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

21 September 2011

Interview with Fran Kelly

ABC Radio National

21 September 2011

SUBJECTS: Finance Minister of the Year; Australian economy; IMF's World Economic Outlook; Opposition's WorkChoices policy; people smuggling

KELLY:

The world's best treasurer joins us now in our Parliament House studios as well. Wayne Swan, congratulations.

TREASURER:

Good morning, Fran. It's good to be with you and thank you very much.

KELLY:

The world's best treasurer, are you comfortable with this title?

TREASURER:

Look it's very satisfying to see that this award has gone to Australia.  I pay tribute to the hard work of millions of Australians, businesses and working families that have worked so hard to make our economy one of the strongest in the developed world.  I think we can all take a great deal of pride from this outcome.

KELLY:

Euromoney Magazine says quote 'you have succeeded in getting most of the important decisions right, including the exit strategy for the stimulus package' and quote 'imposing the fiscal discipline that many other ministers refuse to adopt.'  Funny the Opposition says the exact opposite to that.

TREASURER:

Yes, they do, but the fact is that when we moved to stimulate our economy we also put in place a set of very strict fiscal rules because I've always said you can't be Keynesians on the way down and not be Keynesians on the way up.  And those strict fiscal rules said that when growth returned to trend what we needed to do was put in place strict fiscal disciplines particularly on spending and we've done that.  We've done that for a very important reason and you see why in both the Euromoney Magazine article and also in the commentary of the IMF.  What's most important today in the global economy is that you see countries which have clear, consistent and firm fiscal policies and Australia is seen to have clear, consistent and firm fiscal policies.

KELLY:

Is there a bit of being in the right place at the right time here because the award also says Wayne Swan has also been undoubtedly been blessed with a number of advantages including a sound economy and the natural resources bounty that has allowed Australia to trade with China in particular, to boom?

TREASURER:

Well Fran, there's a series of things here. There's 30 years of past governments particularly the Hawke and Keating governments for the very important way they put in place hard, long-term reforms.  That's why we're…

KELLY:

Peter Costello left you with a surplus.

TREASURER:

Yes he certainly did as I just said I pay tribute to governments of both persuasions over the past 30 years because the lesson we can draw from all of this and the fact that this award was last given 27 years ago to Paul Keating is that long-term reform is what is required to set the country up for the future.  What we know from the history of long-term reform in this country is that it is politically difficult and we've seen that in the big battles of the late 80s and the early 90s: national superannuation reform, enterprise bargaining, bringing down the tariff wall, and it is no different today in terms of when we are talking about lifting our productivity through the NBN and superfast broadband, putting a price on carbon.  All of these things underscore, and this award underscores, the importance of governments taking the tough decisions but the long-term decisions for the country's future irrespective of their political popularity at the time.

KELLY:

So it's interesting though, isn't it?  You're getting these international accolades, this award shows the Australian economy is the envy of the world, but you're not getting the political dividends at home for that management.  Look at the polls: 26 per cent in the latest Newspoll for Labor.  Why this mismatch?

TREASURER:

Well Fran, I'm not focused on the opinion polls, I'm focused on what…

KELLY:

You're going to have to eventually.

TREASURER:

Well, I'm focussed on what we must do to set this economy up for the future, to secure our foundations for the future, to build our national savings both private and public: fiscal policy on the one hand, superannuation on the other.  Lifting the productive base of our economy, productivity enhancing reforms in terms of investment in skills, making sure we price carbon so we can set ourselves up for the clean energy jobs of the future.  All of these things are difficult, and of course I'd love to see a really good opinion poll but it is not what drives me in politics and it is not what drives this government.

KELLY:

The International Monetary Fund released its latest world economic outlook overnight and makes for pretty grim reading.  The IMF downgraded Australia's growth for this year from 3 per cent to 1.8 per cent.  Do you agree with that forecast?

TREASURER:

Well, can I just make this point, there is a slight downgrade from our budget forecast of 2 ¼ [per cent] but that simply relates to a bigger-than-expected impact of the natural disasters in Australia earlier this year and we talked a bit about that through the National Accounts in both March and June. 

The fact is that we have the strongest growth of any major advanced economy.  Our outlook is very good. The fact is that the underlying strength of our economy is recognised in the IMF report. We need to have confidence in the underlying strengths of our economy as we do face, as we go through the next few months, a much more uncertain global economy.  There has been a downgrade in global growth to 4 per cent.  That is still relatively strong in global terms.

