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

10 November 2011

Doorstop Interview

APEC - Honolulu

10 November 2011

SUBJECTS: APEC, Global Economy, European and Italian Economies Carbon Price, Qantas Euromoney Award, Market-Based Exchange Rates, Australian Dollar

TREASURER:

Well we're here in the heart of the Pacific for APEC. This is 21 Pacific Rim economies, some of the most dynamic economies on earth. Now we are currently in the international economy experiencing global volatility and uncertainty, so international engagement like this is very important for economies, particularly in this region, to discuss the consequences of what's occurred in the global economy in recent times. We've seen impacts on financial markets, we've seen impacts on confidence in economies and of course, we've seen a lowering of global growth.

Here in this region with some of those most dynamic economies, it's really important that APEC economies speak with a united voice, to urge the Europeans to quickly implement all of the policies that they have put forward to solve the financial crisis.

Because when you look at APEC and the 21 economies, there's not an economy here that hasn't felt the chill winds of events occurring in Europe and in the United States. Which is why it is important that our views are expressed strongly about what needs to be done in Europe. But it's also important here at APEC to make sure that all of the economies here come together to implement a range of reforms which can lift global growth. This is the strongest growing region in the global economy, but more needs to be done here to lift growth because the region can't continue to rely on Europe and the United States. We cannot rely on those two powerhouses of the global economy to drive growth in our region. What that means for economies here is we have to put in place a range of structural reforms to lift growth, to lift our productive capacity, so an increasing proportion of global growth is driven from the Asia-Pacific, and we can do that.

So these meetings are pretty important to talk about topics such as the financing of infrastructure, the planning of infrastructure in our region, to drive growth, what we must do by way of structural reform to move towards market-based exchange rates. A whole range of structural reforms can be implemented here to drive global growth given what's occurring elsewhere in the global economy. Over to you.

JOURNALIST:

How much do you think your discussions are going to center on what's happening in Europe and what's your reaction to developments in Italy overnight?

TREASURER:

Well we've got nine members of the G20 present at these meetings plus some of the most dynamic smaller economies in the global economy. I think there are very strong opinions here about what the Europeans need to do. They need to get their act together, they need to quickly implement the commitments they've already given, particularly through the G20 process and through the processes in Europe. First and foremost, this is a challenge for Europe but we've all got a stake in the outcome. What we've learnt, again, over the last few months is that no economy is immune from the fallout from what's occurring in Europe. That's why it's very important we take steps to, one, urge the Europeans to implement the commitments they've already given, but also to take steps very proactively to lift growth in this region, which requires a range of reforms here to lift the productive capacity of the region.

JOURNALIST:

What are you hoping to achieve in terms of the Trans-Pacific Partnership?

TREASURER:

Well trade reform is one part of that very broad agenda and that will be dealt with by our leaders. We're certainly ambitious for trade reform. The Prime Minister did a fantastic job at the recent G20 summit. We've got to build on that here, through the meetings here. It is the economies here that have got the capacity to lift growth to assist global growth through further reforms, and if we can do that through trade reform in this region, through reform in terms of infrastructure planning and financing, then we can drive global growth increasingly from the region to the benefit of all of our peoples and to the benefit of the global economy.

JOURNALIST:

How close do you think you're going to come to implementing that Trans-Pacific Partnership? Where are you going to get to?

TREASURER:

I'm going to leave that for the leaders, but there's been a strong push among Finance Ministers, also among Trade Ministers, to get something done in terms of global trade. We can't see, we can't afford to have a return to protectionism, but what we must do is move forward with some new arrangements and I think the leaders will be spending a fair bit of time talking about that, because this is one of those important structural reforms that has got the capacity to lift growth and to give some more drive to the global economy.

JOURNALIST:

Now that Australia has a carbon tax, will you be urging any other leaders on the sidelines to perhaps start moving faster to pricing carbon?

TREASURER:

Well there's plenty of action happening in the region when it comes to carbon pricing. Look what's happening in China, they're moving towards trialling carbon pricing schemes in some very big provinces in China. In the United States we've got an emissions trading scheme starting in California in the not too distant future, and nine or ten states in the United States are moving in that direction. There's a lot of action happening on carbon pricing in the region.

JOURNALIST:

Can I just get your reaction to news that the Transport Workers Union is considering appealing the Fair Work Australia decision on Qantas?

