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

10 July 2008

Doorstop Interview

Sydney

10 July 2008

SUBJECT: IMF Statement, Reserve Bank, Foreign Investment, Interest Rates

TREASURER:

I just want to say a few things about the jobs figures today. Thirty thousand jobs added. A slight tick down in the unemployment rate. Given the global credit crunch, given the global oil shock, these figures are very welcome figures indeed. They also reflect the importance of a report put out today by the International Monetary Fund. The International Monetary Fund gave the Government a very big tick on the inflation fighting credentials of its recent Budget and the importance of investing in the future. Those judgements from the International Monetary Fund are also very welcome.

JOURNALIST:

(inaudible)

TREASURER:

No, I think what's important here is to recognise these figures are welcome news. There have been eight interest rate rises in a row. Eight interest rate rises over three years on the back of a record high inflation – a 16-year high. In that environment the economy has been slowing. So given that environment, given the global credit crunch, and given the global oil shock, these are very encouraging figures. I for one am optimistic about the future of the Australian economy. It's important we have a disciplined Budget. It's important that we fight inflation. It's also important that figures like these today are acknowledged as being figures which reflect a degree of optimism.

JOURNALIST:

(inaudible) … problem is petrol prices hitting a new high?

TREASURER:

Well as I said before, increases in global petrol prices and the global credit crunch are certainly having an impact on this country. We're not immune from the fallout from those forces, but given those forces these figures today are quite encouraging.

JOURNALIST:

(inaudible)

TREASURER:

No, the long-term future for the Australian economy is quite good, but there have been eight interest rate rises over three years. We've also had a global oil shock. We've also had a global credit crunch. That is certainly slowing the Australian economy, but this is an economy in which the fundamentals are good, but we are being impacted upon by these global forces. In that context these figures today are welcome.

JOURNALIST:

Does it increase the chance of a rate rise … (inaudible)?

TREASURER:

The Reserve Bank can take its own decisions about the future of rates. What these figures today reflect is that the Australian economy is continuing to grow. That's very important and that should be acknowledged. And that is happening despite what's occurring with the global oil shock, and despite what is occurring because of the global credit crunch.

JOURNALIST:

(inaudible)

TREASURER:

I have not seen that report so I don't intend to comment on it. I don't particularly want to comment on a case by case basis.

JOURNALIST:

(inaudible)

TREASURER:

Well inflation was left at a 16-year high by the previous government. It's fallen to the Rudd Government to deal with that problem, and deal with it we have been doing. That's why in our recent Budget we put forward budgetary settings which would put maximum downward pressure on inflation and therefore maximum downward pressure on interest rates. That's why the endorsement of that Budget by the IMF today is important. It acknowledged the critical role that our Budget is playing in dealing with inflation and putting downward pressure on rates for the long-term.

JOURNALIST:

Have you got anything to say about institutions that keep putting rates up independently of the Reserve Bank, regardless of job figures and regardless of any other financial influences?

TREASURER:

Well I can't speculate about what institutions do, but we do know that there is a global credit crunch in full force at the moment and it's pushing up borrowing costs around the world. What I would say to financial institutions is take great care in the decisions that you take arising from those global forces.