LINDSAY TANNER: ...that means that if you're making election promises, they're made in that way, and I think a signature point about the Rudd Government is that we are very strongly committed to delivering on our election commitments.
QUESTION: The figures today show the household consumption a fall down to .7 which is still quite strong, but inside the figures there have been significant falls in terms of spending on hospitality and on transportation and also in food.
Are you expecting that's where people will start to - will continue to cut back as the weight of prices on oil, food and interest rates here?
LINDSAY TANNER: It's difficult to discern a clear pattern in those spending figures. I noted as you did that the restaurants, hotels and cafés category was at the bottom of the list of increases, but interestingly enough, spending on recreational and cultural activities was at the top. So, the initial assumption that you might have that the more discretionary kind of spending as starting to be squeezed is perhaps not necessarily the case, because I would assume that most recreational and cultural spending is discretionary as well.
So, when you look through those individual categories, it's difficult to form a clear picture of the patterns of change, and I suspect as you look over those categories over the years of national accounts that they will move around a fair bit so at this point I wouldn't necessarily read anything into those different categories.
QUESTION: Mr Tanner, do you think we're going to see [indistinct] and if that happens, how does that affect the Governments, and not only to get skilled Australians home, but attracting overseas workers as well.
LINDSAY TANNER: Well I'm afraid it would both be inappropriate for me to speculate on currency movements and also if I did I'd probably start losing money. So - because I may get it wrong. So, I have no view on where the Australian dollar will head relative to the US.
It's important to note that that's not just a story about the Australian currency, it's also a story about the American currency and the considerable softening of the American currency that's occurred in recent times for reasons that I think we can all understand.
The question of Australian expatriates and having them come back to Australia is quite a complex one and I think it's something that we do want to see Austra... but we want to see Australians getting opportunities abroad as well. So I think the important thing here is that the flow is both ways and the flow is that you've got both people taking opportunities to work overseas, in some cases in the most important markets in the world to develop their skills, but also to be coming back to Australia and using those skills.
Obviously we don't control the level of the currency and that's one of the factors that will have a bit of an influence on people's choices, but the factors that do influence people's choices hereof course are many and varied and they are different from individual to individual.
QUESTION: Looking at the state final demand, you would have seen that the ATP has turned negative, the only state to do so that's in the March quarter. And that was in the quarter that you were talking about paying. So perhaps it's understandable that there wasn't much hiring going on, real estate sales weren't happening.
I'm wondering whether you feel that you did have a part in that and whether you think that things in the ACT might pick up now the budget's out of the way?
LINDSAY TANNER: Look I - it'd be nice if I was that influential, but I doubt if I can be blamed for any softening of the ACT economy. And I think the - I can't give you precise figures, but if you look at the overall figures in the budget on public sector employment you'll see that there is a slight reduction across Australia. There's considerable variations across agencies. My assessment is that the total impact on the ACT is very, very limited, very much on the margins. Of course unemployment in the ACT has been very low, and I'm sure that if you talk to most people in government agencies who are in the business of hiring people, they'll tell you that it's a very tight Labor market and it's increasingly very competitive to get good people.
So I believe the ACT economy is in good shape. It's robust and I don't believe the Federal Budget has...
QUESTION: No, it won't [indistinct] in the lead up to it, that's what I'm asking you.
LINDSAY TANNER: I think it's...
QUESTION: Maybe the media should take responsibility too for reporting the [indistinct]...
LINDSAY TANNER: I think it's important - in a sense you've answered your own question Peter - I think it's important to distinguish between commentary of politicians and government ministers and the occasional embellishment that occurs when that is being conveyed to the general community.
So, I - it may come as a shock to you Tim, but residents in the ACT don't only read the Canberra Times. They do have access to other media. But it is, I think, stretching it to suggest that there has been any significant impact from talk prior to the budget.
QUESTION: Why do you think turned - ACT's the only state to have gone negative in state final demand in the first quarter of the year.
LINDSAY TANNER: Well I think that one rather obvious point to make is that quarter by quarter figures particularly disaggregated to what's...
QUESTION: Well over the year, they've extensively grown. They've grown - 0.1 which is flat.
LINDSAY TANNER: Look that's true and you can see that in varying degrees. I think probably the most significant answer to that is that the least mining and resource focused economy in Australia is the ACT. So - now that's probably not the only answer to that question, but I think that's probably the key answer.
QUESTION: Mr Tanner, and do these numbers make any change in your expectations about growth in the economy through the rest of this year?
LINDSAY TANNER: Look I can't really speculate on what our expectations are, Peter. I obviously will be studying the figures in greater detail and the budget settings of course that the razor gang exercise was mentioned before, are something that we will, you know, always have in contemplation.
But I don't think - even though the growth figures were on the high side compared with market expectations, we don't sit around necessarily, or certainly ministers don't sit around necessarily making projections about what will occur in the next quarter or the following quarter.
We take advice about these things. We take advice about policy settings. We take advice about the fiscal settings clearly. But I can't really comment on what our projections might be. That's really something that obviously people in treasury work on all the time. We get advice from time to time and we take a lot of notice of that advice.
QUESTION: With these figures here with domestic [indistinct] running at about five per cent, [indistinct] be at 3.6, the economy is really running at absolutely full stretch still. Does this mean you will need to revise your targets for expenditure outlay cuts?
LINDSAY TANNER: It certainly - well we don't have a specific target for expenditure cuts as a result of raising [indistinct] because the areas we're delving into are highly complex and it's basically impossible to make a realistic assessment of what you may achieve until you're well into the process.
I'm sure you know that IT purchasing is the bane of existence of most CEOs of large corporations and it's no different in government for example. So, it doesn't necessarily suggest that by any means. But, it certainly does suggest that the fight to address inflation is by no means over and that we've got a long haul in front of us, so it does very much underline the importance of a tough budget. We believe that the budget settings are right. We don't see any reason why these figures call those settings into question. We believe the budget settings are right.
There are significant pressures in the contrary in the global economy which have gone up and down over the last six to nine months, but certainly cannot be ignored and we cannot assume that they have magically disappeared. So we believe the budget settings are right. We believe that the message out of these figures is that the number one economic challenge for Australia still remains getting inflation back in check and investing for the long-term to ensure that we've got the economic capacity to allow that strong rate of growth to be absorbed by the economy to function and to produce the outcomes without leading to higher inflation.
Thanks very much folks.
Very last one, I'll indulge you because...
QUESTION: Surely at some point [indistinct] there must be some [indistinct] set sooner or later and surely, wouldn't that be influenced, say September or October timeframe.Wouldn't that be influenced by CPI at that point?
LINDSAY TANNER: We won't necessarily set a target. A lot depends on where the work takes us. And bear in mind that the - although it has a fiscal settings relevance, the primary purpose of this exercise is to improve the efficiency of the public sector. So - whereas the budget was focused on just finding savings wherever we could and strengthening the surplus. Although that's an issue, obviously with the second stage of the razor gang, the real focus is on quality. The real focus is on quality of government spending, value for money, reducing spending wherever we can, getting better outcomes.
And in some cases, what will happen is that we will find savings that may not come into effect for two years, three years even. For example, in the purchasing area, whether it's IT or elsewhere, you've got existing contracts in many places that you can't simply overturn. So, we may be producing significant positive outcomes in that process which will not be relevant to today's macro-economic settings because they won't actually deliver benefits for two or three years.
Thanks very much folks.
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