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

11 November 2011

Doorstop Interview

APEC, Honolulu

11 November 2011

SUBJECTS: APEC, Global Economy, European and Italian Economies, Commonwealth Games, Plain Packaging, Australian Economy

TREASURER:

In the last 24 hours I've had meetings with many of the economies represented here at APEC. There are a couple of things that really stand out. Just about every economy here has been impacted by the events in Europe. And I think because of that, nations represented here absolutely understand that you need to do the hard yards of fundamental reform to keep your economies in good nick. The global economy is paying a very high price from the failure of the Europeans to reform their economies over a long period of time. What really distinguishes this region has been the fact that many economies here are dynamic because over a long period of time they have put in the hard yards of fundamental reform and that is really what APEC is all about - the fundamental structural reforms which lift the productive capacity of economies of this region, which gives these economies the power to lift living standards.

What we're seeing in Europe is the failure of governments there to do that over a very long period of time. All of my colleagues are dismayed by the events in Europe. There's a real determination here for our voice to be heard in European capitals, but most importantly, for us to put in place the long-term reforms which will allow growth to continue and to lift living standards in this region.

Because really, at the end of the day, what is growth all about? It's about lifting living standards, it's about jobs, it's about good jobs with a good standard of living, and you can only do that if you pay attention to the basics and get the reforms right for the future. Over to you.

JOURNALIST:

(inaudible) people waking up today and seeing the volatility going through the markets. They'll have anxieties about their own superannuation and so on, a sense perhaps that it's not going to be over quickly. What can you say to people to reassure them that there's anyone really at the wheel?

TREASURER:

Well the fact is we are in a world economy which is global and everybody is affected by events in Europe. The volatility we've seen in the last 24 hours does transmit to economies right around the world, even economies like ours which are in good nick. When you have an impact on the share market, you have an impact on retirees, you
impact across the board – it has an income effect, it has a wealth effect. That's why everybody has got an interest in ensuring that the Europeans actually get their act together, because we are all interconnected in this global economy.

JOURNALIST:

What's your advice to Europe in the immediate term?

TREASURER:

Well - sort it out, get your act together. At the end of the day the Europeans have to deal with their challenges in Europe. But from our point of view we've all got an interest in ensuring that the Europeans not only get their act together, but that we have a set of global arrangements which support global growth. We need growth to create the jobs, to lift the living standards, to bring people out of poverty, but also to ensure that peace of mind that we were talking about before.

JOURNALIST:

Will you be reviewing Australia's growth outlook given the dramatic cuts to EU growth forecasts (inaudible).

TREASURER:

Well we've already said that lower global growth means lower growth in our region and lower growth at home. But fortunately this region is in a much stronger position than Europe or the United States. We're not immune from the fallout, we just talked about that. But essentially lower global growth impacts across the board and this region is not immune from events in Europe. The problem we've got at the moment is...

JOURNALIST:

...Australia's growth (inaudible)

TREASURER:

Well we'll update our forecasts in the normal way at the end of the year. But I want to make this point: when you've got two of the big economic engines in the global economy continually misfiring - that is Europe on one hand and the United States on the other - that has an impact on even dynamic regions like ours.

JOURNALIST:

The Trans-Pacific Partnership is a big issue being discussed at this meeting. How important is that to Australian trade?

TREASURER:

Well reform of our trading system is very important for a great trading nation like Australia, so I hope to see progress there at this meeting. But it's not just what we're doing in terms of trade, it is also what we are doing and discussing about investment and infrastructure in our region more broadly. It is also about how we fund that infrastructure, investment flows in the region - all of these items are on the agenda today and they are an
important part of making sure this region is as dynamic as it possibly can be.

JOURNALIST:

In the meetings that you've had so far, what's the mood been among the Ministers? What sort of attitude do they have to what's happening in Europe and how it affects us?

TREASURER:

Well I think many Ministers are dismayed by the events in Europe. We've been talking about these issues for 18 months. These issues have been on the agenda, it's not as if they've snuck up on anyone, and people are dismayed at the failure of the Europeans to get their act together and deal with these issues. I think what it does do, here amongst Ministers, is give Ministers a steely determination that in this region, we can do much, much better than they've done in Europe by putting in place the fundamental reforms that are required to strengthen our economies and build in the resilience.

