The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

24 October 2011

Interview with Alexandra Kirk

ABC Radio, AM Program

24 October 2011

SUBJECTS: European sovereign debt; putting a price on carbon

KIRK:

Treasurer, good morning.

TREASURER:

Good morning, Alex.

KIRK:

A week ago you castigated European leaders for quote `mucking around' with Europe's problems. By all accounts nothing has changed. They failed to come up with anything today. They're now talking about Wednesday. Is it just hot air?

TREASURER:

Well, this has been going on for 18 months and it is true that they have been mucking around for 18 months. The time for blame shifting is over. The time for half measures is over. Obviously these negotiations are tough. They've been going on over the last few hours and we've heard some of the frustration, particularly from the British.

I have that same frustration with the failure of the Europeans to deal comprehensively with this range of issues over a long period of time. If they take a day or two extra to get this right then that should be okay, but if they don't come up with a comprehensive set of plans then I do fear for the fallout and how this will impact not just on the European economy, but how it will impact on the global economy.

So we do need to see a comprehensive set of plans and if we don't see those, we will see a protracted recession in Europe and the obvious implications of that for the rest of the global economy. So the stakes are very high here and we do need to see a comprehensive plan from the Europeans.

KIRK:

The German leader, Angela Merkel, is playing down expectations of a deal by Wednesday. Do you have any confidence that they will meet that deadline?

TREASURER:

Well, I believe we need to have that deadline met. We need a durable solution when it comes to Greece's excessive levels of sovereign debt. We do need to see a credible plan to recapitalise the European banks. And also we do need to see a very sizeable war chest to deal with the threat of contagion - that is, the spread of these sovereign debt issues to countries like Italy.

We need to see action in those three areas because, you see, in terms of the global economy, we've not only got challenges in the European economy, we've got very weak growth in the United States as well - so two of the big economic engines in the global economy are misfiring. It's very important that we see this dealt with in Europe in the next few days.

KIRK:

How long can this drag on? Realistically, how long do they have?

TREASURER:

Well, it's been going on for far too long, Alex. We've seen it going on for 18 months. That is why the Europeans have to actually put in place this comprehensive plan. If they take a day or two more, that's okay, but I fear for what will occur if we do not see a durable, comprehensive plan - a credible plan particularly in terms of the markets - come Wednesday.

KIRK:

Your Government's biggest challenge, of its own making, is the carbon tax. Months ago when it was clear the tax was on the nose with voters, the Government hoped that once the details of the tax were revealed MPs could go out and sell it in the electorate. But today's Newspoll shows that it remains deeply unpopular - with the two independents, Tony Windsor and Rob Oakeshott, they would lose their seats and 70 per cent of voters in the two rural seats against putting a price on carbon. It's clear no one likes the carbon tax. What's going to change?

TREASURER:

Well, Alex, we don't take our decisions based on opinion polls. What we have to do is face up to the very big challenges of the future and putting a price on carbon is such a challenge. It's absolutely critical for our future economic prosperity. So we don't take our decisions based on an opinion poll. What would I say to my grandkids in 20 years' time if I said I didn't proceed with a very important reform that went to the core of our prosperity because I was worried about an opinion poll or two.

KIRK:

Wayne Swan, thanks for joining AM.

TREASURER:

Thanks Alex.