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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

7 September 2011

Interview with David Spears

Sky News Channel

7 September 2011

SUBJECTS: National Accounts; Workplace relations; Budget forecasts; New South Wales Budget; Asylum seekers.

SPEERS:

Wayne Swan, thanks for your time. Surveys consistently in the recent months have shown that business and consumers are pessimistic, but today's figures show businesses and households seem to be spending again. Has confidence now returned to the Australian economy?

TREASURER:

Well the consumption figures in the National Accounts have consumption at about trend, at about 3 per cent for the year. Now if you listened to a lot of the public commentary or perhaps you take notice of a number of the surveys, you get the impression there is some form of consumption strike going on. There clearly isn't, but there has been a shift in what people have been doing. People have been spending more on services and they've spending less on goods. And it's also true that people have had rising incomes and they've also been lifting their savings. They are simply not spending in a way in which they may have spent prior to the Global Financial Crisis. I think retailers got used to people spending a lot more in their stores so consumers are out there saving a bit more but they are still spending, spending around trend levels and the consequence of that is that has made a very significant contribution to growth in these figures today.

SPEERS:

You call it a patchwork economy though, and clearly one area that is struggling is tourism and you've pointed to that. Exports overall are down half a per cent in today's figures but tourism in particular, short term overseas departures are up nearly 9 per cent?

TREASURER:

Well first of all can I say exports are going up, although they have been held back because we still have got some problems in the supply chain in terms of coal. But what we actually saw reflected in the figures was that there was a strong burst of imports and we're seeing that reflected in the figures. So exports are going strongly and investment in the export sector, the resources sector, is also very strong and that is one of the strengths of the economy, and strong business investment.

SPEERS:

What about tourism?

TREASURER:

I think in tourism they are doing it tough because of the patchwork economy. The elevated dollar really hurts those people that are trade exposed and it particularly hurts the tourism industry and what we've seen in the figures is this huge jump in the June quarter of people going overseas and spending their money on overseas holidays...

SPEERS:

(Inaudible)

TREASURER:

...so I take this opportunity to urge Australians to holiday at home.

SPEERS:

But that's not enough with the dollar where it is. Obviously the temptation is there to go abroad. What can the Government do to help tourism?

TREASURER:

Well what the Government can do to help tourism and all of those sectors that are affected by the patchwork economy, which is caused particularly by a high dollar, is to make sure we do everything we can do to make those businesses more competitive. That's why the Government for example is so intent on using the revenue from the MRRT to give a company tax cut, to give a very big company tax cut to small business. That's not the only thing we can do, it will depend upon the sectors, but these are structural forces on our industries that we need to recognise are causing great pain in those sectors and I do recognise that.

SPEERS:

The cost of labour in today's figures continues to rise and yet productivity has been falling. Now some argue that this productivity issue needs to be tackled by reforming industrial relations. Even some of Labor's friends here, Heather Ridout of the Australian Industry Group, is saying individual contracts should be brought back. What's wrong with individual contracts if there is still a no disadvantage test?

TREASURER:

Well first of all, let's look at the figures in terms of what is happening with wages. Basically wages are growing around trend. There's nothing particularly unusual about what we are seeing in terms of our wage data at the moment. There is a separate debate is what we need to do as a country to lift productivity overall. Now there are some people out there who think the way you lift productivity is simply to rip away wages and working conditions and go back to some sort of WorkChoices style approach. The Government completely rejects that.

SPEERS:

What about having a no-disadvantage test for individual contracts? Well that's what she's arguing and that's what others are arguing What's wrong with that?

TREASURER:

Well we'll talk to industry and responsible people in industry about the issues they have and their plans for lifting productivity, but I want to make this point: the point is that when it comes to Australia's productivity challenge, the challenge for us is to make sure that we train and educate and skill our workforce - and that's what the Government has been intent on doing from day one. The centrepiece of our last Budget was a huge skills package, not only to train the workforce but also to lift labour force participation.

SPEERS:

But what about individual contracts, are you open to considering them?

TREASURER:

No I'm not open to going back to a WorkChoices style arrangement.

SPEERS:

No, but with a no-disadvantage test?

TREASURER:

Well, the Fair Work Act, we've put it in place, we did that in consultation with the industry. From time to time there'll be some people in the industry who will say to me or to other Ministers that they'd like to revisit sections of the Act. We will deal with that in the way in which any responsible government deals with it. We've got a review of the Fair Work Act happening now, but we are not in the business of going back to some WorkChoices style arrangement where people's basic wages and working conditions are ripped away.

SPEERS:

Which is not what they're arguing. They're not arguing for that.

TREASURER:

No, well they're not arguing for the Fair Work Act to be overturned either. Some are, some aren't. We'll have a responsible conversation about it.

SPEERS:

But individual contracts are out?

