TIM COX : Now, to the recession, or not. As you know, yesterday Australia narrowly avoided going into a technical recession. Andrew Scobie from the Tasmanian Chamber of Commerce and Industry was suggesting earlier that perhaps the, the recessionary talk is more the concern of journalists than anyone else. I'll get that, I'll get that checked out for you. But, on that, Lindsay Tanner, the Finance Minister is on the phone from Canberra. Minister, good morning.
LINDSAY TANNER: Good morning Tim.
TIM COX : Any, any response to Ross - no, I won't ask you to respond to Ross there. But, what does it say? Are we, are we getting ahead of ourselves worrying about the recession in Australia? is it better placed to cope than other economies?
LINDSAY TANNER: Oh, we said all along that Australia is much better positioned than virtually any other developed nation to deal with these enormous negative pressures Tim. But they are enormous. They are battering our economy, and although this figure has come as something of a surprise to many people - you'll note that the Prime Minister, the Treasurer, and I, all at various stages not so long ago were indicating we felt recession was pretty much inevitable. And of course, up until only a day or two before, everyone was predicting in the media that it was going to be a negative figure. It is good news. It shows the government's stimulus efforts are working, but, we're not out of the woods yet. There's a long way to go, and we still expect some tough times in the next few months.
TIM COX : But are those stimulus packages - which is to avoid the recession, at virtually and literally any cost - going to, if not push Australia into recession in the future, certainly make it very difficult to go back to the sustainable growth that Australians have come to expect?
LINDSAY TANNER: I don't believe so. What you've got is a retreat of private sector activity occurring, driven overwhelmingly by international events and by the astonishing drop in growth and employment and increasing budget deficits all around the developed world. And what the government has to do is to step in to fill that gap as much as it can temporarily. The great mistake that governments made during The Great Depression was when similar events occurred, they pulled their heads in. They didn't actually step up to the plate and help stimulate activity to keep the economy in reasonable shape. And that's why it ended up being The Great Depression. So it's crucial that we push back. That's what we're doing - sustaining jobs, supporting economic activity as much as we can. And these figures do indicate that those efforts are having a positive effect, but, we do underline the fact we've still got some big challenges in front of us.
TIM COX : What is the first of those, given that this, this other shoe didn't drop? So, where do you go? Do you look at another stimulus package beyond here to, to try and keep away from those negative growth figures?
LINDSAY TANNER: Well most of the stimulus package that was announced in February is yet to hit the economy. These figures only reflect the first part of the payments - the payments made through the, through the Family Payment, through Centrelink rather; through that system, and not the payments made to taxpayers, which of course went out in April. And of course they don't reflect anything of the infrastructure spending, which is about 70 per cent of the total stimulus package - whether it's maintenance for schools, building new school buildings, building new houses, road and rail projects, insulating homes. All of that is in effect yet to hit the economic data, because these data only go up to the end of March. So, we, it's a bit premature I think to be speculating about further stimulus measures when much of the stimulus we've put in place has yet to show up in the economic data.
TIM COX : The Federal Opposition says that the first stimulus package didn't create a single job. The Tasmanian Chamber of Commerce and Industry has suggested here a couple of times now that it, if it hasn't created jobs, it certainly saved jobs. What do you believe it's done, and what do you believe is a fair price for that?
LINDSAY TANNER: Well the Opposition's been all over the shop on this. We note that, the statement you've just made is correct; that that's what they said. But only yesterday Joe Hockey was on radio saying, well of course these payments create some jobs, they, they do generate jobs; that's a no brainer. So, they don't even seem to be able to get their own lines right. There's no doubt that, when you inject this kind of money into the economy, it sustains jobs, and it creates jobs, and that without the government stimulus measures, Treasury estimates that unemployment would be about 210,000 higher. That's a huge number of people unemployed; a huge number of people suffering; a huge number of families around the country in big trouble. And so it's really crucial for our economy that we minimise unemployment. It is rising. We expect it to rise more. That's why it's really crucial to push back in the other direction as hard as we can.
