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

16 April 2011

Doorstop

Washington

16 April 2011 (Australian time)

SUBJECTS: Budget; G20 Finance Ministers Meeting

TREASURER:

Finance Ministers today made steady progress on a series of reforms that are very important for global growth in the long-term. In particular, the framework for strong, sustained and balanced growth, important progress was made there, and Australia stressed particularly the importance of jobs and employment creation. Jobs and employment and creation which go to the centre of prosperity and the wellbeing of families right around the globe.

We also had a discussion today about the global economic outlook. The global recovery is continuing but the global recovery is fragile. And of course the risks are on the downside. Instability in North Africa and the Middle East and of course the tragic events in Japan will mean particularly that growth in Australia this year is lower than we've previously forecast. Growth will probably lose up to three quarters of a per cent as a consequence of the floods, cyclones and of course the events in Japan. That of course might have an impact on budget revenues. So an impact in the short-term, but the underlying strong fundamentals of the Australian economy will see us through in the medium-term.

JOURNALIST:

So that historical [inaudible]

TREASURER:

What I've said very clearly is that the impact of the floods and Cyclone Yasi and of course the impact of the tragic events in Japan will subtract something like three quarters of a per cent from our growth in 2010/11 but we're yet to finalise our figures.  But what we do know is that will reduce Government revenues but [inaudible] in the short-term we're absolutely determined that the impact of these events will not actually stop us from returning to surplus in 2012/13.

JOURNALIST:

Why then if there such a big hit to the economy is it so important to return to that surplus right on target [inaudible]?

TREASURER:

[inaudible]…both in the medium-term we'll be strong. The mining boom and the investment pipeline that comes with that will mean that growth will be strong. Unemployment is already low, so by 2012/13 our economy will be approaching capacity. So what we have is an impact on growth now and an impact on Government revenues [inaudible].  What we must ensure we do is come back to surplus in 2012/13, because by then our economy will be at capacity and it's very important to make room for the private sector.

JOURNALIST:

The Government made a promise to get back to surplus by 2012/13 before [inaudible] they will affect Australia's ability to get back on time?

TREASURER:

These are impacts in the short-term.  There's no doubt there will be an impact on the budget bottom line this year. But as we go into the forward estimates, as we go into the years ahead, growth will be strong.  Short-term weakness, medium-term strength.

JOURNALIST:

Just on the G20 [inaudible]

TREASURER:

Well I think making progress on this framework is quite important and of course I think as Finance Minister Lagarde has said today, there will be a second stage of the mutual assessment process which occurs under the framework and of course that will involve a very thorough assessment of seven large economies. But of course, there's chalk and cheese between Australia and the rest of the world when it comes particularly to our financial system. Our financial system is in good nick and of course our economy is much stronger than just about every other developed economy. So Australia will not be assessed in that second stage process.

JOURNALIST:

You mentioned also [inaudible] risks to the global economy are on the downside [inaudible].  How certain can you be of your assessment that things will pick up in a year or two?

TREASURER:

Because Australia has a very strong investment pipeline -  something like $380 billion of investment on the drawing board, a lot of it beginning right now. But of course there's short-term weakness that flows from recent events in the global economy. That will detract from growth this year, that will have an impact on our budget bottom line this year.  But as we go over the forward estimates, as we go through towards 2012/13, our economy will be very strong and we'll have to bring our budget back to surplus to make sure there is room for that very strong private sector investment that will continue to drive jobs.

JOURNALIST:

Just finally, just generally on the trip so far, has it been pretty worthwhile and anything [inaudible] that you're prepared to share with us of what you've learned of the American economy other perhaps [inaudible] lessons like you did with the GFC?

TREASURER:

Well I think what you can still see is a very sharp contrast between the Australian economy and the United States economy. We've unemployment with a four in front of it, they've got unemployment with an eight in front of it. And that is the case with many other developed economies. Australia is in a fortunate position, our [near-term] growth however will be slightly weaker than we predicted last year, but the long-term strength of the Australian economy, and the strength of our fundamentals is what will see us through compared to the rest of the world. Thank you