TREASURER:
Today's balance of payments for the September Quarter 2001 show that Australia recorded the lowest current account deficit for nearly twenty years. That is, our current account deficit has fallen as a percentage of GDP to 1.7 per cent. And that is the best result, the lowest deficit as a proportion of the economy since March of 1980. The current account deficit was improved by an actual surplus in trades on goods and services. That is, Australia has been running a surplus in its trading position. The deficit is lead by the fact that we remit income, particularly interest income, overseas. For the September Quarter exports were down as would be expected, as a result of the world economic climate, and imports also fell. But the resilience of the our exporters in keeping exports up as they have has lead Australia to be in a stronger position than nearly every other developed country in the world. I don't want to underestimate the significance of global developments. The United States economy is in recession, Japan is in recession, Europe is very weak. The world is facing a synchronised downturn as serious as we have seen for several decades. This has meant that it is hard to keep your exports up, but Australian exporters have in fact done magnificently over the last quarter. I pay tribute to them and the result in relation to today's current account deficit as a result is as good a results as we have had in Australia for twenty years.
JOURNALIST:
On another matter, Treasurer. You know the way the financial portfolios are structured in the third Howard Ministry, can you just explain how things work? I mean, what are the exact responsibilities of the Minister for Revenue, for example?
TREASURER:
The Minister for Revenue will be dealing with tax inquiries and will be dealing with those things that still have to be settled as a result of the tax reform. Most of it has been done in relation to the GST, and in relation to income tax and Capital Gains Tax, and company tax and Financial Institutions Duty. But there are still matters that are outstanding and queries and matters in relation to that will be handled by the Minister for Revenue.
JOURNALIST:
But oversight, do you oversight the Minister for Revenue or...?
TREASURER:
Well, I oversight the whole Treasury portfolio.
JOURNALIST:
What about the Minister for Financial Services, how does that work? What relationship (inaudible)?
TREASURER:
Well, there isn't a Minister for Financial Services.
JOURNALIST:
(inaudible).
TREASURER:
Financials Services are also part of the Treasury portfolio. That includes banking policy, it includes the Australian Centre for Financial Services, those sorts of things. Some of those I will be handling personally and some of them I will be delegating to other Ministers in the portfolio.
JOURNALIST:
You say synchronised global downturn. What do you see for the current account deficit going forward?
TREASURER:
We are now in a synchronised global downturn, and that means that everybody's exports are going to be effected, including Australia. The fact is if the American economy goes into recession, Americans have less money to buy Australian exports. If the Japanese economy is back in recession, the Japanese have less money to buy Australia's exports. Australia's exports will be effected by that. I wish it were otherwise. I wish the world were booming because then our exporters would have buoyant markets. But our exporters have been protected by some degree by two things. One is we have taken taxes off exports for the first time in Australia's history with the New Tax System, and that means that has reduced their prices. The second is the exchange rate has meant that they are very competitive in international markets. And so notwithstanding the synchronised world downturn, which is having an effect on our exports, our exports have held up remarkably well. Nobody could complain about the efforts of Australian exporters.
I pay tribute to them. And even in this difficult world situation we produce a surplus on our trade in goods and services and the lowest current account deficit in twenty years.
JOURNALIST:
Are you saying that the best is behind us in terms of the current account deficit?
TREASURER:
Well, at 1.7 per cent of GDP the lowest in twenty years, I don't think you can expect it to go that much lower. In fact, over the course of the last twenty years we have seen it as high as 6 per cent, more than 6 per cent.
JOURNALIST:
Treasurer, company profits are also somewhat down. Is that a warning sign?
TREASURER:
Well, company profits were down in the September Quarter coming off very strong growth in the June Quarter. I think that is consistent with what we think that the economy will slow somewhat through 2001-2002. Get this point clear, I have always said the Australian economy will slow in 2001-2002. The critical thing is, will we do better than the rest of the world which is going into recession because growth, albeit slower growth, is better than the situation where you have got recession say in Japan and the United States. So company profits have come off a bit, that is consistent with what we think to be a slowing economy. But on the other hand there does appear to be quite some strength in the Australian economy at the moment in two areas. One is retailers are reporting quite strong retail trades, consumption trade, and I notice that Woolworths, even Coles/Myer, David Jones are talking about strong profit expectations for Christmas, and I hope that is the case. The second is that the housing cycle just seems to be kicking in and that is giving a great deal of strength. What would you want if the world was turning down and it was becoming harder to export, you would want strengthening domestic economy, and you would want strengthening consumption, and a strengthening housing cycle. And we have got both occurring at the moment, just at the time that you would want it. So that looks as if it has got enough strength to take us through the Christmas period and into the New Year. And we hope that the United States economy and other economies around the world recover some time in 2002.
Thanks very much.