JOURNALIST:
Treasurer, just quickly, the secondary boycott provisions in the ACCC, can you explain just briefly how that will work?
TREASURER:
The Government is going to amend the Trade Practices Act so that the Australian Competition and Consumer Commission can take representative actions – that it can take an action on behalf of all Australian farmers if somebody tries to boycott their wool. An example of this has recently been the group which is trying to organise a boycott of Australian wool because it is protesting about mulesing. That of course would affect all Australian farmers. We are going to amend the law so that the ACCC can bring legal action on behalf of all Australian farmers against those that are trying to boycott their wool and boycott their wool on these spurious grounds. Mulesing is something that is done because otherwise sheep could suffer flystrike which would be more painful, which would be more exploitative, and to empower the ACCC to look after Australia’s farmers against these groups is a benefit to all wool growers in Australia.
JOURNALIST:
Treasurer, on interest rates, does it surprise you that the Reserve Bank hasn’t even begun to think about cutting interest rates even after the fourth quarter CPI numbers?
TREASURER:
Well, we have set an inflation target for interest rates to be directed towards and the inflation target is 2 to 3 per cent. Now the indications are that on underlying basis inflation is within that band, and looks like it will stay within that band through 2007-2008. So the important thing is that we keep inflation in that band because that is the target that monetary policy is working towards.
JOURNALIST:
Does it concern you that they haven’t ruled out another rise in interest rates?
TREASURER:
Well monetary policy will be set according to economic conditions as they arise, and the good news is that inflation is within our target and if we keep it there that will be good for the Australian economy.
JOURNALIST:
Is Glenn Stevens right to say that it is too soon to rule out, to declare victory over inflation?
TREASURER:
Well certainly inflation has moderated from the position that it was last year. In an underlying sense it has come back within our band. Now bear this in mind, that inflation will go up and it will come down, it is the average over the cycle that we are targeting and we want the average over the cycle to be between 2 and 3 per cent.
JOURNALIST:
What about his warning not to go on a spending spree in the lead up to the election?
TREASURER:
Well I think it is very important that we keep our budget balanced. When I became Treasurer of course, we use to run huge deficits, that was the Labor way and we had to balance the budget and we had to re-pay Labor’s debt. We don’t want to go back there, we don’t want a Labor Party that would take the budget back into deficit and run up debt again.
JOURNALIST:
With economic growth well below three, does it surprise you that they are still talking hawkishly?
TREASURER:
Well look, you heard the Governor yesterday, he can speak for himself.
JOURNALIST:
What about the grants, WA stands to lose $1 billion in Federal Government grants over the next four years because we are doing so well within our own economy, it seems like we are the victims of our own success?
TREASURER:
Western Australia has received a subsidy out of the GST pool for 20 of the last 27 years, and for seven of those years has been a donor. The donor states, which are principally New South Wales and Victoria, enable the recipient states, which are principally South Australia, the Northern Territory and Tasmania, to provide a level of national service which is equivalent. Now WA has been a recipient state for 20 of 27 years. WA is no longer a recipient state, it will be a small donor state. And principally that is because WA doesn’t need to be a recipient, it doesn’t need donations from the other states because WA’s finances, particularly with a booming property market, are on a much stronger basis.
JOURNALIST:
On the single desk, you have urged the likes of the PGA to keep on contributing their thoughts and to effectively eliminate the likes of single desk, you seem pretty encouraging of that kind of train of thought.
TREASURER:
I think the PGA has had an important role in the policy debate, they are supporting freer and more open trade and I urge them to continue making their voice heard in Canberra.
JOURNALIST:
On the boycott provisions, does that bring us far ahead of international standards or does that just bring us into line? How aggressive are these new changes?
TREASURER:
Well at the moment any individual could take an action to stop the boycott. But you see an individual farmer might not be that affected and an individual farmer may not have the financial ability to bring the action. So what I am announcing today is a provision to allow the ACCC to bring it on behalf of all farmers so they could recover compensation on behalf of all farmers, which is going to be a much greater loss, and they can pay the costs of the action on behalf of all farmers, which will mean that they have got greater capacity to bring the action. It is a representative action.
JOURNALIST:
Does this stop freedom of speech?
TREASURER:
No. As I said Martina Navratilova and Pink will still be able to attack Australian wool as they do, ignorantly – it is just that people who organise boycotts, which costs farmers money, won’t be able to continue with their boycotts. You can say what you like, you can be as ignorant as you like and I think Martina Navratilova and Pink, when they campaign against Australian farmers, are ignorant. There is no law that is going to stop ignorant commentary but there will be a law which will allow the ACCC to stand up for Australian farmers where they suffer from a boycott.
JOURNALIST:
The State Nationals have been lobbying Mark Vaile to kick in a tax flow-through share scheme, has Mark had a word to you about that at all? Is that an issue you would like to consider?
TREASURER:
Look, I have had many representations over the years in relation to all sorts of tax matters including that one and we receive them all.
JOURNALIST:
Treasurer, are you comfortable with the idea that the Reserve Bank reserves the right to change interest rates at any time it feels during an election year?
TREASURER:
Well I put the Reserve Bank on an independent footing and it is my agreement with the Governor that governs monetary policy and I think it has been one of the great successes of Australian public policy. Thanks.