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

11 November 2008

Doorstop Interview

Washington DC

11 November 2008

SUBJECTS: G-20 Leaders' Meeting; Washington Meetings; G-20 Finance Ministers' Meeting

TREASURER:

This is an important time for Australia to be represented here in Washington ahead of the G-20 Leaders' summit this weekend.

This morning I had a good conversation with the Chairman of the Federal Reserve, Ben Bernanke - a positive conversation about the financial system and the way ahead. I can't go into the details of that conversation, but it was positive and I did spend some time talking about Australia's response to all of these issues, particularly our use of fiscal policy and monetary policy, and of course, our views about the future of the financial architecture, views which I expressed at length at the G-20 Finance Ministers' Meeting over the weekend.

So, it's an important time for Australia to be here in Washington and to contribute to what are very important debates, because as we all know, there's change in the air in Washington and certainly some big challenges for the globe if we are to deal with the financial crisis which is certainly slowing global growth and impacting on countries - both developed and developing.

JOURNALIST:

How realistic is it to expect any significant progress from this weekend's meeting, with so many different agendas from different countries involved?

TREASURER:

It's very important for Australia to put its voice strongly. We did that at the Finance Ministers' meeting in Brazil on the weekend, and certainly there is a big reform agenda ahead. Certainly, nations need to consider coordinated action to strengthen growth through both fiscal and monetary policy, but also we must remember that we must deal with the causes of the global financial crisis. And of course what that requires if fresh consideration of the regulatory system. Australia thinks we need better regulation, not necessarily more regulation. We certainly need better supervision. We do need to attend to issues such as capital adequacy, the structure of incentives in big financial institutions, the role of the IMF, the role of the World Bank, the future of the Financial Stability Forum. These are very big issues and there will be a variety of views around the table, as there were last weekend, and I'm sure there will be this weekend. But nevertheless, there must be a determination to deal with these issues. It won't be easy. It will take time, but I think the G-20 Leaders' Meeting this weekend will certainly be a good start.

JOURNALIST:

On that issue, do we have a position paper that we will present to the G-20? Would you characterise our position as being closer to the Europeans than to the Americans and the Canadians?

TREASURER:

Certainly the Prime Minister outlined at the United Nations some weeks ago Australia's approach to all of these issues, and we will take all of those approaches forward, but there will be a variety of views. I don't look at it as either being for the Europeans or for the Americans. I think what we've got to be for is a better financial system that protects households and businesses. We've made it pretty clear, yes, there does need to be better regulation. There's no doubt about that. There needs to be better supervision and of course there does need to be better coordination between the major agencies. At the moment we've got the IMF and the World Bank - two old, established institutions - and we've got the Financial Stability Forum. We've also got the needs of countries who must attend to their own domestic arrangements as well, and we need to put in place a way in which they can cooperate. All of those issues are on the agenda this weekend.

JOURNALIST:

And the position paper? Is that going to be forthcoming?

TREASURER:

The Prime Minister's position was outlined at the United Nations some weeks ago. That is the position that we have taken forward in various forums and those were the positions that I outlined at the Finance Ministers' Meeting in Brazil last weekend.

JOURNALIST:

Can you give us an idea of what we could expect to see out of the G-20? Will we get an action plan that talks about, say, how they'll coordinate monetary and fiscal policy or will we get a series of working groups, in your view?

TREASURER:

I can't pre-empt the outcome of the Leaders' Meeting. All I can do is talk with other Finance Ministers, as I have. All I can do, as I have, is talk to policymakers here in Washington. But as for the outcome, that's up to the Leaders this weekend.

JOURNALIST:

If the Americans won't play ball, though - and there's no indication from what they're saying that they will - there's really no great hope of expecting anything significant to emerge, is there?