TIM COX : Alright. So, how will - will you remain on the course you're on at the moment, or do you believe that given that figure yesterday, growth but small growth at the current course is the right one?
LINDSAY TANNER: I don't see any need to change course, because, although it's good that the number was in the positive, it's still a very very modest growth number compared with ordinary levels of growth. So, we shouldn't by any means start to get complacent. It's good that it was a positive number, not a negative number, but quarterly account figures of course, by themselves, have to be treated with some caution. And it, it does show that we're in the middle of a very serious slow-down. We already knew that. This confirms it. Debates about the technical definition of recession, and are we in a recession or not in theoretical sense, really don't matter very much. We're in the middle of a serious slow-down. The government's acting to push back and stimulate activity. And we're going to continue to do that.
TIM COX : Alright. Now, there's an interesting line put forward in The Australian today - I can't remember which journalist it is - but it suggests that, with some of the state economies in recession - New South Wales and Queensland I think, and growth in demand for example, retreating in pretty much every other state - does it matter if the national economy is, is technically shrinking or not, if the state economies are?
LINDSAY TANNER: It becomes difficult to assess these things Tim, because, once you narrow down to specific state situation; given that there is so much cross-border activity these days, it becomes difficult to form clear conclusions. We've had periods when, for example, Queensland and Western Australia were roaring ahead because of the mining boom. So sometimes you can draw some conclusions. But I'd be cautious about drawing any conclusions about individual states from a single quarter of data. And, inevitably, these things do sometimes end up being revised a bit, in retrospect, you know, because the, putting these data together is always a very tricky and complex business. So, I wouldn't draw any particular conclusions about individual state data from just one set of figures.
TIM COX : Okay. And can I ask you quickly, as a leading figure of the Left, the very brief potential return, or the potential entry to federal politics of union leader Kevin Harkins this week - which of course was knocked on the head by the Prime Minister - what was your take on that?
LINDSAY TANNER: Oh look, I know very little a bout the matter, just generally Tim. I read an article in the paper about the Tasmanian Labor Party pre-selection processes. That is the sum total of my knowledge about the issue I'm afraid. So I...
TIM COX : I can bring you up to speed if you want.
LINDSAY TANNER: [Laughs] I'm sure you're probably well across the gossip of the internal politics of the various parties in Tassie, but I'm afraid I'm not, and...
TIM COX : But should the Prime Minister be, be acting at all on pre-selection matters this far out from an election? Should this be up to the federal executive?
LINDSAY TANNER: Well the Prime Minister is of course the, a member of the federal executive and chairs the federal executive of the Labor Party, so, it is, it is from time to time something that party leaders have involved themselves in. You know, sometimes there are controversial pre-selection issues, so, you know, the Prime Minister is entirely entitled to do that. I make no comment about the substance of these things, because I, I simply do not know what is occurring in the Tasmanian branch of the Labor Party, and not in a position to comment.
TIM COX : Alright, well let me finish on the question of swine flu - whether the, the risk or the threat is being over-stated or not. Do you believe the Australian economy is in a position to withstand whatever impact it will have on employment, as Tasmania moves to a similar position to some others states - and that's excluding kids from school after they've been through Victoria - which of course will have an impact on the economy?
LINDSAY TANNER: Well Tim, my son was at the first, is a student at the first school in Victoria that got hit with this, and so he immediately went into that, you know, period of time away from school. The school was closed down for a while. I have faith in the health authorities - federal and state - to make appropriate balanced assessments of the situation, and to put in place the measures that are needed to do everything possible - both to minimise the spread of swine flu and to also to assist those who have contracted it. So, I think it's really important that we just take the advice from the experts on this, and that we take a balanced view of it. It is a major challenge for our society and for our economy, but, we've got to act in a responsible and sensible way in response. And that's why we get expert advice about it.
TIM COX : Good talking to you again. Thanks a lot.
LINDSAY TANNER: You too. Thanks very much.
TIM COX : Lindsay Tanner, the Finance Minister there.
- ENDS -
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