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

8 August 2011

Interview with Sabra Lane

ABC Radio, AM Program

8 August 2011

SUBJECTS: Global Economy; IMF report on Australia; returning the Budget to surplus

LANE:

Wayne Swan, good morning. Welcome to AM.

TREASURER:

Good morning Sabra, good to be here.

LANE:

Following the US credit downgrade on the weekend, have you held talks with your department and financial regulators here about the potential impacts here and about what might happen on the share market today?

TREASURER:

Well, I have certainly been talking to our regulators in a regular way over the past few weeks, talking to the Treasury and also talking to international finance ministers as well, fellow finance ministers. For example, I spoke to Timothy Geithner last night and I spoke to a number of them in the last few weeks because what we have to do internationally is to make sure we work together to deal with these challenges.

LANE:

Okay, you talked with Timothy Geithner, what did he have to tell you about the strength of the US economy? Are you worried about these concerns and was China right to tick it off on the weekend and say it should be living within its means?

TREASURER:

Well, I think we do need to see the G20 nations in particular work closely together. I don't think it is helpful to have some of that commentary we saw on the weekend. We do need to work together closely. There are big challenges in Europe and as we know, economic growth in the United States is weak so that just reinforces the case for all of us to work together. Because those of us that are in the Asia Pacific have strong economies. Our fundamentals are strong but we're not immune from the fallout of events either in the United States or in Europe.

LANE:

And what did Timothy Geithner have to say to you?

TREASURER:

Well, we talked about the need for us to coordinate what we do and to work together. I don't go into the details of those conversations. But we have a proven track record domestically here of responding to international uncertainty and what we do need to do particularly through forums such as the G20 is to work closely together if we are to avoid some of the fallout from what is unfolding particularly in Europe.

LANE:

There is talk now of a possible Global Financial Crisis mark II. Do you and Treasury see that as a real risk?

TREASURER:

Oh, look I think we'll cross that bridge if we come to it. I think it is very early to be making that sort of judgement. Here domestically we can see in the IMF report that was released yesterday, that our fundamentals are strong, that our economy has been well run, that we are in the right place in the world at the right time. There is not a G20 finance minister who wouldn't swap places with me in the environment we are in at the moment. So here in the Asia Pacific we are strong but nevertheless, we are not immune from the fallout of events elsewhere.

LANE:

Is the Australian Treasury now working on potential contingency plans should there be another global downturn?

TREASURER:

Well, we have an enormous amount of policy flexibility because our economy has been well run and as I said to you before …

LANE:

But we don't have a surplus anymore.

TREASURER:

… we have a proven track record of dealing with global instability. There is no doubt there is an impact on our economy from these events but what we have to do is to make sure that we keep our fundamentals strong and the Government is committed to returning the Budget to surplus in 2012-13.

LANE:

But we don't have that helpful buffer up our sleeve now.

TREASURER:

Well, I think it is certainly too early to be making that sort of statement. As you can see from the IMF report which has been issued, our public finances are strong, our public debt is low, the investment pipeline is strong, our financial institutions are strong. So what we will do is to continue to put in place the very strong financial management that we put in place over the past four years.

LANE:

As you've said the IMF praised the Government for its planned surplus return in 2012-2013 but with growth now revised down, tax receipts, business tax receipts will almost likely follow downwards. That will surely impact on your plans for a surplus and make the job tougher.

TREASURER:

Well, there is no doubt that things are more difficult in the economy and that makes things more difficult for the Budget but the Government is committed to returning the Budget to surplus in 2012-13. There are swings and roundabouts. The one thing that all Australians can take great confidence from is the fundamentals underlying our economy are strong and we are in the right part of the world at the right time.

LANE:

Mr Swan, thanks for your time.

TREASURER:

Thank you.