TREASURER:

I don't have that view at all. I think the Americans have been constructive in the discussions that I've had with them. They were certainly constructive at the Finance Ministers' Meeting in Brazil over the weekend. So, I don't share that view. But we can't pre-empt the outcome of the G-20 Leaders' Meeting this weekend, but what we can do is we can put forward an agenda. We can discuss it in a constructive way. That's certainly what Australia's been doing, and we've been doing that from the very beginning because we have recognised for a long period of time what a serious issue this is for the globe, as well as for all of our countries domestically.

JOURNALIST:

Have any countries suggested that they will come on board with the five point Australian plan? Can you give us an idea of whether, say the British, who are also talking about a five point plan, whether there's significant overlap there?

TREASURER:

Well naturally, each country will have their position. The important thing for this weekend is to work their way through all the important issues and come to a considered approach. I can't predict what other countries will do. I know the British have a view. I know the French have a view. I know the Europeans have a view. I know the Asians have a view. I know the emerging world has a view. The job of the Leaders this weekend will be to bring all of those various strengths together and chart a course for the future. So, you can't pre-empt the outcome of the meeting.

JOURNALIST:

A noticeable absence at the weekend will be President-elect Obama. Have you got any meetings planned with his staff? I know some of his staff will be at the meeting, but what are your plans in terms of meeting with them?

TREASURER:

No, I don't have any plans to meet with Senator Obama's staff. Our Embassy has been very active here. It's only a few days since the election, and I'm sure, over time, we will have a very close working relationship with the new Administration. Prime Minister Rudd has already spoken with Mr Obama, or President-Elect Obama, as you know.

JOURNALIST:

How important is it that Senator Obama's advisers have a critical role in this summit on the weekend?

TREASURER:

Well, you see, Senator Obama, or President-Elect Obama, has not taken power yet. The system in America is entirely different from ours, and I don't intend to pass any judgement on that. It's entirely a matter for the Americans, as it should be.

JOURNALIST:

With regard to discussions here with Mr Bernanke and others, are you feeling kind of less comfortable about the way things are or are you reassured or how would you characterise your impressions?

TREASURER:

We are in the midst of a global financial crisis which is having a dramatic impact on global growth, which is impacting on all countries domestically. What we need to do is to come together and put in place internationally-coordinated responses and responses domestically, depending upon circumstances in each country.

One issue I took up quite strongly at the G-20 Finance Ministers' Meeting was the need for fiscal policy to be quite active in this current environment, particularly given what is happening with global growth, and I was pleased to see, for example, the initiative from the Chinese only a couple of days ago - particularly important for Australia given the importance of that economy in our region. So, what suits one country won't always suit another country. But what we do have to get is a set of responses that strengthen global growth and deal with the financial system's issues for the future.

JOURNALIST:

Ben Bernanke and the Federal Reserve have been tied at the hip through this crisis with the Bush Administration. Do you think the days of independence of central banks are now redundant or are they threatened in this environment?

TREASURER:

No, I don't believe that they are. In Australia the RBA has loosened monetary policy. Fiscal and monetary policy are now working in tandem. That's very important to strengthen growth in Australia. It's also why it is so regrettable that we've seen these vicious attacks from the Liberals in Australia on our independent financial institutions: the head of the Treasury and the Treasury, the attacks that we saw the other week on the Reserve Bank by the Liberal Party in Australia. That's the last thing any country needs in the middle of a global financial crisis, is to have a major political party attack important, independent institutions who are highly respected and who have great integrity.

JOURNALIST:

The moves to reflate and cut interest rates and so forth, other measures that have been taken, is it enough or do think there's much more that's going to be required to get this situation under control?

TREASURER:

The Rudd Government has the view that we must do everything we possibly can to strengthen domestic growth in the face of this sudden and sharp global slowdown both in the developed world and in the developing world. That's why we moved so swiftly with our Economic Security Package. It's been backed up by swift monetary policy action by the Reserve Bank. Those two things working in tandem can strengthen growth because we believe we must protect households and businesses domestically from a financial crisis that they didn't cause.

Thank you.