The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of David Bradbury

David Bradbury

Assistant Treasurer, Minister Assisting for Financial Services & Superannuation and Minister for Competition Policy & Consumer Affairs

5 March 2012 - 18 September 2013

Transcript of 06/06/2012

NO.052

Interview with Steve Price

2GB Nights

4 June 2012

SUBJECTS: Stock market, Joe Hockey's comments, Nielsen poll

STEVE PRICE:

Joining us on the line the Assistant Treasurer David Bradbury is good enough to join us again. Does what happened today Minister put another dent in your bid to have a surplus budget next year?

DAVID BRADBURY:

Well look I think it's important to take these things one step at a time and obviously there is a fair bit of global instability. The forecasts upon which our budget has been framed do take into account this sort of volatility and certainly a slowing of growth in Europe. But the important thing for people to remember is what underlies and underpins the Australian economy are some very strong fundamentals and they are the sorts of things that hold economies in good stead in times of challenge and these fundamentals go to things like low unemployment, the fact that we have been growing, one of the few advanced economies that has grown significantly since its pre-GFC levels, we have inflation contained and of course we have a very strong pipeline of investment coming in to Australia as well.

PRICE:

Some people today are suggesting that we might be looking back to a 2008 type collapse, is that an exaggeration in your view?

BRADBURY:

I think people should be very careful in making these sorts of comparisons. For a range of reasons I think there are many factors that are very different at this point in time but clearly there has been a significant correction on the stock market, certainly the figures we have been looking at have been significant. I think we really do need to make sure we're focussing in on the underlying strength of the Australian economy and people aren't falling for the temptation of talking down the economic situation. Whilst there are challenges globally, to be frank we have a strong track record when it comes to confronting these challenges and I think it's important for people to focus in on those underlying fundamentals which as I say continue to be very strong.

PRICE:

News.com is reporting tonight, a month of carnage on the market, wiped nearly $8,000 off the average Australian households assets, I mean those sorts of figures are very alarming for people. Everyone has got super, most people, a lot of people have a mortgage, I mean it's pretty grim.

BRADBURY:

I think we have to be careful not to be talking ourselves down into a more serious situation than perhaps what we might be facing. That's not to say that this isn't troubling. Of course it is troubling but in terms of movements on the stock exchange and how that impacts on people's superannuation, well obviously those people close to retirement age will be taking a very and a more keen interest in how these movements might be impacting on their superannuation assets. But of course for those within the population that are some time off retiring, you've got to be very careful not to be monitoring the day by day movements on the stock exchange. Ultimately what you need to be focussing in on is where you might be in some future point in time. So whilst I think clearly what is occurring is tremendous volatility that of course will make many people nervous but it's important in times like this to reflect upon the underlying strength. These are big challenges that we're facing here in Australia and abroad, but if there was one place in the world that I'd want to be when taking on these challenges, it's here in Australia.

PRICE:

If you had your timing over again would you rather that you weren't introducing a carbon tax in four weeks' time?

BRADBURY:

Reforms of this nature are always going to require some lead time, and that's important because you have to give people the opportunity to make the changes that are necessary. But what we are talking about with the carbon price is not a dramatic overnight change to the economy...

PRICE:

But it does put a dent in the optimism you're talking about, the optimism of businesses, of directors of boards, of people doing forward investment. It's just another niggle isn't it?

BRADBURY:

I think the big structural reforms that economies need to undertake are matters to be confronted. In terms of the timing of those, you have to give people plenty of notice. I think that it's fair to say that there is very much a concerted campaign to scare people when it comes to the introduction of the carbon price, and that of course is having an impact on confidence.

PRICE:

The last time we had a downturn like this, your government decided that they needed to inject a whole lot of cash into the economy, Kevin Rudd was Prime Minister, everyone got $900 and they went out and spent it. You're not going to do that now because you need a surplus. So we're in a similar situation but you're going to introduce a carbon tax, a new tax, and not give people money.

BRADBURY:

Well we should be careful about making comparisons with the Global Financial Crisis with what we're experiencing today. As significant as it is we are not experiencing the same sorts of credit and liquidity challenges that were being faced at that point in time. I think that what was being experienced was of a different nature so it's important to make that distinction. But more broadly on the point of whether or not the budget being more contractionary at this point in the cycle is appropriate or not, I think it's important to recognise we still have plenty of room as far as monetary policy is concerned, and we have ensured in returning the budget to surplus, in making the savings necessary that we've given the Reserve Bank the room to move to make any future decisions it may choose to make. But equally, the introduction of the carbon price, let's not forget that there will be many families that will be receiving more assistance than what is expected to be the impact on their budget by the carbon price. Now I know there are plenty of people out there that are sceptical of that, but they will see as the money starts to flow, and they'll also see that the actual impact of the carbon price is not as dire as people have been suggesting. I see today Tony Abbott has been out there...

PRICE:

Well I was about to bring that up, you must be pleased you had Joe Hockey today saying this is where he'd rather be if there was a financial downturn anywhere in the world.

BRADBURY:

Well they are responsible comments, but it's about time. That's the point I'd be making. Tony Abbott and Joe Hockey have been relentless in their attempts to talk down the Australian economy. The one thing I'd say to Mr Hockey though is don't just go on to Bloomberg and tell that to an international audience, reaffirm the positive messages the government has been making about the underlying strength of the economy. But of course Tony Abbott made this comment today where he said the carbon price won't be like a striking cobra, it will be like a strangling python, it will take much longer and it will be a tight squeeze over time. I think we're seeing a really significant departure in his rhetoric which means that he understands that when we hit 1 July, the sort of apocalyptic proclamations he has been making, you know, Whyalla will be wiped off the map, and every item in the grocery store will go up by a ridiculous amount of money. These things are not going to come through, he will be somewhat exposed when that happens and now we see him with these weasel words trying to squirm his way out of that position.

PRICE:

Well talking about people being wiped off the map, if you look at the Nielsen poll in the Herald today, 26% primary vote David, you wouldn't have your seat.

BRADBURY:

I'm sure that would be the case and there are plenty of people that have survived from election to election who on various occasions throughout the Parliamentary term would've been wiped off the electoral map. But in the end we've got both a responsibility to govern for the long term, and to stay focussed on the challenges the country faces. To be frank, there's a lot of numbers being provided to me in briefing notes on days like today and the Nielsen poll is certainly not amongst the most important. When you look at the figures in terms of what's happened on the stock exchange, if you look at the data that needs to be assessed right across the globe, we've got some real challenges. I'd just make this point, the interesting thing that Joe Hockey did say today that I agree with is he said look at all around the world at the moment, these are difficult times to govern, there aren't many governments that are getting a big tick of approval from their people and that's because these are incredibly difficult times to govern. With that said, we're focussed on doing the things we said need to be done, and we're going to get on with the job and these challenges keep coming our way but we'll do the best we can to confront them.

PRICE:

Ever the optimist, are you optimistic about a rate cut from the Reserve Bank tomorrow?

BRADBURY:

Well of course Steve, I don't comment on the Reserve Banks thoughts.

PRICE:

I can only but try David, I can only but try, we'll wait and see what they do during the morning. Thank you David, good on you.

BRADBURY:

Good to talk to you Steve.