The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 June 2008

Interview with Adam Boulton

Sunday Live Program, Sky News, BSkyB TV, United Kingdom

8 June 2008

SUBJECT: Australia/UK Bilateral Relationship, Trade, G8 Finance Ministers' Meeting, Climate Change, Republic

BOULTON:

We are not neighbours but we have still got a Queen in common even if we are going in different directions economically, that is at least according to my guest now who is the Treasurer of Australia.  The new Labor Government of Australia have been off to a cracking start.  He is Wayne Swan and he joins me now.  Welcome to you indeed.  That is the reality, is it, that Britain and America, Britain and this country I’m sorry, in spite of all their ties, and Australia, are growing apart?

TREASURER:

No, I don’t believe that’s the case.  We’ve got a strong relationship, a strong economic relationship and I think a strong political relationship. In fact, we are two countries in the world that have enjoyed a 17-year uninterrupted economic expansion – I don't think there are many other countries in the world that have done that – but it’s true that in the last 25 years Britain has looked to Europe, Australia has looked to Asia but there is still a very strong trading relationship, a very strong investment relationship both ways and certainly strong British migration to Australia as well.

BOULTON:

Of course, ideologically there have been different governments for most of that period, do you think there are similar reasons as to why Britain and Australia have done relatively well economically, after all you have got a lot of commodities to sell, which is not something Britain has?

TREASURER:

We do. We certainly do, but we have become much more open to the world in Australia in the last 25 years.  We fundamentally reformed our economy back in the late 80s and early 90s.  Under previous Labor governments, we dropped our tariff barriers, we put in place enterprise bargaining, we floated the currency, we put in place national competition policies.

BOULTON:

So, in that sense, a sort of Thatcherism, if you like.

TREASURER:

No, not at all. 

BOULTON:

Economic liberalism at any rate.

TREASURER:

It is very much the Australian way.

BOULTON:

But that’s what would be the common factor between the two economies. 

TREASURER:

No, we believe in creating wealth but we also believe in spreading opportunity, and that’s the Labor way. 

BOULTON:

The suggestion now is that only Britain and Australia do actually believe in free trade, particularly if you listen to what’s being said in the American presidential campaign by the likes of Barack Obama, you must be worried about that.

TREASURER:

Yes, but we have to keep fighting for open and free markets, and nothing could be more important at the moment when you look at what’s going on with food internationally.  There was never a time when we needed more action internationally in terms of free markets, a breakthrough in the Doha Round, that is terribly important.  And that is one of the things that I’ve been talking to Alistair Darling about, because we’re both heading off to the G8 Finance Ministers’ meeting in Osaka, and really the world, in terms of stability, does need some concerted action here when it comes to commodity prices both for food and oil.

BOULTON:

What can be done?  Because obviously we’ve got a free market in oil to a certain extent, we’ve got cartels, we’ve got a free market and the oil price has gone up, some say driven as much by special relations as by scarcity.

TREASURER:

When it comes to food we need that breakthrough with the Doha Trade Round and also other action because nothing could be more fundamental to doing something about world poverty as well.  But when it comes to oil, I think we do need to have a good, hard look at what is going on with the oil markets.  We need to understand the nature of the problem and I think that we can begin talking about that at the G8 Finance Ministers’ meeting in Osaka.

BOULTON:

I mean, there has been one proposal that there ought to be different levels of tax between arbitrage and people who are actually dealing in the commodity to supply the market.  Do you think that…?

TREASURER:

Well, I’m not going to pre-empt the outcome of the discussions.  Obviously this is a global problem that requires a global solution, and there are no simple solutions and there are no silver bullets.  But the inflationary impact of what is going on in oil markets and in food markets will have consequences across the world, in terms of the world economy, in the months and years ahead.

BOULTON:

Do you think that the UN food conference this week was the way to do it, bearing in mind that ended up certainly being noticed largely for the presence of the Iranian President and President Mugabe?

