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 October 2008

Doorstop Interview

Farrer Place, Sydney

8 October 2008

SUBJECTS: Interest rates, Malcolm Turnbull's ego, Government spending

TREASURER:

Australian families will get a very significant boost out of yesterday’s Reserve Bank decision.  For families with a mortgage, say of around $300,000, that’s a gain of something like $160 a month.  So, a significant boost for Australian families but also, I think, a significant boost for the Australian economy at a time of international economic uncertainty and, of course, we are just going through one of the most significant events in the history of world financial markets since the Great Depression.  I think that has been underscored by the Reserve Bank decision yesterday.  There’s no doubt that those events are having a significant impact on our economy which is one of the reasons why I’m going to the IMF meetings in Washington over the next couple of days.  We need an international solution to these problems.  We need an enduring solution and it must come about through concerted international co-operation and decision making, and hopefully in the IMF over the days ahead we can see some real progress there.  The Prime Minister has made it very clear that Australia is determined to work internationally through bodies like the IMF and also the G20 to get some real progress in this area.

JOURNALIST:

What can Governments do?

TREASURER:

What Governments can do is to strengthen their domestic economies but Governments must also act globally.  This is a global problem which requires global action.  It requires international bodies to come together and take some decisions and implement them over time.

JOURNALIST:

Will the Government have to change its spending plan?

TREASURER:

Well, there’s no doubt that there will be a slow down in the world economy.  That will impact on the domestic economy.  We’re certainly not immune from the fall-out from this event but the underlying features of the Australian economy are strong.  A strong Budget surplus.  We have our investment funds.  We have a well-regulated banking sector.  They are all things that are in Australia’s favour.  We’ve got to remember this in the current environment.  Australia is in a far better position than just about any other country in the world, but we’re certainly not immune from these events.

JOURNALIST:

(inaudible) downgrading its forward forecasts?

TREASURER:

Well, the Treasury will produce its growth forecasts in the mid-year economic review.  That will be published later this year.  It will be there for all to see at that time.

JOURNALIST:

Treasurer, do you think the RBA’s move yesterday will lead the world central banks in a run to slash interest rates?

TREASURER:

Oh look, the decision taken by the Reserve Bank yesterday was a decision taken by the Reserve Bank in the interests of this country.  What other Reserve Banks do around the world is entirely up to them.  But what we know is that there has been the most dramatic event on world financial markets in history, basically, since the Great Depression.  There’s not been an event of this nature and what it requires is decisive action.  There’s been decisive action from the Reserve Bank of Australia and there’s been decisive action from the Australian Government.  Those are things that are running in favour of this country, compared to many others.

JOURNALIST:

What do you make of Mr Turnbull’s comments this morning that if he hadn’t put the pressure on banks in recent days we would never have got the 0.8 per cent?

TREASURER:

I know Mr Turnbull thinks that the whole world revolves around his ego, but there are some events in the world which are much bigger than Mr Turnbull’s ego.  The fact is the Reserve Bank is responding to international events and it’s responding by providing an easing of monetary policy for Australian families.  It’s got absolutely nothing to do with Mr Turnbull, although as I said before, Mr Turnbull seems to think that the whole world revolves around him.  Well, it doesn’t, and these events are ones to which the Reserve Bank and the Government has responded over time, dealing with it in a decisive way.

JOURNALIST:

Is the economy worse off than you initially thought?

TREASURER:

We brought down our Budget in May this year.  The settings we put in place then did anticipate the possibility that these events on international financial markets could have adverse consequences for Australia and, sadly, that has been the case.  But as I said before, a strong Budget surplus, a well-regulated financial sector, investment funds, high commodity prices, they’re all things that mean Australia is in a better position than many other countries in the world.

JOURNALIST:

Treasurer, is it fair that the banks take one per cent off deposit rates and .08 off mortgages?

TREASURER:

Well, in these current circumstances the most important thing that we have in our favour is a stable banking system.  The truth is that the international cost of money is through the roof at the moment.  Getting a cut of something like 80 basis points is a big gain for families.  Now, when the international circumstances normalise, I would expect the rest of it to be passed on by the banks.  But you can’t have the sort of irresponsible grandstanding and the reckless grandstanding that we’ve seen from Mr Turnbull in an environment where the stability of our banking system is something that all Australians depend on.  All Australian families and Australian businesses do need a stable banking system and they don’t need a Leader of the Opposition behaving in such a reckless and irresponsible way.