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

19 April 2012

Doorstop interview

Washington

SUBJECTS: G20 Finance Ministers and IMF meetings; strength of Australia's economic fundamentals; returning the budget to surplus; RBA charter

TREASURER:

I'm here today to talk to G20 Finance Ministers, to meet with political leaders, to meet with Finance Ministers from the IMF and other regulators. As the IMF has said, global growth prospects have improved a little but there are still big challenges ahead. The good news in the IMF forecast is that growth in the Asian region is strong and of course their forecasts for Australia are also strong.

The fact is that growth in Australia is around trend, according to the IMF, but the most important thing when you look at the IMF forecast is that growth in Australia will outperform every other major advanced economy. That's a very good result for Australia, particularly given the headwinds in the international economy.

The Australian economy is 7 per cent larger than it was prior to the global financial crisis. Here in the United States their economy has only just got back to the starting line prior the global financial crisis. In the UK for example, their economy is 4 per cent smaller than it was prior to the global financial crisis. So the outlook in Australia compared to other major advanced economies is very good but of course there are uncertainties in the global economy and that's one of the reasons that we're here for this meeting.

There will have to be important decisions taken by the IMF about the resourcing of the IMF; resourcing which is absolutely essential to prevent contagion from Europe should support be necessary. That's one of the matters that will be discussed at length here with the Finance Ministers, over to you.

JOURNALIST:

Is the Opposition right when it accuses the Government of trying to con the Reserve into lowering the cash rate?

TREASURER:

Look, this is just absurd. The fact is that the Opposition is out there talking down the Australian economy every day. They have even been out there talking down the growth figures in the IMF forecasts.

The fact is that the Government is determined to bring the budget back to surplus in 2012-13. We're doing that because there is uncertainty in the global economy and a surplus is the best buffer against that global economic uncertainty and we're also doing that because it gives maximum flexibility to the independent Reserve Bank to take rates down, should they make that judgement. That's why we're coming back to surplus in 2012-13, another indication of the relative strength of the Australian economy, given the global uncertainty and very important I think to send a message to the world that the public finances in Australia are in good shape, much, much better shape than any other major developed economy or many other developed economies.

JOURNALIST:

Why isn't the Government's determination to return to a surplus a big risk, given the sluggish economy and increasing numbers of jobless?

TREASURER:

Well, this Government has got all the big economic calls absolutely right. We moved to stimulate the economy back in 2008, 2009. A consequence of that has been the creation of something like 790,000 jobs in Australia in the term of this Government. Compare that to what's occurred elsewhere in the developed world, 27 million jobs have been lost. Here in America the unemployment rate – 8 per cent plus. Look to Europe – unemployment rates at 20 per cent, youth unemployment is higher than that in many other developed economies.

The fact is bringing the budget back to surplus sends a very clear message to the world that in an economy which is growing around trend, where the unemployment rate is 5.2 per cent and where there's an investment pipeline of something like $450 billion in resources, coming back to surplus is the right thing to do.

JOURNALIST:

Is it time for the Reserve to focus more on jobs rather than containing inflation?

TREASURER:

What the Reserve does is that it makes its judgments independent of the Government. What the Government does is put in place very sound fiscal policy and during the global financial crisis we move to stimulate the economy, we avoided a recession, we supported jobs, we supported small business. The consequence of that is that our economy is 7 per cent larger than it was prior to the global financial crisis. Now that the economy is returning to trend growth, or around trend growth, the appropriate thing to do in those circumstances is to have a budget surplus.

JOURNALIST:

You're at the White House. Have you had a chance to see the President?

TREASURER:

Well, I saw a gathering in the distance as I walked up here before. I gathered he was at the hotel next door but I haven't seen the President but I will be seeing Mr Geithner, seeing Mr Bernanke and I will be seeing many other people while I'm here.

JOURNALIST:

Can I just ask, is it at all time to revisit the understanding between the Reserve and the Government?

TREASURER:

No, I believe that the understanding, the charter if you like, that we have given to the Reserve Bank is appropriate.