TREASURER:

Well, this issue of food prices was top of the list when I was at the OECD and the IMF back in April.  I think we’ve got to keep working on it internationally.  There are a variety of paths and roads that we can go down but I think the most fundamental one that we need to go down is to get some progress in that Trade Round and to get rid of that…

BOULTON:

But you’re not going to get it if you get President Obama are you, on the basis of what he’s saying?

TREASURER:

Well, there was a lot of optimism back in April when I was at the IMF in Washington, and those negotiations are going on.  Certainly from the Australian point of view, we are putting a lot of effort into it and I know a number of other nations are as well. 

BOULTON:

Now, your country is growing ever closer to China, I mean big customers for your raw materials.

TREASURER:

Our biggest trading partner now in a very short period of time. 

BOULTON:

Exactly.  Given what you have been saying about freedom and democracy, one can understand economically why you are doing it.  But isn’t there something in your gut actually saying, well they’re not democratic, they are putting political pressure on Tibet, they execute a lot of their own people, this is all a bit unsavoury?

TREASURER:

And we’ll talk about those issues.  We have a dialogue with the Chinese on those issues and indeed our Prime Minister, Kevin Rudd, was in China and made commentary there about the Tibet issue.  But look, we need to engage with China and it is going to be…

BOULTON:

You’re arming them economically, effectively, by giving them your…

TREASURER:

But we also have a dialogue with them on these critical questions of human rights as well.  We don’t forfeit the right to discuss those issues whilst having an economic relationship.  China is engaged in the world economy and the world needs to engage China.  I’m going there not only because they are a very substantial trading partner, but they are a very important part of the architecture not only of the global economy but of global politics.  And it is very important for the world that we all engage with China; just as China is increasingly engaging with us.

BOULTON:

But in a sense, you need their money and so in the end business is going to take second place isn’t it, human rights is going to take second place to business? 

TREASURER:

I think the power of trade in the world is a tremendous force for good, and it can bring political and human rights benefits as well as economic benefits, and that’s what we’ve been doing. 

BOULTON:

One of the big shifts with the arrival of your Government, the Rudd Government, the Labor Government, was a change in Australia’s position on climate change, yet we’ve got now a real possibility perhaps that change in America could mean there is a global deal, do you think or not?

TREASURER:

Well, we’ll be working for that.  We are working very, very hard on introducing a domestic emissions trading system for our country.  It is a very substantial and fundamental economic reform and it is also an economic reform that is dependent upon the rest of the world coming to the table over time as well, and that not only includes the United States, it also…

BOULTON:

And China as well.

TREASURER:

Yes, it does.  It also includes China.  But it also means that we have to make some very substantial progress when it comes to critical issues like carbon capture and storage, and that is something that I will discuss with your Chancellor here, and something that the British are very keen on.  But we have to engage China on all of these issues, and that’s why this economic engagement is so important, because tackling climate change is perhaps the most fundamental economic and security issue you can get. 

BOULTON:

I just want to put one thing to you.  You’ve come up with a Budget that has been widely praised.  Again what you have done is taken your surplus and you put it in long term investment rather than spending it immediately.  Looking at what happened in Britain, do you think it is the case that this Government missed the opportunity to, as the Conservatives put it, mend the roof while the sun was shining, because we’re aren’t in that good a financial…

TREASURER:

Look, I’m not going to buy into British politics, but I think the Government here has, over a long period of time, put in place some pretty fundamental economic reform, just as previous governments have done in Australia.  But the most important thing that we’ve done in our Budget is that we have put away a very substantial surplus to invest in the future.  Our criticism of the previous government is that they didn’t do that. 

BOULTON:

And the Queen, how long has she got as the Head of State of Australia?

TREASURER:

I think she’s got a while yet. 

BOULTON:

Got a while.  Are you going to do anything about it?

TREASURER:

We’re Republicans but we have to have constitutional change and the people have to be on board. 

BOULTON:

Thank you very much indeed.