The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 August 2011

Interview with Marius Benson

ABC News Radio

8 August 2011

SUBJECTS: Global economy; IMF report on Australia; returning the Budget to surplus; Government's productivity agenda

BENSON:

Treasurer, before I ask about the IMF assessment of Australia, can I ask you are you planning any action today in response to what has been a weekend of some turmoil and a lot of talks on financial markets around the world?

TREASURER:

Well I've been consulting regularly in recent weeks with our regulators, with the Treasury, with finance ministers from around the world about all of these events, and that will continue in the normal way.

BENSON:

And is any action needed at the moment from your side, from Australia?

TREASURER:

Well we've got a very strong set of economic fundamentals in our economy. That's what the IMF report from yesterday shows very clearly. The fundamentals are strong and of course yesterday's report points to the fact that our economy has been very well run. Because of that we are in a very good position to cope with the worst that the world can throw at us. But naturally we will be consulting with our advisers, with our regulators. And I've been, as I said, consulting regularly with fellow finance ministers from the G20.

BENSON:

So consultation but no need for immediate action. You just leave the settings as they are at the moment?

TREASURER:

Well what we've got to do is to closely observe these events as they unfold in Europe and the United States, but I think what Australians can have confidence in is the fact that we are in the strongest part of the global economy - the Asia Pacific. And our strength here, particularly in Australia, is far stronger than just about any other developed economy, partly as a consequence of what we did to cope with the Global Financial Crisis and the global recession. We came out of that stronger than just about any other developed economy. We have a strong financial system, with a very strong investment pipeline, particularly in resources. So I think Australians can have confidence that we are in a better position to cope with these events in our economy than just about any other developed economy.

BENSON:

So if there is another Global Financial Crisis, if there is a GFC part II, will the tactics be the same: cut interest rates, increase bank liquidity?

TREASURER:

Well I don't speculate about that but it follows from the fact that our economic fundamentals are strong, that our economy is being well run, that we have a degree of policy flexibility to respond to international events should that be required.

BENSON:

Do you think the markets in Australia have much to worry about as they open today?

TREASURER:

I don't speculate about markets but fundamentally here in Australia our fundamentals are strong. We have a very strong financial system. There's a very strong investment pipeline, particularly into resources. For all of those reasons, I think Australians can have some confidence we've got the capacity to deal with the worst that the world will throw at us.

BENSON:

Some analysts this morning are saying your promise of a surplus return - a return to surplus in 2012-13 - is in trouble because growth is so sharply down. Is that still a government guarantee?

TREASURER:

Well the global situation will make things more difficult but the Government remains committed to delivering our surplus as planned.

BENSON:

So that's a guarantee?

TREASURER:

Well, I've just made the point that the global situation does make life more difficult, but I don't speculate about how that will evolve in the next few months. The Government remains absolutely committed to delivering our return to surplus as we planned.

BENSON:

So are you stepping away from the level of commitment that you've given in the past or are they identical words? Are you unchanged?

TREASURER:

Not at all. I am just making a very sensible point that the global situation has changed. It does make life more difficult, but we have got to see how that progresses in the months ahead. But the government does remain committed to its fiscal strategy.

BENSON:

The global situation changed, the commitment unchanged?

TREASURER:

Marius, I am not playing that game. The fact is that the Government is committed to a return to surplus. I've said that on numerous occasions in recent days. It goes to the core of our fiscal strategy. We're not immune to events overseas and the global situation does make life more difficult. But the point is - and the IMF report goes to this fundamental - is that our economy is strong.

BENSON:

The IMF gives the Government a lot of ticks for its policies but productivity it points to as a problem.

TREASURER:

Well, the Government has been pointing to the challenges of productivity as well. We've acknowledged for some time that there's been a long-term structural decline in productivity in our economy over many years. And what the Government did from day one was put in place a productivity enhancing agenda - a productivity enhancing agenda in skills and education, in infrastructure, in regulatory reform. All of those things take time to work because productivity is something that has to be dealt with for the long term. The NBN, for example, is a very important productivity enhancing reform. It is being rolled out, we've been working on it from day one, but it takes time to put in place. These are the sort of reforms that deliver the productivity growth increases that the country requires, but they take time.

BENSON:

Wayne Swan, thank you very much.

TREASURER:

Good to be with you.