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Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

10 August 2011

Interview with Virginia Trioli

ABC News Breakfast

10 August 2011

SUBJECTS: Global outlook; Australian economy; interest rates; Australian dollar; returning the Budget to surplus; China�s economy

TRIOLI:

Wayne Swan, good morning and thanks for joining us.

TREASURER:

It's good to be with you.

TRIOLI:

Now do you hope the Reserve Bank comes out with emergency-style interest rate cuts soon?

TREASURER:

Well that's entirely a matter for the Reserve Bank, but I think what Australians should know is that our economic fundamentals are rock solid: we've got low unemployment, we've got a strong investment pipeline, we've got low public debt. The fundamentals here are just so different from what's happening in other developed economies.

TRIOLI:

You've warned of plunging tax revenue because of the global downturn. On that basis, how can you categorically claim that you'll get the Budget back into surplus for 2012-13?

TREASURER:

Well, what I'm saying is that we do expect to come back to surplus but these events have made that much harder. The events on global markets do impact here, we are not immune, and of course that does have an impact upon tax revenues, but we've outlined our fiscal credentials. We've said very clearly that our aim is to bring our Budget back to surplus in 2012-13. And that's what we aim to do.

TRIOLI:

Can I get an unequivocal statement on that then this morning; that the Budget will be brought back to surplus for 2012-13? 

TREASURER:

What I'm saying to you, Virginia, is that we will bring the Budget back to surplus in 2012-13. We are not immune from the events that we are seeing on global markets. They do impact on revenue, they do have an impact on our economy. We have put in place a fiscal strategy. The fiscal strategy that we put in place to stimulate our economy saved this country from recession. The consequence is that we are much stronger than other developed economies. Our fiscal strategy is important and we're going to do our very best to implement it.

TRIOLI:

So is that a little get-out-of jail card at the end there about us not being immune when you say that you will bring it back...  I'm hearing it two ways. I'm hearing we will bring it to surplus 2012-13, but…

TREASURER:

This is a silly game, Virginia. The fact is that we've got a fiscal strategy, we're sticking to our fiscal strategy. The reality out there at the moment is that there is an uncertain and volatile international economy. It is impacting on our economy. It is common sense to make that observation. But what Australians can be confident of is simply this: that the economic fundamentals of our economy are rock solid and the Government will do it's very best to implement its fiscal strategy in more difficult conditions. That's the common sense observation.

TRIOLI:

Well, let me try to approach this from the other side. I mean, given the financial world reality that we are facing at the moment and the problems in the United States and potentially leaching over to China as well, why does it matter that you get that surplus in that year? Is it really just a political surplus for you?

TREASURER:

Not at all. I think we've got a demonstration of what is happening elsewhere in the world as to why it matters here. When we moved to stimulate our economy, we did go into debt. We stimulated our economy. We said that what we would do is that when growth returned, we'd bring our Budget back to surplus, we would pay down debt. And debt in Australia is less than one tenth of debt in other developed economies. That is why we are so strong, that is why our fiscal strategy matters.

TRIOLI:

Are you pleased that the dollar has fallen? Does that make life easier in your view and is that a preferential position of the Federal Government when it comes to our primary producers and exporters?

TREASURER:

Well I don't comment on what occurs with the dollar on markets. Our dollar has been strong because our economy is strong. We are stronger than other developed economies. Our prices that the rest of the world are paying for our commodities are strong. That's the reason our dollar has been strong. But it will move around because it is a market-based exchange rate. I don't comment on its movements.

TRIOLI:

Given that nonetheless you talk about how strong the Australian economy is, you amongst others also acknowledge just how exposed we are to the situation in China. What anxieties or fears do you have about the problems in America and perhaps that plunging demand there in the United States bleeding over into China when it comes to a problem with China's exports?

TREASURER:

Well the big advantage that we have is that we are in the strongest growing region in the global economy. There has been a changing of the guard in the global economy. Economic power has moved from West to East. And of course China is a big part of that story, but it's not just China. It's the rest of Asia as well. So what is important for Australia is that we are in the right place in the world at the right time. Yes some people are concerned about growth in China and will it be impacted upon by what is going on in Europe and the United States. Yes there may be some impact. But I am very confident that this region will remain strong and that is another reason why Australia will be strong and continue to be strong in the circumstances in which we find ourselves with the turbulence in the global economy, particularly in Europe and particularly in the United States.

TRIOLI:

So unlike more sober analysts who actually are seeing some worrying signs over in China, you don't and my question was about actually whether you see…

TREASURER:

No, that's not what I said either.

TRIOLI:

Yes but I asked you directly, any concerns or anxieties about China? This is an opportunity to say what you think they might be.

TREASURER:

Well first of all, every week for the last couple of years we've had analysts out there questioning whether China will continue to grow strongly. I believe China will continue to grow strongly. It is not immune from other changes in the global economy, but it is a very big economy. It has enormous policy flexibility. Of course it is affected by the economic cycle and events elsewhere in the world but I believe our region will continue to grow for a whole host of reasons which are particular to this part of the world. And that's a good thing.

TRIOLI:

Alright good to talk to you Wayne Swan. Thanks for joining us today.

TREASURER:

Good to be with you.