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

15 October 2011

Interview with Richard Quest

CNN

Paris

15 October 2011

SUBJECTS: G20 Finance Ministers meeting; global economic outlook

QUEST:

Australia's Treasurer Wayne Swan summed up the rest of the world's frustration with Europeans leaders. In Paris for the meeting, he was scathing about Europe‘s past attempts to fix the crisis through its limp stress tests, and I spoke to him earlier today. He said Europeans wanted to see proper action, and I asked him how worried he was that the European contagion could spread around the world.

TREASURER:

Well I'm hopeful that what we'll see in the next few weeks is the announcement of a comprehensive range of measures from the European authorities. They've said they'll do that by the October 23 when their leaders next meet. It's absolutely imperative they do that because we are facing a serious situation in the global economy. What we've seen is a very big hit to confidence; we've got two of our big economic engines misfiring. So it is going to be very important to see a comprehensive statement from European leaders by October 23. What we can do here at the G20 is talk to our European colleges about how important it is for them to act decisively, plus also get behind them with whatever measures that we can put in place to assist them to resolve their challenges.

QUEST:

What would you imagine something like Australia and yourself or the emerging markets of Asia might be able to do to assist in that regard. I mean, you know, short of going and buying Italian and Greek bonds yourselves, what else can you do?

TREASURER:

Well I think it's important that through the G20 which has the biggest developed economies as well as the biggest developing economies, we can come together and make a difference. We did that three years ago in the middle of the global financial crisis and we had a dramatic effect. For example, I think there would be a willingness through the G20 to support some extra resourcing for the IMF should that be required in addition to what is happening in Europe. That's just one constructive solution. But the other thing that we have to do is to re-emphasise the need for fundamental structural changes in both developed and developing economies, and nowhere is that more important than in Europe in the years ahead.

QUEST:

Isn't what you just said crucial, because what happens is you get a crisis, everybody puts out the fire, and then carries on as business as normal. Isn't that the lesson of 2008, the structural changes that you all promised, never happened?

TREASURER:

No I don't agree with that. There are big structural changes that are happening in the financial system. The fact is that they'll take some times to put in place and to work. The real challenge in Europe has been that the stress tests that they put in place didn't really do the job. And we've seen the sovereign debt crisis shine a light on the failure to, if you like, put in place fundamental reforms in the financial system. What Europe demonstrates is the importance of structural changes, the importance particularly when it comes to fiscal policy, of good fiscal policy over the years - that can't be put in place overnight, it takes some time. But what this demonstrates is the importance over time of those long-term reforms in both developed economies as well as developing economies, and that's what the G20 is all about.

QUEST:

And if they do not do those reforms, and they do not get to grips with this crisis once and for all - the phrase `comprehensive' being used by just about everybody - what do you fear will happen?

TREASURER:

Well I do fear for what could happen if we don't see that fundamental reform. You see, what this is really about is jobs. We want a healthy economy so we can produce the jobs for tomorrow. Jobs give the security; they give the peace of mind. They are really the basis for a moral society and if we don't get economic growth to get the jobs, then what we see is the social dislocation that comes from that. I'm a member of the Labor Government, we're absolutely committed to a prosperous economy, good fiscal policy and supporting jobs. And in too many places on the globe, we don't see enough jobs. We see very high unemployment and we see many people not being able to make a contribution to society. What this reform has got to be about for the long term is the creation of jobs, good jobs, more jobs and jobs that bring dignity and worth to human beings.

QUEST:

Finally, Mr Swan, and forgive my, I won't say cynicism but perhaps my jaundiced view, why do you think, or why should we have hope that the G20, Europeans, will deal with this now? This crisis has slowly got worse over the least 18 months to 2 years. So why do you think it should get, why now Mr Swan?

TREASURER:

Because it's been going on for 18 months, that's 18 months too long. What we've got to get is some action. People don't want half measures, they don't want blame shifting, they want action. And I believe that is the case within European democratic societies as well as around the world. Essentially, what finance ministers said to European finance ministers in Washington two weeks ago is get on with it and get cracking. And I think that the patience of the rest of the global economy is going to wear very thin if we don't see some action from the Europeans in the next little while. I'm encouraged by what I've heard so far, but what we want to see is action, there's a timeframe for it, they've got to get it going.