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

28 August 2011

Interview with Bernie Lo and Karen Tso

CNBC Asia

30 August 2011

SUBJECTS: Visit to Hong Kong and China; International currency; Australia's fiscal settings; the House of Representatives

LO:

Good to see you.

TREASURER:

Good to be here.

LO:

Deputy Prime Minister, welcome to Hong Kong.

TREASURER:

It's a pleasure.

LO:

What exactly are you going to raise with the Chinese? What are you hoping to take away from this visit?

TREASURER:

Well, first of all I'm in Hong Kong and I've been talking to investors this morning. I'm also going to talk to authorities in China about their outlook for the global economy. They're also a participant in the G20 and they are a participant in the global framework for Strong Balanced and Sustainable Growth. So all of those issues are on the agenda when I'm here in Hong Kong, and of course in China.

LO:

Will you be pressing this, you know, more forcefully at all on the currency issue? They have been, they have been strengthening it quite significantly although the markets seems to have myopia when you look at the dollar rate versus the Yuan -

TREASURER:

We've made our view very clear we need to see market based exchange rates. Australia is a very strong believer in a floating currency and one of the structural reforms that we require in the global economy particularly from large developing countries is for them to boost domestic demand and move to more market based exchange rates. That's part of dealing with the global financial imbalances, the global financial imbalances that cause the Global Financial Crisis and then the global recession. So, that's just one of the structural reforms that is required, but it is not the only one. Structural reforms are required in developed economies as well as developing economies.

LO:

Karen, say hi to your Deputy PM.

TSO:

Deputy Prime Minister and Treasurer, always nice to see you, welcome. Let's talk a little bit more about international -

TREASURER:

It's good to be with you.

TSO:

Let's talk about the internationalisation of the Yuan. The markets have in particular focused on this given some of the safe haven currencies have been battered around and lately with what's happening worldwide. We noticed China has moved to more soft border trade settlements. Where does Australia stand on that and do you think a lot of Australian companies will be going down this path in the next five years?

TREASURER:

Well, I certainly think there is intense interest in all of these issues and I've been talking about them when I've been here in Hong Kong this morning. We would like to see all of that opening up and would like to see a market based exchange rate and we have seen some of that opening up here in Hong Kong. It's a very important issue and it's a very important reform here in Hong Kong.

LO:

Mr Swan, you've been very steadfast and unwavering in your commitment to getting Australia back into a balanced budgetary situation - the upcoming fiscal year 2012-2013, I believe it is. Of late the Green party has been clamouring for perhaps a change to the composition of the board at the RBA saying there used to be a community representative or you know (inaudible) a union representative. They note that there has been some stress in the job market outside of course the mining sector. Are you still steadfastly in favour of a balanced budget or in a global swelling environment is it maybe time to revisit that obsession with having to, you know, clear the books?

TREASURER:

Well, we expect to bring the Budget back to surplus in 2012-13 and we are determined to do that, but of course events in the global economy will have consequences for both global growth and also for our Budget. But it's too early to tell the size of those impacts but what we will do is we will assess those as they come through and we will update our budget at the normal time in the Mid Year Fiscal and Economic Outlook which comes at the end of the year. So having a clear and consistent and credible fiscal policy is really important not just for Australia but elsewhere in the world and we've had a demonstration of how important that can be when you look at events in the one hand in the United States and events of course in Europe.

TSO:

Now Deputy Prime Minister I've got to bring up the elephant in the room when it comes to the Gillard Government. The market is saying we could be seeing a Government in its last days as this scandal plays out with the MP Craig Thomson who is embroiled in alleged fraud and also a prostitute scandal. What do you say to the market who says that we might be seeing some sort of transition take place if you can't hold onto the numbers?

TREASURER:

Well, can I just say those assertions are absolutely absurd and not based in any fact at all. We have a Government which is clearly in control and governing. We've passed 180 bills through the House of Representatives. We have passed our Budget in full. That sort of talk is ridiculous, not based on fact and I believe misrepresents the situation in Australia. Because compare what we've done in Australia to the political gridlock in the United States and the political gridlock in Europe. What Australia has been doing through its Government is putting in place a really clear and consistent fiscal policy, a very big reform program to lift productivity. What we are doing in Australia is enhancing all of our economic strengths and that sort of commentary is frankly just ridiculous.

TSO:

Well, Deputy Prime Minister we do appreciate you addressing that and in fact if you look at the market reaction there certainly seems to be some strength in the stock market and the Australian Dollar. Are you concerned about the global position though with the United States and the weakening growth forecasts and how Australia might fare?

TREASURER:

Well, I think the outlook for the region and the outlook for Australia is strong but we are not immune from events either in Europe or the United States, but just look a the last couple of years, look at the strength in the region.

LO:

Deputy Prime Minister it's been an honour and pleasure speaking with you. Thanks for finding your way up here.