GLEN BARTHOLOMEW: Well, let's talk finances here at home, the Federal Government is claiming success for its economic stimulus strategy, following the release of figures yesterday, showing Australia's economy growing, almost the only developed nation in the black. Even the Opposition has welcomed the growth figures, but they're warning it's now time to cut back on the Government's spending. To look at the economic way ahead, Marius Benson is speaking to the Finance Minister, Lindsay Tanner.
MARIUS BENSON: Lindsay Tanner, there seems to be a certain amount of congratulations going around in the economic and political world at the moment, some of the economists looking at the growth figures released yesterday were calling us the Wonder from Down Under, and calling it a champagne economy. Have you broken out the champagne yourself?
LINDSAY TANNER: I certainly haven't, Marius, we've got a long way to go in the battle against very powerful global forces, it's certainly gratifying that the Government's stimulus strategy has had such an impact, and of course the Reserve Bank has been pretty important in all of this as well, but we still face some pretty significant challenges, so we're not assuming anything just yet, it's too early to be declaring victory.
MARIUS BENSON: And people are making the point that if Australia is now leading the world in terms of growth, we're about to lead the world in putting up rates.
LINDSAY TANNER: The Governor of the Reserve Bank's made it clear that over the past few months we've had interest rates of course at what he calls emergency settings, and they've been at 50 year record lows, so it's unavoidable that at some point in the future they will rise back to more normal levels, but of course we don't know how soon, and over what period of time that might occur. Obviously the crucial thing for the Government, and indeed the Reserve Bank, is ensuring that we get economic growth and activity and employment back to good levels. We've managed to get through the recent circumstances better than most people expected, and certainly better than the Government and Treasury predicted, but that's no guarantee that that will continue over the next six to 12 months. We're optimistic about that, but clearly we've still got to be very vigilant in pursuing our stimulus strategy, to protect jobs, and sustain activity.
MARIUS BENSON: One view on rates being put this morning comes from the ANZ chief executive, Mike Smith, who says it would be crazy to put up rates now, it would put recovery at risk.
LINDSAY TANNER: Well, I'm not going to speculate on the detail of where interest rates might hit, but clearly the sentiment behind Mike Smith's comments the Government would agree with absolutely, and that is that we shouldn't be assuming that we are out of the woods by any means on this economic challenge that we face. We've certainly made great progress, and we are in a much better position than pretty well any other country, but that doesn't mean that it's all over, it just means that we've done pretty well so far. But you can look all around the world and see that there's a lot of fragility in the global economy, there's still question marks about the robustness of China's recovery, there are still very threatening elements in the economies in Europe and North America, that at any time could have an adverse impact on Australia, and of course we've still got unemployment rising, and the growth levels that we are enjoying, albeit much, much better than what other countries are seeing, of course are still pretty ordinary in overall terms. So we've got quite a distance to go, before we can say that things are back to normal.
MARIUS BENSON: Things aren't perhaps back to normal, but you've made it clear, I think the Treasurer's made it clear that the stimulus pedal which you've had flat to the floor, you're easing off on that stimulus spending now.
LINDSAY TANNER: It's already factored into the strategy that there will be a gradual withdrawal of stimulus of course, so for example the first home owner's grant boost is in the process of being withdrawn over a six month period, you'll see an end to the tax break for business investment, particularly smaller businesses, all of those things were already factored in, but we are going to continue with the stimulus package, as it was outlined. And one of the things that commentators are overlooking, when they suggest that the stimulus should be withdrawn more quickly, is that the impact of the stimulus is already factored into the budget estimates, so that should we withdraw the stimulus faster than has been suggested, that actually would inevitably increase unemployment, it would lead to more business failures, and it would lead to worse outcomes on growth than otherwise we would get. So there is still a need for action, to ensure that our economy continues to grow, but it's already set in the process that the stimulus will gradually be withdrawn, that's how it's designed, and that's what we're going to continue with.
MARIUS BENSON: Could I just ask you a final question about politics more than economics, which is, there are a lot of reports around this morning that Labor federally is worried about Labor in New South Wales, the catastrophic situation there, in terms of public support dragging down Labor's brand nationally, is that a concern?
LINDSAY TANNER: Things that go on at the state level can sometimes impact in federal politics and vice versa, but generally speaking, these days voters do distinguish between the two levels of Government, and they focus on the issues that are most important, at the level of Government that might be up for election. So obviously we're concerned broadly about how things are going with State Governments across the country, not just because of the political dynamics, but also the impact that they have on our policies, on our agenda, to strengthen Australia, to improve our productivity, tackling things like infrastructure and skills, so we'll always be interested in what's happening at the state level, but I wouldn't overstate the current circumstances in New South Wales, and their potential significance for a federal election that is due of course, a bit more than a year away.
MARIUS BENSON: Lindsay Tanner, thank you very much.
LINDSAY TANNER: Thank you very much, Marius.
GLEN BARTHOLOMEW: The Finance Minister, Lindsay Tanner, with Marius Benson there.
| Media Contact: | Website: |
|---|---|
| Nardia Dazkiw - 0418 144 690 | www.financeminister.gov.au |
