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

27 September 2011

CNN Interview

New York

27 September 2011

SUBJECTS: European sovereign debt; global economic outlook; Australian economy

ANCHOR:

The Australian Deputy Prime Minister and Treasurer, Wayne Swan, joins me now from CNN New York.  Mr Swan, let's start with what's been going on at the IMF.  Do you feel that there has been a change of heart among your colleagues in Europe and also the IMF, a willingness perhaps to let Greece go and perhaps come forward with a big fund which would defend a more defensible line?

TREASURER:

Well, I wouldn't put it like that.  What I found over the weekend amongst my colleagues from Europe and right around the world was an appreciation of the seriousness of the challenge, that there had been a huge hit to confidence which is producing slowing growth.  The Europeans made it very clear they were absolutely determined to implement all of their commitments and other finance ministers from around the world also made it very clear that we stood ready to work with the Europeans should further action be required.  So I was encouraged by that but the Europeans were emphatic that they were going to implement all of their commitments of the 21st.  That's quite important because I think we all understood that what's going on in Europe can't be confined to Europe.  It does have implications for the rest of the global economy.  We've seen the turbulence in markets and I think all ministers agreed that we have to do everything we possibly could through both the G20 and the IMF to assist our European colleagues.

ANCHOR:

Well, you must be rather frustrated though, Mr Swan.  Surely you can see the huge downside risk to the Australian economy as a result of this and we've already seen that with commodities prices sliding.  You must be very frustrated that it only seems to be now that your European colleagues are taking this seriously.

TREASURER:

Well, it is very important that the European colleagues step up to the plate and I believe they made those commitments on the weekend.  They are very serious about implementing all of their commitments.  What we are seeing here is what we saw three years ago that you can't confine a problem in one part of the global economy from the rest of the global economy.  So in that sense we're all in it together. But Australia is in the Asia Pacific.  The Asia Pacific is growing much more strongly than the rest of the world.  What we are suffering from, I think, has been political gridlock in both Europe and in the United States.  We don't have those problems in Australia where we've been getting on with the job of strengthening our economy.  We avoided a recession which puts us in a much stronger position than just about any other developed economy.  We have strong public balance sheets.  We have low debt.  We have very strong job creation over four years and we have a big investment pipeline but nevertheless we still feel the impacts of these events on global markets.  So it's in all of our interests, wherever we are, to cooperate with the IMF and the G20 to make sure everybody does what they possibly can to see these issues resolved in Europe.

ANCHOR:

Let me put this to you, that you are actually in a more precarious position now than you were in 2008 because we now could be looking at a slowdown if not a recession in those fast growing Asian economies which provide the demand for your commodities.  We're already seeing big slides in commodity prices – copper and gold for example – but it can only be a matter of time before things like iron ore, which is very important to you, follow.  You much be must more worried now than you would have been in 2008 when it only looked like a pure financial crisis and when the backwash in terms of the real economy looked as if it would encompass Europe and the United States but not South East Asia and China.

TREASURER:

No, I don't accept that at all.  In 2008, global demand was falling off a cliff and seven of our top 10 trading partners were going into recession.  We've got the IMF still forecasting global growth of 4 per cent and growth in the Asia Pacific of 8 per cent.  So I think things are vastly different now.  The Australian economy is stronger.  We've increased our output by 5 per cent over and above where it was prior to the global financial crisis - not something any other developed economy could point to - but on top of that we have a really strong investment pipeline particularly into resources which is going to be largely unaffected by these events on global markets because they are long-term investments in energy supply to the region. 

So we have some strengths there that make it very clear that the Australian economy is probably one of the more resilient economies in the world.  Nevertheless we've got to make sure that we do everything we can to resolve these problems in Europe and to make sure we put a floor under global growth, deal with the confidence issues and get on with sorting out the problems which are the hangover of the global financial crisis, namely the need for a global framework to deal with global financial imbalances.

ANCHOR:

Okay Wayne Swan, thank you very much indeed.