JON FAINE:
Yesterday, the Australian dollar reached 99.2, it settled at 99.14 overnight and coming as it does at the same time as unemployment figures, suggests that we're approaching five per cent unemployment and the prospect of what's generally regarded as full employment, the economic future is as exciting for some as it is scary for others. Bill Shorten is the recently promoted Assistant Treasury in the Federal Parliament and in the Gillard Government. Bill Shorten good morning to you.
BILL SHORTEN:
Good morning Jon.
FAINE:
When does the Australian dollar reach parity?
SHORTEN:
Oh I don't think it's appropriate for me as a member of the Government to speculate about the fluctuations in the dollar, so I can't say Jon. But what I can say is that clearly our economy relative to a lot of the rest of the world is very strong, that's why people are investing in Australia and that's why we're seeing our dollar being more popular around the world.
FAINE:
What does it mean then when we reach parity whenever it might be? There's little doubt it's going to happen now.
SHORTEN:
Well the dollar does go up and down ever since, and it was a Labor Government who took the hard decision to float it, Hawke and Keating back in the early '80s. What it means is that our dollar floats up and down and it can go up - it could go up further and it will go down in the future.
What I think it means in the short term with our dollar being 99 cents or 95 cents or $1 US, it means that our economy is working well. It means that in particular you'd have to say the mining sector is attracting a lot of capital from the rest of the world.
As our currency appreciates and goes up, it does mean that some of the mining boom is getting spread across the whole of the economy because as the Australian dollar can buy more, more households in Melbourne and Sydney can get better bargains in terms of what they buy from overseas, imports. So it does mean that we - the whole economy benefits from the rising dollar.
FAINE:
The risk is though we're seen as a one-trick pony. In other words the economy has only one dimension to it, and in fact we put all our eggs in the China commodities basket.
SHORTEN:
Well we are where we are. Australia's a small country. You know, we're not like the Netherlands or Denmark nestled in the sort of the - the bosom of Europe. So we have distance as an issue. We're not like Canada...
FAINE:
Are you comfortable being dependent on China?
SHORTEN:
Well I think it's a good thing that there is a demand in rapid growth in China and India. I think that's to Australia's good fortune.
FAINE:
For the moment.
SHORTEN:
That's right and you know, it means that down the track the dollar can go down. Demand for our resources can diminish over time. It looks like, I have to say that the Chinese and India growth rates will be pretty significant.
I tell you, we could be in a lot worse position Jon. If you look at the unemployment numbers for September as you alluded to, we're at 5.1 per cent or put another way, in human terms, 50,000 extra people went home in September and were able to tell their families that they had a job. In the last 12 months there's been 360,000 jobs created.
Now that's the operation of the private sector and the government together but 80 in every 100 of those news jobs created over the last 12 months have been full time jobs. So I actually think the economy is stronger than just the dependence on India and China but you know, we, for once, our distance from Europe and America and our natural resources is playing in our favour.
FAINE:
How do you avoid inflation and how do you avoid wage claims as unemployment drops and you reach notional full employment at below five per cent? Your former colleagues in the trade union movement would be pushing for wage rises. That leads to inflation and that becomes catastrophic.
SHORTEN:
Well there's any number of questions in that so I'll try and take it one at a time. Interest rates are set by the Reserve Bank. The Reserve Bank is independent of government. The Labor Government - Labor in government has supported an independent body setting interest rates so to some extent what happens in terms of interest rates and inflation, that's controlled by independent bodies from government.
What I do know a Labor Government can do is it can put in place better infrastructure, so that people can get their product to ports and get them - get them moving from Australia. We're doing that. I do believe that the best thing this country's got going for it, one of its sources of natural advantage, along with its natural resources, is its people. That's why spending money on our school infrastructure is good for kids, so they have better environments to learn in.
FAINE:
Yes but are you prepared to take on your colleagues in the trade union movement when they start pushing for wage claims?
SHORTEN:
Oh okay, lets got specifically to wages. I think that one of the interesting levers which can help diffuse inflation going forward is superannuation. Superannuation means of course that people don't get the money now but rather than contributing to or seeing that eaten up by inflation or interest rates, they save this money, it gets concessional treatment in the tax system, so you're only paying 15 cents in the dollar on it.
And I think that what the Government's put in place to encourage superannuation moving from 9 to 12 per cent will have a dampening effect really on wage growth...
FAINE:
Okay well whether that will..
SHORTEN:
...and also therefore inflation.
FAINE:
Whether that satisfies wage claims we'll have to wait and see. It will be an interesting negotiation. Thank you for your time this morning.
SHORTEN:
Great, good morning Jon.
FAINE:
Bill Shorten the Assistant Treasurer in the Federal Government.