KELLY:

But that's not developed economies, is it?

TREASURER:

No it is not, that's exactly right, but our other advantage here is that we are in the right part of the world at the right time. And if you look at the IMF forecasts for growth in the Asia- Pacific they are strong and they point specifically to the fact that the Australian economy is strong. In fact they give our economy a ringing endorsement, not just in this report, but in a recent country report as well. 

So we've got some things going for us but of course we have to be aware about uncertainty in the global economy and when I go to the G20, IMF, World Bank meetings in Washington later this week I will certainly be making the point that it is very important that the Europeans get their act together.

KELLY:

Well, I was just going to ask you about that because it warns of a dangerous new phase that we are entering. The IMF says – and they told us on Breakfast earlier – policy-makers in the US and the euro zone are basically moving too slowly.  Is political inaction threatening to drag the world back into recession, taking Australia with it?

TREASURER:

Well, there's no doubt that political inaction lies at the core of this challenge in both Europe and the United States.  What you're seeing in both areas really, is political gridlock. We are free of that in this country.  We've got a Government that has got over 180 bills through the House of Representatives.  We've got our budget through in full and we're legislating and putting in place the essential reforms for the future.  That's what distinguishes Australia from what is going on Europe and the United States.  And you rightly pointed to the fact that we have a very strong investment pipeline, particularly in resources.  Strong public finances, our low public debt mean that we are in the best position of just about any developed economy to handle this global uncertainty.

KELLY:

(Inaudible) would look at Labor's position in the polls and be relishing that.  But sitting around the table in Washington, with the IMF and the G20 Finance Ministers as the world's best Treasurer, they'll be looking to you, what's your solution?  How do you get global growth back on track?

TREASURER:

Well, the most important thing is to restore confidence in the global economy and that can only be done by some very important decisions that need to be taken in Europe and they need to be taken very quickly.  In terms of the United States I think we'd all like to see more progress there so we're really in the hands now of President Obama and how he puts forward his jobs plan and how he gets it through the Congress.  If he is successful in that I think that will have a very beneficial effect in terms of global confidence and therefore global growth. What the markets are really looking for is a sign that political decision-makers in both Europe and the United States are on top of what they're doing in getting in place the essential settings for the future.

KELLY:

On another matter Treasurer, Opposition Leader, Tony Abbott, has declared once and for all the Coalition does not support a return to individual contracts.  Is this the end of any kind of Labor scare campaign about a return to WorkChoices with Tony Abbott?

TREASURER:

We know in our heart of hearts that they are addicted to WorkChoices, Fran, and we see it day after day.  We see it from their backbench.  We see it from elements of their frontbench.

KELLY:

But this is the leader.  He is saying no, they do not support the return to individual contracts.

TREASURER:

Well, this is also the leader that also claimed he used to stand for overseas processing and suddenly has done a 360 degree reverse and says he no longer supports overseas processing.  The fact is this is a bloke who will say and do anything to get elected, but what are his underlying positions?  We know when it comes to fiscal policy there's now a $70 billion hole in his fiscal estimates.  Why is that?  It's because he is determined to rip out one of the more important reforms, which is carbon pricing, which has at its core a very important tax reform.  So he's been behaving in a pretty reckless way and frankly I don't believe much that he says.

KELLY:

I'm glad you mention overseas processing because it brings us to the Caucus meeting yesterday on Labor's proposed changes to the Migration Act.  John Faulkner stood up, criticised the Malaysia solution and basically said it's clear it is out of step, it contravenes the ALP platform.

TREASURER:

And I think a number of us did not agree with that assessment but it's entirely his right to make that assessment in our caucus.  That's where we all talk freely about what we're doing here in politics, our beliefs and our policies for the future. The fact is, I believe, and many others in the caucus believe that it is entirely within our platform and we are operating within and we think that we've got in place a very important outcome in terms of our Malaysia arrangement.  One which  delivers additional refugees coming to Australia, coming to Australia in a way in which is fair to all other refugees.  Processing them in Malaysia sends a message to the people smugglers that their model is no longer sustainable.  We believe our policy is the right policy for the future. The right way to deal with the asylum seekers and the right way treat refugees.

KELLY:

Treasurer, thank you very much for joining us.

TREASURER:

Thank you.