Journalist:
(inaudible) …this with Centro have wider ramifications for the economy?
TREASURER:
Well I don't propose to comment on the performance of any individual company. Both the Government and regulators in this country are watchful and alert. We have a strong financial system and we have world class regulators.
We have a first class RBA. We have ASIC. We have APRA. They are all watchful and alert.
Journalist:
Are you worried about (inaudible)?
TREASURER:
Well, the fall out from the sub-prime issues in the United States reminds us that we are all involved in a global economy, but those issues in the US are not directly issues which we're experiencing in this country.
We will experience second-round and third-round effects from what is occurring in the US because we do operate in a globalised economy.
Those companies which are exposed directly in terms of their borrowings in the US market will of course feel these effects more than others.
Journalist:
So, there's already evidence that there have been more homes repossessed in Australia and other fallout whether it's direct or indirect. What can the Government do?
TREASURER:
There is no doubt that Australians are highly geared, but we have a world-class set of regulators in this country and we are not experiencing the sub-prime issues that have occurred in the United States.
Journalist:
Do we need to spend a little less … (inaudible)?
TREASURER:
Well there's no doubt that – as I've said yesterday – that we in this country in terms of government need a new era of fiscal discipline. Yesterday and last week I talked about the inflationary challenge. And certainly what we must do as a Government is put maximum downward pressure on inflation and maximum downwards pressure on interest rates in the long-term. That's why we need a new era of fiscal discipline.
But I also made the point that we must address the twin investment deficits in this country. We've got a skills shortage and we've also got infrastructure bottlenecks. It's very important we modernise government expenditure so we invest in those areas which enhance the productive capacity of the economy which in the long-term puts downwards pressure on inflation.
Journalist:
What about households. It's not a popular message, but do Australians in households – individuals – need to spend less?
TREASURER:
I think what Australians understand is that they have to be prudent with their budget. There has been upward pressure on interest rates arising from the inflation legacy that this Government has inherited, which is why facing the inflation challenge is a very significant priority for us.
Journalist:
Are you concerned at all that the jitters felt in the property sector on the share market will go wider?
TREASURER:
I think what we have in this country is a very strong financial system, but of course we do operate in a globalised economy. What we are seeing is some of the fall-out from the issues to do with the sub-prime issues in the United States.
Journalist:
(inaudible)
TREASURER:
I'm not going to speculate on what will happen in individual companies but I think by and large the Australian corporate sector is healthy, but our regulators remain watchful and alert.
Journalist:
Have you been in talks with the regulators just to check… (inaudible)?
TREASURER:
I've been in discussions with the regulators since I became Treasurer some weeks ago, and I will continue to do that. The Government and the regulators are watchful and alert.
Journalist:
Are they confident?
TREASURER:
All the advice that I receive is that we have a very strong financial system. The fundamentals in Australia are sound, but there are of course some consequences that will flow from issues in the United States.
Journalist:
Have you had any talks about these latest developments…?
TREASURER:
I'm not commenting on any individual company in terms of what may be happening with that company.
Journalist:
There's a report out today showing that more Australians are dipping into their super to bail themselves out of failing mortgages. How concerned are you about that?
TREASURER:
I haven't seen that report so I couldn't comment on it.
Journalist:
Where do you stand on that issue – people drawing on their super early?
TREASURER:
Well, there are some very strict rules which govern that, so I'd have to see that report before I could comment on it.
Journalist:
Can I ask now you're in government what role Rod Eddington will have?
TREASURER:
Well he's the chair of our Business Advisory Council and we'll be making some further announcements about that later on.
Journalist:
What will he be doing?
TREASURER:
Well we'll talk about that when we make those announcements.
Thanks