in North Queensland. Will you be meeting with Councillor Mooney?  Is that what you’re here for, to support his…

TREASURER:

I’ve certainly have met with Councillor Mooney and I’ve said hello to Mayor Tyrell as well this morning.  I’m meeting with a whole range of people.  The Townsville Council up here has been a leader with a lot of foresight over the last few years in putting in place the essential plans that go to the core of economic prosperity, and I enjoy working with people like Tony Mooney because they’ve got some foresight.  They’ve got some plans for the future.

TAPIOLAS:

Mr Swan, I understand you’ll be touring Pallarenda with Tony Mooney today.  Will you be considering any Commonwealth buy-back of that land that’s been sold onto developers?

TREASURER:

No, I’m not making any other commitments other than we made during the election campaign.  As you’ve correctly identified before, we’ve got some budget constraints.  The previous government was spending like a drunken sailor towards the end.  We are going to rein in the national budget.  We’ll meet our election commitments but we won’t be making other commitments so soon afterwards, no.

TAPIOLAS:

The news from the US today is that they’re facing a further crisis in rates.  Is that something that you expect to spin off into our economy?

TREASURER:

Well, we’re not immune from the fallout of the sub-prime crisis in the United States and it will have an impact not only there, but on world growth rates.  But the good news is that we are better placed than most other countries because of our proximity to Asia and our relationships with India and China.  We are better placed to withstand the fallout from those events primarily in the United States and Europe.

TAPIOLAS:

Inflation, though, is on the rise in Australia.  What do you do to keep it down?

TREASURER:

The Prime Minister has announced a five-point plan to deal with that inflation that we inherited.  You might recall the figure for October, November and December was a 16-year high in inflation.  And inflation at that level erodes incomes, it constrains growth, it erodes savings.  We must tackle that if we’re going to have sustainable growth in the future.  So, we’ve got a program we’re putting out there, including budget restraint, investing in skills, our plans for infrastructure, our plans for private savings, and of course, that investment in our workforce through the tax cuts.  That’s all part of tackling the inflation challenge.

TAPIOLAS:

Is it inevitable that it will have to go up further before it comes down?

TREASURER:

Well, the Reserve Bank itself has forecast elevated inflation at or above their target band at an underlying level for the next two years so we have to do everything we possibly can in this Budget and through subsequent Budgets to put downward pressure on inflation because inflation’s already produced something like seven interest rate rises in the last three years.  So, the job of the Federal Government is to take the pressure off the Reserve Bank through fiscal policy, and that’s what we’re planning to do.

TAPIOLAS:

Won’t the $31 billion in extra money in people’s pockets through these tax cuts just boost inflation?

TREASURER:

No, it won’t because it plays a very important part in lifting workforce participation.  And of course, one of the very big problems we have in the economy is a skills shortage and, more generally, a labour shortage.  These tax changes are aimed at the lower and middle levels and they will enhance workforce participation and they will give some tax relief to a lot of people who’ve had very little tax relief in the last three years or so.

TAPIOLAS:

Mr Swan, you’re in North Queensland today.  Where are you off to next?

TREASURER:

Well, I’m going out to Thuringowa to the Upper Ross community hub.

TAPIOLAS:

And any surprises on the way throughout the day?

TREASURER:

Well, there’s always a surprise in political life.  I love coming here and I generally have a surprise or two so if you can organise one let me know.

TAPIOLAS:

Wayne Swan, Federal Treasurer, thank you very much.

TREASURER:

Good to talk to you.