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

7 February 2012

Doorstop interview

Canberra, ACT

SUBJECTS: Australian economy; Liberal confusion on return to surplus; Joe Hockey's $70 billion budget crater announcement; bank competition; interest rates; floods; jobs

TREASURER:

Well, today is the first day of Parliament. It's really a time to focus on the big economic opportunities and challenges that lie ahead for Australia. There is a great deal of volatility out there at the moment but the Australian economy has great underlying strengths: we have low unemployment, we have contained inflation, we have a strong investment pipeline and of course we are bringing our budget back to surplus in 2012-13.

Yesterday I think we saw the latest instalment in the slapstick farce that is the Liberal Party's economic policy. We saw Mr Robb fail to commit to bringing the budget back to surplus, not just in 2012-13, but at any time. As you know Mr Hockey has already said there's a $70 billion crater in the Liberal Party's bottom line. So to see Mr Hockey last night on Q&A deny that he ever said it when he said that on Sunrise with the cameras rolling just demonstrates the slapstick farce of the Liberal Party's economic policy.

We've also got a bit more competition out there I think today, we see in the banking sector. We've seen the commitment from the NAB to keep its standard variable rate lower than the other major banks. We've now got a lot more competition out in the banking sector and I would say to everyone out there in Australia, shop around because you can do even better than the major banks in terms of the standard variable rate if you shop around.

The cash rate at the moment is 4.25 per cent. When the Liberals left office it was 6.75 per cent. If you've got a $300,000 mortgage at the moment, you're paying $3,000 less per year for your mortgage than when the Liberal Party was last in power. You can see the impact of our competition reforms in the banking sector right now and you can go out there and shop around and get better deals than those offered by the major banks, but it was good to see the commitment from the NAB today to be lower than any of the other major banks.

JOURNALIST:

But Treasurer it's pretty likely isn't it that not all the banks are going to pass on any interest rate cut today?

TREASURER:

Well, first of all let's wait for the Reserve Bank decision and then let's see what the major banks do. I've made my attitude very clear. I want to see red hot competition in the banking sector. That's why we've put in place the capacity for people who are not happy with their banks to walk down the road and get a better deal. That's what the banking competition package was all about when we announced it at the end of the year before last and it's now out there having a real impact.

JOURNALIST:

Is it possible that by bashing the banks…

TREASURER:

Look, can I just say I reject that language. I've seen this headline today. There's a story in The Australian. They didn't put any of the propositions that are mentioned in that story to me or to my office. So what I'm on about is a stable, strong, and profitable financial system. There's no doubt that's terribly important for the economy but one in which there is competition.

JOURNALIST:

But you do come out fairly often, fairly hard, when the banks don't pass on interest rates onto customers.

TREASURER:

Hold it. We've just had two rate cuts at the end of last year both passed on in full to their customers. That's the point I want to make and if you've got a $300,000 mortgage at the moment you're paying $3,000 a year less than you were paying when the Liberals were last in power. There is more competition out there. The standard variable rate, the average of the major banks, is 7.3 per cent. If you have a look around there are plenty of deals on offer which are less than that. That's the first point I want to make.

Now I know there are vested interests out there that are running all sorts of lines. I'm committed to a profitable, stable, banking system but a banking system in which there is strong competition and I'm not going to stop speaking out against the power of vested interests who want to talk their own book all the time. We can have a competitive, stable, profitable banking system which is competitive and that's what my objective is. Some people want to go out there and put labels on headlines. I'm the Treasurer of Australia, I represent all Australians, and I will speak up for all Australians when it comes to these important public issues.

JOURNALIST:

Treasurer, just with the flood (inaudible) what sort of impact is that going to have on the Federal Government's bottom line do you think?

TREASURER:

Well, you know, what gets lost in the economic discussion of last year was how strong our economy was despite the huge economic impacts of the floods, the huge impact on our growth and of course their huge impact on our budget bottom line. The floods last year, in total, are going to cost the Federal Budget $6 billion. They had a tremendous impact on our economy last year. They did impact upon growth.

Last year we had a combination of events. We had the floods in the south, then they spread to the west, then we had cyclone Yasi and it spread right across the state. It was the biggest natural disaster in our history. Now we'll just have to wait and see how this unfolds. I'm very concerned about it, but my prime concern at the moment isn't economic, it's for the people, that we deal with them in the recovery phase properly.

The deployment of the army this year like it was last year has been extremely effective. We've got the very hard work of the SES up in Queensland, and last year what was so important was the way in which all Australians pitched in.

