HOWARD SATTLER: One Government that's certainly pretty chuffed with itself today is the Rudd Government with the news that we have not gone into recession, Australia, unlike just about every other major developed western nation; the United States and Britain spectacularly so and just about all of Europe, I've got to say, too. But no, we - and I don't want to go through too many figures here, but our gross domestic product was up 0.4 of one per cent. So that means that we'd have to have two more quarters in a row, below nought per cent, to go back into inflation, which we haven't been in since 1991 I think it is. Joining me now is Lindsay Tanner, the Federal Finance Minister, cracking the Champagne over there in Canberra tonight Lindsay?
LINDSAY TANNER: Certainly not, Howard, certainly not. And it's good news to have a quarter that was in the positive obviously, but we're by no means out of the woods yet and we're still expecting things to be pretty tough over the remainder of this year.
HOWARD SATTLER: Well the Prime Minister and the Reserve Bank Governor have both said we're going to go into recession. How did they get it wrong?
LINDSAY TANNER: Well, look, I think we need to be a bit careful here. I - you know, I've made comments about these things and I said; look, let's wait until we get the data and although clearly the - all the indicators are...
HOWARD SATTLER: You told the Prime Minister that did you?
LINDSAY TANNER: [Laughs] I think I might have said it on one of your interviews Howard [laughs].
HOWARD SATTLER: Yeah.
LINDSAY TANNER: But the - we need to sort of be a bit careful about all this, because a lot of people are saying; look, there's no doubt that these international circumstances are pushing us towards recession and we don't yet know what the rest of the year will hold and we think there's certainly a possibility we might still get further negative numbers and I don't think we ever get too hung about these technical definitions. The fact is times are hard. Unemployment's rising. We've got a huge challenge still on our hands. We've got to keep all that in mind.
HOWARD SATTLER: You've been taking credit because of the stimulus package, more than anything else. But surely - and I've said this to you before, that's only short-term. You can't keep producing stimulus packages that are worth about $10 billion each?
LINDSAY TANNER: That's correct, and it was always intended to be short-term. We're very careful to make these packages temporary spending, because if you lock it in forever, of course, then you're putting on the Budget bottom line forever. And so that's absolutely correct. We believe these figures show that that stimulus spending is having a very positive impact on jobs and keeping businesses afloat in very difficult circumstances. But it, of course, only reflects part of the stimulus. Much of it is still either has just come into the economy, or is going to come over the ensuing months.
HOWARD SATTLER: Yeah, and the $900 packages will wash through pretty soon too, won't they?
LINDSAY TANNER: Well some of that's already in these figures, because some of it went out - about $4.5 billion of that went out in March. But about $8 billion or $9 billion is - went out in April which, of course, will be reflected in the figures for the next quarter. But in a sense all of these figures, of course, they're an important interpretative to - they're an important way of analysing what's going on, but we don't want to get too hung up about them, particularly one quarter's figures. The fact is we've got a big challenge. The stimulus that the Government's put in place, clearly is having a positive effect, it clearly is working. But we shouldn't rest on our laurels or think that the game's over. We're just in the first quarter here.
HOWARD SATTLER: Has this caused you to amend your predictions on unemployment?
LINDSAY TANNER: No, it hasn't. I think it's probably too early to really head into that sort of territory. But certainly it gives us cause to be slightly more optimistic than perhaps we otherwise might have been. But I think the - I don't anticipate we'll be making any amendment to those predictions. But, it does...
HOWARD SATTLER: About eight per cent, thereabouts, when it peaks?
LINDSAY TANNER: That's right, about 8.5 per cent is the projected peak during the course of next year. A lot of this depends on what happens internationally, of course, Howard, and neither you nor I can control that. But I think it is important that we acknowledge that the efforts that the Government's putting into sustained activity in the face of these huge downward, negative pressures, are having an effect. People can debate the merits, the detail, that's fine. But there's no doubt that they're having an effect. The rest of the world is in diabolical shape. We've still got a huge battle on our hands. But we're managing to, at least, get some half reasonable outcomes.
HOWARD SATTLER: Okay. I've been talking a bit today about Perth tenants facing price increases of up to 20 per cent, can you believe that? That's rental properties. And just walking out on their leases now and going who knows where? What do you say to them?
LINDSAY TANNER: Look, I don't know about the details. I do know...
HOWARD SATTLER: They're being - and I don't - I'm not asking for that, but I'm saying we're being told today that we're not recession, but for them, they certainly are.
LINDSAY TANNER: Well, as I'm sure you know, the things have been pretty extraordinary in the Perth property market over the past two or three years and you've seen amazing spikes in both house prices and rental levels. I'm not an expert in what's gone on in very recent times and, in particular, what you're referring too, I apologise, but I don't know about, so it's pretty hard for me to comment on. But that's one of the problems of the mining boom, of course, is that you get these extraordinary spikes, and they're fine for people who are doing really well, but not everybody's going to be in that situation. And, of course, when the boom finishes, you can get some people in difficult circumstances.
HOWARD SATTLER: Well I don't know whether it has finished, because conversely I heard from Port Hedland today, they're building all these new container berths up there for the big ships, and - for the ore carriers I should say, and they think things are going pretty well. They're try... they're about to try and make provision for an extra 3000 people in the town. So I just wonder whether the recession is just a sort of spot recession in some parts, and not others?
LINDSAY TANNER: Look, I think - you will get some variety there's no doubt. And there's no question that the long-term future for WA is very bright and the long-term future for our mineral sector's very bright. We can't know how quickly a rebound will come. Of course, a lot of it's about prices, rather than actual volumes. Price does affect volume obviously. But a lot of it's just that we've seen dramatic falls in prices after several years of dramatic increases. But there's no doubt the future in the medium-term's very bright for the Australian mineral sector and particularly for WA obviously, which is the number one state in that area.
HOWARD SATTLER: Even though we're going to have a huge debt?
LINDSAY TANNER: Oh look, we don't back away from where the Budget is heading, because it's been just unavoidable. We had a huge drop in revenue courtesy of the global recession, that's knocked an enormous amount out of the projected tax revenues. And we just had to make a call that said we've got to sustain economic activity and jobs, even though that means the Budget being in deficit and it means a significant debt arising from that. The key challenge, of course, which we've set out a pathway for, is to get back into surplus and a strategy for paying down the debt. And the important thing is we've set that out, we set the plan out there and said here's what we intend to do. We'll be judged against that by - no doubt, by yourself, by your listeners, by voters, everybody.
HOWARD SATTLER: Okay. Thanks for talking to us, thank you for staying back.
LINDSAY TANNER: Good to talk to you again Howard.
HOWARD SATTLER: Lindsay Tanner, the Federal Finance Minister, his take on the recession that we didn't think we were going to have.
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