TREASURER:
Well, overnight the US Federal Reserve cut interest rates by 0.5 of a per cent and that is in response to a very obvious and substantial slowing in the American economy. The American economy is the world powerhouse, and a slowing American economy means a slowing world economy, and that will have an effect on Australian. It has already had an effect to date. And I welcome the fact that the US Federal Reserve has moved so dramatically in response to American and world developments. Over the course of this year, it has now reduced interest rates in America by a full 2 per cent. Here in Australia, we have reduced interest rates by 1.25 per cent and weve also acted in a very substantive way here in Australia. But, what this means is that obviously it is going to be a challenging time for the world economy and for us in Australia, as challenging as our last big external event, the Asian financial crisis. It illustrates the importance of running good sound economic policy, a good Budget, structural reform, continuing with the tax reforms that the Government has been putting into place and a concentration on ensuring that fundamentals in the economy are kept strong.
JOURNALIST:
Do you think theres room for the Australian interest rate to come down further?
TREASURER:
Well, interest rates in Australia have now come down by 1.25 per cent. In the United States theyve come down by a full 2 per cent. And the reason why interest rates are coming down in both countries is that inflation is now no longer a problem and the world economy is slowing. It makes an absolute mockery of the farce that we have been getting from the Opposition. Theyve been running around talking about the GST as being the cause of the downturn. I presume Mr Beazley will be out today saying that GST has caused the downturn in the US economy, or Alan Greenspan has been reducing rates because of the Australian GST. Populists, cheap populists like Mr Beazley get found out when there are significant international events. And hes been found out by this. The fact of the matter is, that the US economy is slowing, the world economy is slowing, that is affecting Australia, it is affecting our region and it illustrates the importance of good economic policy - not giving the game away and lapsing into cheap economic populism.
JOURNALIST:
(inaudible) that Australia could be heading towards a recession?
TREASURER:
Well, what weve seen in Australia is an incredibly strong economy over the last 4 years notwithstanding the Asian financial crisis. We are seeing now another great challenge. But, I think that the Australian economy can weather this external challenge. The Reserve Bank, in its recent statement said there are two threats to the Australian economy - one is the world situation and the other is an attempt by cheap domestic political opportunists led by the Labor Party to try and affect confidence. And I would urge the Australian public and Australian business to ignore the cheap political opportunism of the Labor Party. They think if they can talk Australia down enough, it will become self-fulfilling. I say ignore that. We can face external challenges. We did it in 1997 and 1998 with the Asian financial crisis. We can do it again.
JOURNALIST:
Motoring organisations are renewing their calls for a Government inquiry into the volatility of petrol prices? Whats your response?
TREASURER:
Well the principal reason for high petrol prices, and we all know it, is the world oil price. You dont need an inquiry to discover why petrol prices are so high. Its because the world oil price is so high. And the Government has done its bit. Weve cut excise again by 1.5 cents. The States could do a bit. They could cut their petrol excise. None of the State Governments cut their petrol excise. They have capacity to cash out an 8.2, an equivalent of 8.2 cents, they have a capacity to cash out the equivalent of 8.2 cents of petrol excise. They do it in Queensland, so I should exempt Queensland from this, but none of the other States do it. And thats a pity. But the Commonwealth Government has done its part. It cut petrol excise and the principal reason for the high oil price now is world oil prices. Now weve got to make sure that we keep the petrol stations in Australia honest and we have the Australian Competition and Consumer Commission doing that. But until you see that world oil price come down, youre not going to see substantive long term relief at the petrol bowser.
Okay, thanks.