VIRGINIA TRIOLI: Moving on now but staying still with the consequences of the situation in Mumbai, Finance Minister Lindsay Tanner joins us now from Canberra.
Minister, good morning.
LINDSAY TANNER: Good morning, Virginia.
VIRGINIA TRIOLI: First of all I do want to put to you what you think the outcome and the fallout from these dreadful attacks in Mumbai might be because that being the financial capital there in India, the consequences for an already rattled market in Australia and around the world are significant, aren't they?
LINDSAY TANNER: Too early to say, I'm afraid, Virginia. I only know a very sketchy account of what's occurred there but typically economies recovery fairly quickly from these kind of incidents so although it's obviously a very serious incident and a lot of people have tragically died, I wouldn't speculate on the wider economic implications. The security implications are probably more significant.
VIRGINIA TRIOLI: Lindsay Tanner, I guess then moving more locally, we need to talk about just how long we might then need to stay in deficit, given this is an issue that the Government has finally raised the curtain on. I guess the question this morning for you is what took you so long?
LINDSAY TANNER: Virginia, we're still projecting that the Budget will remain in surplus but we're simply acknowledging that the wider economic circumstances internationally are continuing to worsen and that's increasing the risk that the international situation will push the Australian Budget into deficit and we're also emphasising the fact that we are not going to allow that to get in the road of our commitment to long term sustainable growth and our commitment to jobs. We've got a number of plans in the pipeline for investing in infrastructure, skills, and the things that deliver long term sustainable growth and we remain committed to those. So we're simply acknowledging that the risk is growing but our projections continue to be that the Budget will remain in surplus, albeit a pretty modest surplus.
VIRGINIA TRIOLI: So the idea of a deficit is still a long way away?
LINDSAY TANNER: Look, I can't give you a precise risk estimate, Virginia, but the economy's got…
VIRGINIA TRIOLI: You must have risk estimates you're working on.
LINDSAY TANNER: The economy's got three key shock absorbers and that is interest rates, with the Reserve Bank in charge, the value of the Australian dollar in the floated currency regime and, of course, the Budget. So when you get a very powerful external shock like we're receiving in Australia from very rapid slowdown of the major world economies, all of those things come into play in order to stimulate economic activity and push back against those things. Now, we've had a very, very strong surplus but, of course, we've used a fair part of that to push back, to stimulate jobs and growth. If that shock gets bigger, if that external force becomes more powerful, it could push the Budget into deficit.
VIRGINIA TRIOLI: Do you think you can withstand the political shock then of the Opposition making a great deal of hay with the fact that when you get a Labor government you get a deficit and it stays in deficit for quite some time?
LINDSAY TANNER: The Opposition's completely incoherent about this. It's got out there over the past four or five months a lengthy list of uncosted promises about pensions, about fuel excise, about capital gains tax for small business. No suggestion of where the money's coming from. If they honoured their promises in the current situation and they were in government the Budget would already be in deficit. So they just say anything, any day, any time, to get a headline even though they're contradicting themselves almost on a daily basis. Obviously there are political issues with any Budget setting. There's always going to be challenges facing the Government both economically and politically, that's just par for the course, but we're focused on doing the job. There's still a lot of strength in the Australian economy. We're committed to sustaining growth, sustaining jobs, the task's just getting tougher but we're committed to delivering, we're committed to long term sustainable growth.
VIRGINIA TRIOLI: Lindsay Tanner, thank you.
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