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 November 2008

Interview with Mike Carlton & Sandy Aloisi

Radio 2UE, Sydney

10 November 2008

SUBJECTS: Global Financial Crisis; G-20 Leaders' Meeting

SANDY:

Treasurer, good evening.

TREASURER:

Good morning.

SANDY:

Good morning.

TREASURER:

Good morning over here anyway.

SANDY:

Yeah.

MIKE:

It's good to talk to you. We're going to see some real global action to deal with this financial crisis, do you think?

TREASURER:

We certainly do need coordinated global action, and that's certainly been the subject of extensive discussions at the meetings I've been at over the weekend. To some extent we've already seen some. We've seen action on monetary policy across various countries. We've certainly seen action when it comes to fiscal policy across a number of countries, including in Australia as well. And also a lot of action around the world to stabilise financial systems. But I think as we go through this event, there's going to be seeing a need for further coordinated global reaction, and also the need to get in place the changes to make sure that these sorts of events don't ever happen in this way ever again.

SANDY:

Treasurer, from what you've heard over there, particularly from what the World Bank has had to say, do you think that we're going to take a bigger hit from the crisis than you would have imagined?

TREASURER:

Well, certainly the World Bank has produced a report that shows that the impact on emerging countries is much more dramatic than had been previously thought. And if that is the case, that may well show through in subsequent growth figures. But of course, if that were to be the case, that would have a flow-on impact to world growth and also a flow-on impact to Australia. But of course, what's most important for us when it comes to developing countries is particularly what's happening in our region. And of course in our region we do have the powerhouse economies of China and to some extent India, and they are still going relatively well, particularly China. And that may blunt the impact somewhat that's impacting on other emerging economies around the world and impacting on the developed world.

MIKE:

Yeah, we'd better hope so. Treasury is predicting, I think what, 2 per cent growth for Australia this year?

TREASURER:

That's right

MIKE:

Does that still stand, or do you think now it might be less than that? 1.8 per cent or even 1.5?

TREASURER:

Well, I can't speculate about what's going to happen in the future. Those forecasts are prepared by the Treasury in the normal way. But of course if events were to deteriorate further in the world, particularly in emerging economies, it could have a flow-on effect to growth in Australia and impact further on Australia.

MIKE:

Is that likely though, do you think?

TREASURER:

Well, as we've been through this financial crisis, Mike, it has been unpredictable and it has been volatile, so I hesitate to make predictions about where it goes in the future. I just must say that this report from the World Bank is certainly serious, and it's one that we do need to take seriously. But the most important thing we need to do in the face of all of this volatility is to deal with the things that we control, and of course that's what the Government has been doing. That's why we put the Economic Security Strategy out there a month ago, that $10 billion boost, if you like, to our local economy. It's also why the Reserve Bank has been easing monetary policy. It's also why we acted so decisively in providing the bank guarantee. We've understood that this is a very serious event with very serious implications for all Australians, but that's why we've moved quickly to get ahead of the game, in anticipation, that events could turn ugly.

SANDY:

Mr Swan, as always a lot depends on America, which pretty much has a lame duck President at the moment. Does George Bush have any realistic plan to salvage the American economy?

TREASURER:

Well, certainly George Bush will be presiding over the G-20 Leaders' meeting in Washington this weekend. I'm sure that he's prepared to work cooperatively with world leaders to do whatever can be done to strengthen the situation globally. I think that's important. I believe he will go about that in a genuine way. And I also believe that with the change of leadership here, that will in itself have a confidence impact on the American economy, and that can only be good for the world.

MIKE:

Yeah, but there is some drift in America at the moment, isn't it. I mean, Barack Obama is reported as wanting a big new stimulus package, but he's not yet the President. What chance is there of getting George Bush to agree, or are we going to have to wait for Obama to get inaugurated in January?

TREASURER:

Well Mike, I can't speculate about the outcome of the Leaders' meeting in Washington this coming weekend. I believe that the current US President will work cooperatively with G-20 Leaders who represent the major economies around the world, both developed and developing. I believe he'll be constructive in those talks, and I'm very hopeful that we will see in the month ahead further coordinated global action to combat the global financial crisis.

MIKE:

Alright. Now you have got this meeting at the weekend, as you say, in Washington – the G-20, the big economies. What do you hope will come out of them? I mean, it's not just useful to talk about concerted action. What sort of concrete stuff do you want to see?

TREASURER:

Well, I think we do need to reform the supervision and regulation of international financial institutions. I think that's terribly important. That also applies to the existing organisations, like the IMF and the World Bank. I think what has been expressed at the meeting I've been at this weekend is the need for a prompt conclusion of the Doha trade rounds. That would be a very concrete outcome if we could get some progress there. That would be very good for the developed and developing world. It would be good if Leaders agreed on the need for a further fiscal stimulus...

MIKE:

Yep.

TREASURER:

...which you correctly identified before. The incoming US President has also identified the need for that. So there's plenty for them to talk about, and plenty for them to do, because every citizen and every government and every country in the world has a very big stake in all of this.

SANDY:

Alright then Treasurer, thank you for your time this morning.

MIKE:

Thanks very much.

TREASURER:

Good to talk to you.

MIKE:

Yep, good to talk to you too. Thank you very much.