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 Lyndal Curtis

ABC Radio AM Program

10 November 2008

SUBJECTS: G-20 Finance Ministers' Meeting; Global Financial Crisis

CAVE:

Australia's Treasurer, Wayne Swan, has been at the meeting in Brazil, and he told our Chief Political Correspondent, Lyndal Curtis, it discussed the prospect that gains in recent years of fighting poverty may be lost.

TREASURER:

Well, certainly that was a concern expressed at the meetings here in Brazil. Emerging economies are quite fearful now that this global financial crisis has spilt over from the developed world into the developing world. And certainly that has consequences for world growth over and above the downgrades that we've seen from the forecast from the International Monetary Fund in recent weeks.

CURTIS:

You did talk about reforming what are called the Bretton Woods institutions - the IMF and the World Bank. Given that investment is being pulled out of developing countries, is really the first piece of reform that countries are going to have to do to the IMF and the World Bank is give them a lot of money to mitigate against the investment being pulled out of developing nations?

TREASURER:

Well, firstly there was broad agreement about big, key questions. Firstly, the need to improve supervisory and regulatory regimes. Certainly there was broad agreement about the reform of key institutions, such as the IMF and the World Bank. But there was also broad agreement about the need for all governments to engage in fiscal stimulus, if that was appropriate and possible given their domestic circumstances. There was also agreement about expanding the membership and role of the Financial Stability Forum.

CURTIS:

You've said the impact of the financial crisis on developing countries in our region may be more dramatic than was first thought. What impact could that have on Australia's growth?

TREASURER:

Well, that is the conclusion of the World Bank report. And if some of the more pessimistic forecasts for those developing economies materialise, and if international conditions do deteriorate further, well that will certainly have a flow-on impact to Australia. But to counter that somewhat is also the fact that China is still relatively strong. It is certainly slowing, but it has the capacity, if you like, to strengthen its own economy, and that's good news for the Australian economy. If you wanted to be in one country in the world in these circumstances, then the place to be is Australia, and in this region.

CURTIS: You've said at the G-20 that the normal fiscal stimulus such as tax cuts may not be enough for countries needing to pump prime their economies. In Australia, you've put in some extra money through extra fiscal stimulus. What other sorts of things are possible in Australia?

TREASURER:

Well, the Economic Security Strategy that we announced a month ago is very important, and it comes on top of domestic tax cuts delivered from the 1st of July. The Prime Minister has also made it very clear that we do have the capacity to bring forward critical infrastructure investment, which is not only important for the short-term, but deals with long-term infrastructure bottlenecks which restrict our capacity. So, we've got the capacity to provide a fiscal stimulus. We've also had easing of monetary policy, and also the capacity to do more when it comes to critical economic infrastructure.

CURTIS:

The Government's announcing the car plan today. No doubt part of that will be a stimulus to the car industry. But given what's happening in the US car industry, is there a degree of uncertainty about what will happen in Australia?

TREASURER:

Well, there's certainly problems in the global car industry. What we can do in Australia is put in place a policy framework that attracts new investment in long-term sustainable vehicle production, and also moves towards a greener industry by improving fuel efficiency and reducing carbon emissions. All of these things will strengthen our local industry.

CAVE:

The Treasurer, Wayne Swan, speaking to Lyndal Curtis.