NEIL MITCHELL: First though the G20 meeting in Washington at the weekend. As I said, if George Bush really is offended by Kevin Rudd he's a sook, he needs to get over it. Kevin Rudd will probably be on the program later in the week when he gets back from the United States but on the line now is the Finance Minister, Lindsay Tanner. Good morning.
LINDSAY TANNER: Good morning, Neil, how are you?
NEIL MITCHELL: I'm okay. More stimulus needed. That's the agreement. How much have you got to spend and when will you spend it?
LINDSAY TANNER: Well, ours, of course, is already in the pipeline, Neil, but we stand ready for further action if it's required, if the world situation does get seriously worse compared with what's currently projected but there's different situations in different countries so the agreement was that the economies around the world need to be stimulated and we expect countries to act by that.
NEIL MITCHELL: Do you expect that Australia will have to stimulate further?
LINDSAY TANNER: I don't expect that. I think it's probably unlikely but in the current unprecedented circumstances we have to assume any possibility so we stand ready if required. Based on the current growth forecasts and forecasts for the world economy I don't think it'll be necessary but we can't be certain those forecasts will be proved right and if things do deteriorate further then clearly we'll have to think again.
NEIL MITCHELL: What's the projected surplus at the moment?
LINDSAY TANNER: After our spending package that'll start to hit people's wallets and purses in the next few weeks, it's down to about five-and-a-half billion dollars so there's still a little bit of wriggle room there but we don't want to go into further stimulus unless it's absolutely necessary.
NEIL MITCHELL: Is - is it still important to stay in surplus or, if necessary, is it - if the stimulus is necessary would you got into deficit?
LINDSAY TANNER: We are committed to staying in surplus and the projections that have been put out by Treasury after revision, of course, in - a couple of weeks ago after the holes that have been blown in the surplus by the global financial crisis, still show us in modest surplus and we are committed to staying there but, of course, nobody can predict what this international financial crisis and the knock-on economic consequences will deliver to Australia. On current forecasts we'll stay in surplus but if things seriously deteriorate it's going to get tougher.
NEIL MITCHELL: Is if things seriously deteriorate, you're willing to go into - into deficit.
LINDSAY TANNER: Oh, look, I'm not going to speculate about the possibilities, Neil. One of the things that is really crucial for us is maintaining confidence particularly business confidence and we get invited every day to speculate on all kinds of things - recessions, depressions, deficits, and the more that that happens the more it undermines confidence so we stand ready to do what's necessary to keep the economy ticking over.
NEIL MITCHELL: John Brumby, I was talking to him about infrastructure last week. He's still confident you're going to give him the money to build the Frankston Bypass. What are the chances?
LINDSAY TANNER: Look, because we have specific decision-making processes on those things, I can't answer on a particular project but his confidence about the Government's - the federal Government's willingness to invest substantial amounts of money to assist the states on infrastructure is well placed. We've already got about $26 billion either in or on the way into those big infrastructure funds. That's more than enough for the short to medium term task and we've brought forward our planning process a bit to try and ensure that we get the money moving. So his general confidence is well placed. I can't comment about the specific project, obviously.
NEIL MITCHELL: Reports today, and I was talking about it a bit last week, that car dealers are being hard hit, there could be 3000 jobs going from car dealers closing because people aren't buying cars. Do you agree that that's likely and what can you do?
LINDSAY TANNER: Look, to be honest, Neil, I don't have any information that I can draw on. That strikes me as something very hard to assess because, of course, most car dealers are small to medium sized businesses, there's an awful lot of them. I'm not sure how accurate those assessments would be. There has been a problem with finance. We've seen two major sources of financing for people buying cars that are American-based companies effectively leave Australia. They're part the way through the period of departure and that's left a bit of a hole in the financing market. We believe that the market, the other competitors will, to some degree, fill that gap but we've got a Treasury taskforce working right now on ways to ensure that that doesn't further give problems to people in the vehicle retail sector.
NEIL MITCHELL: Did you notice George Bush said the - used the word depression, there's a possibility of his country going into a depression deeper than the 1930s? Do you see it as that - being that crucial?
LINDSAY TANNER: I did notice that and we need to bear in mind that things are far worse in the United States than they are in Australia. We're in better shape than virtually any other developed country. That doesn't mean we're immune from these things but there's no question there are very serious problems in the United States.
I'm not close enough to the fine detail to make an assessment about, you know, recession, depression and so forth but there's no question they've got very severe problems. For example, housing prices that have plummeted.
NEIL MITCHELL: If they go into a severe depression, worse than the '30s, we - surely we can't avoid recession.
LINDSAY TANNER: Look, if that does occur then clearly the knock-on consequences for Australia are serious but we can't be confident, let alone certain, that things will be that bad in the United States and I believe the change of administration - leave aside whether it's Democrats, Republicans - there's nothing better for a problem situation like this than a change of government, there's a bit of a change of mood, more confidence and also the new administration isn't hamstrung by the baggage of the past. It can do - it's got a blank canvas to make decisions, to make big calls so I'm very confident the change of administration will make a big difference and that's not a partisan pro-Democrat statement. If John McCain had won I would have said the same thing.
NEIL MITCHELL: I tell you what makes me shudder, the suggestion of 210 million jobs going around the world.
LINDSAY TANNER: I'm not sure of the basis of those calculations. I notice the International Labour Organisation has made that assessment. I'm not sure of exactly what the basis of that is but you're right, it is a very scary number but often we're dealing with such incredible diversity and variety across the world in terms of economies and regulatory system and statistics, I suspect there's probably a degree of rubberiness underneath it but it does underline how serious things are internationally, no question about that.
NEIL MITCHELL: Now, I've reported today that the ANZ is planning to really tighten up on its criteria for agreeing to loans. Are you aware of that?
LINDSAY TANNER: Not specifically aware of it but that is probably not a surprise. We've seen several of the major banks with some reasonably big exposures to dud loans. That's unavoidable in a boom economy. We've had a prolonged boom and so you're now seeing some of the shakeouts with things like ABC Learning and Centro and others so it's hardly surprising that some of the banks will now tighten their criteria. That would be under pressure from shareholders and I think that's just the kind of thing you'd expect.
NEIL MITCHELL: It's probably a good thing?
LINDSAY TANNER: Look, without having seen exactly what they're proposing to do I - clearly I can't comment on it specifically but it's just the nature of these things, Neil, that when things are going well and we have good times people tend to get a little bit loose in how they deal with these things. You get some companies that are too heavily geared, they borrowed too much and then when the shakeout occurs inevitably these things tighten up. It's just the way - the way these things inevitably happen.
NEIL MITCHELL: Good to speak with you. Just one final question. Have you ever heard of an American wine called Shafer Cabernet Hillside Select 2003?
LINDSAY TANNER: Don't ask me to repeat that. No, I haven't but what's significant about it?
NEIL MITCHELL: Seven hundred and seventy dollars a bottle and they served it to the G20 dinner. They're doing it tough there, aren't they?
LINDSAY TANNER: Why didn't I get an invite? [Laughs]
NEIL MITCHELL: Ever paid 770 bucks for a bottle of wine?
LINDSAY TANNER: I've never paid 770 bucks for a meal including wine let alone just a bottle of wine. [Laughs]
NEIL MITCHELL: Thank you very much. Lindsay Tanner, the Finance Minister.
-ends-
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