The great thing about the Australian economy has been some pretty fundamental reforms over 25, 30 years continuing now under this Government with carbon pricing which builds in a resilience into our economy.

JOURNALIST:

Would you have welcomed Japan to the negotiation table [inaudible]?

TREASURER:

Well certainly, but we'll have to wait and see.

JOURNALIST:

Is there anything that APEC can do in a practical sense in a unified way to pressure Europe to get its act together?

TREASURER:

Be quite loud about our views. I mean the Europeans do respond to external discussion and I think it's really important that countries here are very firm with the Europeans. We have been for some time. We've got to keep that pressure up because the stakes are really high.

JOURNALIST:

The question I originally put to you was what can you say to people to assure them that in fact there is someone with hands on the steering wheel. You've outlined the problems, but is there a risk that in fact Europe is going to blather on as it has done for 18 months failing to address [inaudible]?

TREASURER:

Well is there a risk of that, which is why we have to be absolutely focussed on strengthening our economies in this region, that we can't rely on Europe or necessarily the United States into the future. And in terms of Australia, we've been getting on with the job of reforming our economy and building resilience and strength in our economy, which is why our economy is much stronger now in these circumstances. For example, I mean we've come out of the global financial crisis and the global recession in much better shape than just about any other developed economy in the world. We've got to continue to do that

JOURNALIST:

But are you saying there is a risk of European failure? That remains a real risk?

TREASURER:

Well clearly the Europeans are still grappling with their problems and they haven't necessarily got a firm grip on all of these challenges, and we need them to get a firm grip on these problems and get cracking on the solutions.

JOURNALIST:

How much worry is France now the spread between German and French (inaudible)?

TREASURER:

Well you've just demonstrated why this is a concern because every day that these matters run and they are largely unaddressed in terms of political and economic leadership, you get a new story which further undermines certainty and confidence. That is why the Europeans have really got to get their act together.

JOURNALIST:

There's been some market commentators in Australia suggesting that what's been happening could mean the Reserve Bank could cut interest rates by 50 basis points. Do you think that would be a good thing?

TREASURER:

Well I don't speculate about what the Reserve Bank does except to make the point that when it comes to, if you like, a range of polices to respond to global uncertainty and volatility, there is room to move in Australia when it comes to both monetary policy and fiscal policy.

JOURNALIST:

How much room on fiscal policy though, Mr Swan? You can't find too much fiscal stimulus can you?

TREASURER:

Well the Government has a proven track record of dealing with global volatility and instability and we will act in a responsible way should we be required to act. But I don't speculate about that.

JOURNALIST:

Commonwealth Games decision tomorrow. Do you hold high hopes for the Gold Coast?

TREASURER:

Well, very high hopes it will be a great decision for the Gold Coast, a great decision for Queensland and a great decision for Australia.

JOURNALIST:

(inaudible) plain paper packaging, it finally went through the Senate last night, but the tobacco companies say right, there off to the High Court. Is the Government concerned that a High Court challenge could undo that? Could it be costly for them?

TREASURER:

Not at all. We're prepared to take on big tobacco.

JOURNALIST:

You sound fairly confident about the Gold Coast?

TREASURER:

Fingers crossed.

JOURNALIST:

Just one final question, with the recession in Europe, does that put back the free trade agenda in the Asia-Pacific?

TREASURER:

No, in fact we should re-double our efforts when it comes to trade because of what's happening in Europe. That is one very concrete action that can be taken which has got the capacity to lift global growth. That is why, that is one of the structural reforms I was talking about before. We've got to make progress on trade. We've also got to make progress in many economies in what they call "behind the border" reforms. We need both, and the weaker Europe is, the more important is that we in this region get on with the job of putting in place the reforms which will lift growth and therefore lift global growth.

JOURNALIST:

You were talking before about having room to move in terms of fiscal policy. But doesn't that jeopardise your budget surplus promise?

TREASURER:

Well what we are putting in place is the fiscal policy which we outlined some years ago. What we are absolutely committed to do is to ensure our economy grows, we do it in a responsible way and we do it in a way where fiscal policy is appropriate to the circumstances of the time. Thanks.