COMPERE:
The Assistant Treasurer saying that it should be up to individual consumers to decide if they'll buy Australian. Now, Senator Nick Sherry also saying there are still economic headwinds ahead and the Government's had no decision yet on just whether to lower its current forecast unemployment rate of eight and a half per cent.
Business Channel reporter Kai Chow speaking to Senator Sherry about the future lifting of the Government's bank guarantee, asking him if less government intervention would give those banks less incentive to act in the public interest and compete.
NICK SHERRY:
Well, I think what's important in this context will be the re-emergence of securitisation markets. And, you know, that will happen over time; I can't predict, you know, when that will occur, but they're an important - and have been an important component of competition in the markets in the past, before the financial crisis. So, now, that's one example of where additional competition pressure on the banks will emerge.
REPORTER:
This November, many are expecting the unemployment rate prediction to be revised downwards from 8.5 per cent; do you think we are headed in that direction?
NICK SHERRY:
Well, look, I recall the debate just over three months ago on the Budget, and the Budget was released and we were criticised by some for not projecting higher unemployment and the Budget projected 8.5. Now, I notice the debate has shifted and we're being - it's being suggested unemployment forecasts should be lowered by some of the same people who were criticising us three months ago.
Look, the - we update the Budget data during the release of the mid-year economic forecast which will inclu... which will be released in November.
Look, we've seen some better financial - better economic statistics over the last few months, certainly consumer credit spending, auto sales, house prices, have not fallen off a cliff in Australia as they have in many other countries. And that's thanks to the reactions of the Reserve Bank, it's thanks to our decisive action on the stimulus package, thanks to the bank guarantee; all of those decisive actions by government have helped cushion the economy during this period of time.
But it's too early to be revising forecasts. There's still - there are still some headwinds ahead, you know, there's still uncertainties in some major countries around the world. So some caution and no revision of forecasts until November, if, in fact, it becomes necessary.
REPORTER:
You've said that protectionism just isn't on; however, what do you think of campaigns to buy Australian that perhaps don't involve large-scale protectionist measures, for example, ones that are just communication campaigns encouraging Australians to buy Australian?
NICK SHERRY:
We've had Australian Made campaigns in a range of areas over a long period of time. That's appropriate. Individual consumers will make their decision based on their personal preferences.
But outright protection, you know, massive subsidies, barriers, walls, et cetera, just don't work. They might help in the short term, but once other countries retaliate, it spreads a downward spiral and it helped deepen and lengthen the Great Depression.
REPORTER:
Is there such a thing as a reasonable amount of protectionism?
NICK SHERRY:
Well, there are international agreements, international negotiations. My colleague Simon Crean is handling those. He's involved in the detailed negotiations there and what is allowable in terms of both bilateral and multilateral trade agreements. And, you know, Simon will continue to focus on those issues going forward for the - for Australia.
REPORTER:
Westpac has recently raised its fixed interest rates; is it reasonable, given the situation of their funding costs?
NICK SHERRY:
Well, as I've said, and the Government's said, in terms of raising fixed rates, we believe banks need to put the interests of the broader economy first, particularly in the current circumstances and...
REPORTER:
Ahead of their shareholders?
NICK SHERRY:
Well, we think it is important and it's in the interest of their shareholders that these actions have been described as selfish, and I agree with that, because at the moment it's cushioning the Australian economy against the impact of the worst worldwide recession in 75 years. And that is in everyone's interest, including the banks, obviously the broader Australian community, including the bank shareholders.