TREASURER:

Well, I don't see them as being as being a panacea for productivity if that's the point that they are making. I don't happen to agree that that is a panacea for productivity. Some of them do. I respect their view. I just respectfully disagree.

SPEERS:

How confident are you looking at today's figures now about returning the Budget to surplus next financial year?

TREASURER:

Well, there's no doubt that returning the Budget to surplus in 2012-13 has been made more difficult by all of the events that we've seen unfold over the last three or four months, but the Government is determined to bring the Budget back to surplus in 2012-13.

SPEERS:

Is it going to happen?

TREASURER:

Well, we're determined to bring it back in 2012-13. We acknowledge that that task has been made all the more difficult by events in the global economy which impact upon global growth, impact upon our growth, and therefore impact upon our Budget. But we're determined to do that because we think it is really important there is very clear and consistent fiscal policy.

SPEERS:

Do you think it will happen?

TREASURER:

Well, we're determined to bring it back.

SPEERS:

Because it went from a commitment to a target to something you're working towards.

TREASURER:

That is just the sort of debate that's been run largely by the Opposition. The fact is, I've been clear, all of our Ministers have been clear, the Prime Minister has been clear that we're determined to bring it back to surplus in 2012-13, but we've made the commonsense observation that that task has got harder. People then come to me and say 'what if' - and they give a whole lot of hypothetical examples - 'what if global growth does this or that?', and I say to them that we've got a proven track record of dealing with global financial and economic instability and if that were to happen, we'd deal with it in a responsible way, which is the responsible answer.

SPEERS:

It's also made harder by the decision by the New South Wales government in their budget yesterday to increase mining royalties. This is going to mean miners pass that cost on to you.

TREASURER:

We'll see. I mean this is a political game that is being played by Barry O'Farrell to cover up for his embarrassment at the fact that he's got a budget deficit he didn't tell anybody about...

SPEERS:

He's made the decision and you're going to have to fit the bill?

TREASURER:

Well, we will see because I tell you one thing, the revenue from the MRRT is critical to deal with the pressures in the patchwork economy to give tax cuts ...

SPEERS:

You say you won't follow the mining tax and refund the miners for ...

TREASURER:

No I'm not saying that at all. What I'm saying is we'll deal with Mr O'Farrell and what he's done when it's entirely clear what he's done and how he's going about it and we will meet our commitments in terms of the expenditures flowing from the MRRT because it is critical for dealing with the challenges of the patchwork economy, and we won't be derailed in doing that by Barry O'Farrell who's playing some pretty puerile political games.

SPEERS:

So New South Wales could lose some revenue in other areas?

TREASURER:

We'll deal with it responsibly, we'll have a look at what they're proposing and we'll deal with it.

SPEERS:

They say they need to do this, Mike Baird, The Treasurer, because they're being duded in the carbon tax. They're not being compensated for the impact this is going to have on their coal generators?

TREASURER:

This is just complete rubbish and you know they'll play their games and we'll get on with responsible economic policy. This is a very poor effort from a first term of government - with the majority they've got - to bring down a budget that's so confused and all over the place like this one, let me tell you.

SPEERS:

Why should Victoria and South Australia be compensated for the impact on their brown coal generators when New South Wales...

TREASURER:

Because we're implementing responsible policy. There's very good reasons for the policy platform we have outlined. They understand that, they're playing a political game and are embarrassed by their budget bottom line...

SPEERS:

Well, just give me one reason then. Why should Victoria and South Australia be compensated but not New South Wales?

TREASURER:

Well, I'll tell you why - because it depends on the energy intensity and the degree to which it is an efficient or inefficient generator -

SPEERS:

And that's going to cost New South Wales?

TREASURER:

No, they say that, we don't accept their costings. It's a political game that they're playing, they'll continue to play it. We'll get on with responsibly managing the economy and responsibly putting a price on carbon - which Barry O'Farrell used to believe in.

SPEERS:

Final question on the Malaysian plan which is still under consideration from the Government in the wake of last week's High Court ruling. Is it still your belief that this is the best way to deter asylum seekers?

TREASURER:

Well, it is the best solution and it is the best humanitarian solution as well, and that is why the Government put it forward in the way in which we did. Now we thought earlier in the week that Mr Abbott might have been prepared to consider that and he made an emphatic public statement saying that he would consider it. Now he appears to be crab walking away from it.

SPEERS:

He said he's still prepared to work with the Government to make offshore processing possible?

TREASURER:

Well, I'm not sure what he's saying at the moment, I think he's changed his tune. He should come and tell us whether he's prepared to support a solution like Malaysia.

SPEERS:

What about onshore processing, would that see more and more boats arriving?

TREASURER:

Well, the Government is going through all of the alternatives that we've got to responsibly consider given the High Court decision, but he made a public statement that he's prepared to consider Malaysia. Well, where is he? Has he crab walked away from that or not? Where does he stand?

TREASURER:

Wayne Swan thank you.