I was up at Tully last week for a memorial service for the one year impact of Yasi. People were coming up to me and saying can you say thank you to all of those Australians who supported us, made donations, and have provided the public funds to make sure that this reconstruction goes on and we'll be there again for the people of western Queensland to meet their needs in the aftermath of these events.

JOURNALIST:

Treasurer, can you guarantee that you will deliver a surplus next year?

TREASURER:

I said we're determined to deliver a surplus in 2012-13.

JOURNALIST:

You can't guarantee it, can you?

TREASURER:

Look these silly games that people want to play. This Government is absolutely…

JOURNALIST:

It's not a silly game (inaudible) can't guarantee. You criticise them for that and you can't guarantee it. Isn't that exactly the same thing?

TREASURER:

No. I produced the documents. I produced a mid-year review which nails our flag to the mast. We are determined to bring our budget back to surplus in 2012-13 – words Mr Robb could not utter yesterday and the reason he can't utter those words is that Mr Hockey has said they've got a $70 billion crater in their budget bottom line before they make any commitments over and above the ones they've made now and then Mr Hockey goes on national television and denies he ever said it when he said it on Sunrise.

JOURNALIST:

Will you guarantee it?

TREASURER:

I am determined to produce a surplus in 2012-13. I'm determined to produce a surplus in 2012-13.

JOURNALIST:

So essentially returning to a budget surplus is more of a Tony Abbott aspiration rather than a commitment?

TREASURER:

No, we've got our colours nailed to the mast. That's what we're doing. We're producing a surplus in 2012-13. We're determined to do that and that's what we're going to do.

JOURNALIST:

Mr Swan, with jobs, some members in your caucus are concerned that companies that are receiving government grants are still axing staff. So how do you – what's your message to the caucus members who do have these concerns?

TREASURER:

Well, we're a Labour caucus, our first concern is always jobs. A central concern of economic policy through the global recession was to support jobs, employment and have good budget management. That's our central purpose now as we move through these volatile times and that's what we're doing in terms of our response, say to the auto industry where I think we've had good value for money over the years. I think that's pretty important and what we have to do is ensure we get good value for money in all of our industry programs and that's what we do.

JOURNALIST:

During the caucus briefing yesterday we were told that one Labor MP is concerned that an Australian company in his electorate is training, their staff are training call centre staff to just be shipped overseas. That's obviously causing concern.

TREASURER:

Yes and that was raised in the context of 457 [visas] and the Minister said he would examine it because it may well be, if that was what was going on, that was a breach of the law. So, as is always the case, if people raise these matters with us we will follow through with them and that's what we're doing. And if people have got issues they want to raise in these areas of course we'll follow them through.

Look we're a Labour caucus, our number one concern is jobs and I spoke at length in this discussion in the Caucus yesterday and I made the point that we have a strong economy. We do have a low unemployment rate of 5.2 per cent but there are stresses and strains in our economy at the same time which flow particularly from the higher Australian dollar. So we've got stresses in the auto industry, we've got challenges in the tourism industry, we've got challenges in the education export industry. All of those things can happen at the same time in an economy which is growing at trend but which is experiencing growing pains in other parts of the economy. Our task is to deal with both of those things. That's what our budget last year was directed to, putting in place a whole range of policies that meant we spread the opportunities of the resource boom to every corner of our economy and in particular making sure that those that were most disadvantaged in the labour market were getting a helping hand and a lift up. So there are a lot of measures in that budget designed at lifting labour force participation particularly in areas where there is still relatively high unemployment.

JOURNALIST:

How tough are you expecting this budget to be, the one coming up?

TREASURER:

Look it's really challenging. Our commitment to return the budget to surplus in 2012-13 is even more important in the environment that we've got in Europe. We're seeing the consequences of lax fiscal policy in many of those countries with the sovereign debt problems and the flowthrough effects there to the banking system. It's very important, it's very important that we demonstrate to the world our record of fiscal discipline which has been second to none over the past four years of this government.

JOURNALIST:

Would you like to see Peter Slipper in a wig?

TREASURER:

I don't think from my perspective it matters what the speaker wears. That's always been my attitude since I was first elected to the Parliament in 1993. I've seen some people in wig. I've seen some people in wig and gowns. I've seen some people in a suit and I've seen some people wearing a gown. So any one of those will do.

JOURNALIST:

Treasurer, do you agree with Nicola Roxon that Kevin Rudd should rule out any preference in taking up the leadership?

TREASURER:

Look, I dealt with these matters extensively on Sunday and I don't intend to add to them. I've said on many occasions that much of the commentary we've seen here is a complete beat up and I don't intend to add to it. Thanks.