TREASURER:

Well the Government would strongly oppose any attempt to challenge the decision by Fair Work Australia to terminate industrial action, from any party. From any union or from any employer.

JOURNALIST:

So have you got, do you want to tell them not to do it?

TREASURER:

Well I've made the Government's view very clear. We are strongly opposing any application to challenge that decision of Fair Work Australia to terminate the industrial action. Our view is very clear, from any party, union or employer.

JOURNALIST:

How prominent do you expect the discussion one exchange rates to be this week and given you've just had it in the G20, do you expect it... It's quite different here.

TREASURER:

Well moving to market-based exchange rates is one of those essential structural reforms, combined with a range of reforms in developed economies, to deal with their retirement income systems, to introduce more means of competition and so on, changes in developing economies to lift their domestic demand, to put in place social safety nets. There's a range of reforms required across developed and developing economies that we need to lift global growth. And a move towards market-based exchange rates is one of those reforms which the G20 is committed to and I'm sure it goes to the core of the structural issues that we're talking about here over the coming days.

JOURNALIST:

How do you keep it from becoming a sort of US versus China issue?

TREASURER:

Well it's a bigger question. It's really about how we deal with global financial imbalances. Dealing with global financial imbalances requires a range of reforms; it requires trade reform, it requires exchange rate reform, it requires reform over a range of areas of developed economies, it requires the lifting of domestic demand in developing economies. We've got to deal with all of those things if we're going to do something about the global financial imbalances which keep reappearing in the form that we've seen in Europe in recent times. The failure to reform in Europe over the last 30 years has put the Europeans in the position they are in now. The economies in this region need to keep the reform movement going across a range of areas, including exchange rates, including infrastructure, including lifting domestic demand, including building domestic social safety nets. We've got to keep up that pace of reform, because the Europeans are living with the consequences of decades of not reforming the essentials of their economy.

That's why this meeting is so important, dynamic economies here that have put in place over a period of time substantial reforms that have lifted living standards substantially. And we have to do more, we certainly have to do a lot more given the chill winds that are blowing out of Europe and the United States.

JOURNALIST:

Well how concerned are you about the situation in Italy?

TREASURER:

Everybody is concerned about events in Europe and events in a number of countries in Europe. All these events demonstrate the need for structural reforms. First of all, a credible fiscal consolidation plan to put their finances back on track; that's required in a number of countries across the Eurozone. Secondly, structural reforms in their economies to deal with retirement income systems and entitlement systems. These are well charted and well discussed.

What the global economy needs to do is to see these plans and a credible plan for their implementation, over the next few months and over the years ahead. When that is apparent to everybody we will see more certainty in the global economy.

JOURNALIST:

You going to have any time for a surf while you're here?

TREASURER:

Doesn't look like there's too much around today. I might just go for a quick dip and a swim. When I got up this morning I went out and had a quick swim.

JOURNALIST:

Personally, how are you being received by other Finance Ministers and Treasurers from around the world. You won the best Treasurer in the world earlier on and how are they greeting you personally?

TREASURER:

WWell I think I'm now the fifth longest serving G20 Finance Minister, I've been there four years. But there's been a lot comment from fellow Finance Ministers at meetings in both Washington and Paris about the Euromoney award. For my part, I think what it recognises is really the hard work of the Australian people over not just recent years, but over decades to put in place the fundamental reforms that have made us the strongest performing developed economy. And we've kept that reform effort up over the past four years, including putting through carbon pricing in the last couple of days. So I think fellow Finance Ministers recognise that the reform effort in Australia is somewhat of a beacon for other countries in the region and around the world.

JOURNALIST:

How comfortable are you with the Australian dollar sitting closer to parity now? Would a move to greater strength be welcome?

TREASURER:

I don't speculate about the path of the Australian dollar. I do talk about the various reasons why our dollar is strong. It tends to reflect the fact that among developed economies, our growth is strong. It reflects the fact that our terms of trade are high and it tends to reflect the fact that we've put in the hard yards over a long period of time to reform our economy. But in terms of its movements one day to the next, or month to month or year to year, I don't speculate about that.

JOURNALIST:

Do you think it's in line with fundamentals now though? (inaudible)

TREASURER:

As I said, I think when you look at the strength of the Australian dollar, it reflects the strength of our domestic growth relative to other developed economies, it reflects the fact that our terms of trade are still very high and it reflects that fact that many people and investors around the world now see Australia as a safe haven. Okay, thanks.