TREASURER:
Today’s Reserve Bank decision is a welcome reprieve for working families who’ve been doing it tough after eight official rate rises in a row. It reinforces our determination to fight inflation and to modernise our economy.
JOURNALIST:
Would you like the commercial banks to stay their hands as well?
TREASURER:
As we all know, and the Reserve Bank has referred to this today, there are global pressures which are pushing up borrowing costs. Those are impacting upon commercial banks. What I’ve said in the past and I’ll say again, Australian families are under tremendous financial pressure. The banks must take that into account when they make their decisions, and that’s why I put in place our switching package which gives the capacity to customers to shift banks more easily if they’re unhappy with the performance of their bank.
JOURNALIST:
Is it beginning to look like the work of monetary policy is done? The statement is clear today, growth in domestic demand is moderating. Is that a good sign?
TREASURER:
Well, certainly it’s a good sign that the Reserve took the decision they took today. But these are matters for the independent Reserve Bank. The Government’s job is to put maximum downward pressure on inflation and therefore maximum downward pressure on interest rates. Over recent years all the weight has been on monetary policy. The government had not been playing its role. We are determined to fight inflation, which is why we put our Five-Point Plan out there to deal with the inflationary pressures in the economy so that families out there don’t have to suffer further interest rate rises. The consequences of a lack of discipline when it comes to fiscal policy in recent years are there for all to see. We’re dealing with that. We’re dealing with that in the Budget process.
JOURNALIST:
Are the rate rises working? Can you say that they seem to be working now?
TREASURER:
Well, that’s a matter for the Reserve Bank. They’ve made their observations today but what the Government has to do is to play its role with fiscal policy. All the weight has been on monetary policy. We’ll play our role with this Budget. Our determination is to put maximum downward pressure on inflation and to modernise our economy, to put in place the investments that make us more productive and help us withstand the global pressures that are out there.
JOURNALIST:
(inaudible) slowing demand globally and also there’s signs of slowing demand domestically. How does that affect the Budget in terms of your projections?
TREASURER:
We are certainly not immune from international developments. The Prime Minister has made that clear. Indeed, the purpose of the Prime Minister’s trip is to assess first-hand the impact of global developments in terms of financial markets and stock markets. That will have an impact on our Budget. But most importantly, from our point of view, we have to deal with domestic inflationary pressures, and that’s what we’re doing.
JOURNALIST:
Mr Swan, it was your observation a couple of months ago that the inflation genie was out of the bottle. Is it still out of the bottle or is it back in the bottle?
TREASURER:
We have to see the figures as they come through. But the Reserve Bank and many others have observed that inflationary pressures are still high. We have to deal with them if we’re going to put maximum downward pressure on inflation and therefore interest rates. That’s the task of the Government – to ensure that we can grow quickly without the inflationary pressures we’ve had in recent years which have an impact on interest rates and which in turn, impact on the living standards of working families. Thanks very much.