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Newsline With Jim Middleton -

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(generated from captions) how do we make it safer, how do we make we make it healthy? Meeting the

threat of HIV later in the

program. China surprised the

markets of the Asia-Pacific

official interest rates for the today announcing an increase in

first time in three years. The

move is designed to deflaet a

looming asset price bubble, but

economists are divided over

whether it will work. There's also speculation the move may

be designed to help take the

sting out of a row between

Beijing and Washington what American politicians Beijing and Washington over

is an artificially low Chinese what American politicians argue

currency. The row threatens to

overshadow efforts at the

rapidly approaching G20 summit

to rebalance the world economy following the global financial crisis. Australia's crisis. Australia's Treasurer

Treasurer, welcome to the and Deputy PM is Wayne Swan.

be with you. To what extent do program. Good evening, good to

China's unexpected decision to increase interest rates combined with the US

prospective moves for further monetary policy reduce pressure quantitative easing

in the currency row between China and the US? Chinese

monetary policy is monetary policy is entirely a

global economy has an interest matter for them, but the whole

in the sustainable growth of in

the Chinese economy just as all have an interest in the the Chinese economy just as we

sustainable growth of the

United States economy and once again there, I chairman in the United States again there, I think the

has made it clear that thinks that quantitative easing has made it clear that he

could play

role in boosting growth in the

United States and I think the

whole world has an interest in

seeing that the United States

does grow and grows over time. Do you think the does grow and grows sustainably

impact of

could be to appreciate the value of the Chinese

naturally and to depreciate the

US dollar again naturally and US dollar again naturally

side of help remove the thorn in the

relationship between the US side of the economic

relationship between the US and

China? I think the objective in the United States through a boost to the domestic

economy. I think we've economy. I think we've all got

an interest in seeing that outcome. I don't think outcome. I don't think the

the United States have as actions that may be

the United States have as their

aim precisely an effect on the

currency and as for the Chinese

in terms of their fiscal in terms of their

monetary policy, I'll leave

that to them. I wonder that to them. I wonder whose

side is Australia on? Is China's currency China's currency undervalued in

the Government's view or do you

agree with Wen Jiabao that the dollar and the yuan is the current imbalance between the

consequence of years of loose

US monetary policy? I think

when it comes to the Finance Ministers meeting and,

of course, the G20 leaders meeting everybody has got an

interest in seeing the framework for strong, balanced and sustained and sustained growth meets its

objectives and part of that

objective is, of course, to

have flexible exchange rates,

but that's not the only issue

that you consider when we talk

about that framework. We've

got to look at other structural

in both the developed and reforms in domestic

developing world. Exchange

rates are an important part of that equation, but they're the only part and I think we that equation, but they're not

need to have a broader

in the G20 about how we get a

judicious mix of structural

outcome we are all reform which produces the

seeking. There is a danger is

there not that this row and

particularly the expression of it by US politicians facing

re-election threatens to

overwhelm your desire for within the countries that

matter in the world economy? As

we approach the G20 Finance Ministers meeting there's no

doubt there are some very

difficult and complex issues on which there are different by many sitting around the which there are different views

table. The great strength if

you like of the G20 bringing

together developed and

developing economies means we

can search for common ground.

As you've observed in the media

and policy debate in weeks, some of those debates and policy debate in recent

are heating up. I hope as

go through the gbt process we

can find more common ground on

the structural reforms required

to ensure there is strong and

balanced growth in the

economy. Are you worried, though, as some though, as some other Finance Ministers are worried that if

unchecked this currency row

could esculate into a trade

war? Certainly one of the great

strengths of the G20 and what

has been achieved over the past

two years is that we did avoid

during that period a return of protectionism. has been a very substantial

achievement of the G20. As we

go forward and discuss the framework for sustained framework for sustained and balanced growth, I we can make measured

improvement when it comes to

those structural reforms. As

you know, Australia favours a flexible exchange rate, we have

a floating exchange rate. We

think that is the best approach

not just for the global economy

but, of course, but for individual economies

economies will have to take but, of course, individual

decisions about how they reform

their economies and in a not only with their not only with their own

economic objectives but a

decent outcome with the framework. Looking forward to

the G20, what do you think

ought to be the priorities terms of resolving some of the

new long-standing imbalances

and problems which have beset

global financial the world economy since the

struck? I think there are global financial crisis

basically three discrete areas

we're dealing with. We're dealing with the reform of the

architecture international financial

architecture and a great body financial stability forum progressed through the progressed through of work that has been

other organisations, so we'll certainly be looking at all

those issues. Then, of course, there is IMF there is IMF reform making sure that the IMF is the strength of both the developed and developing world. Thirdly, there is the issue of the framework for sustained and

balanced growth we discussed balanced growth we discussed at length earlier in length earlier in the

interview. If I could return to currency policy briefly, the Australian dollar

China lost value today on the news from China of the interest

rate hike. Is it in Australia's interests as a

country which has so much of

its trade tied up with China to

have a low yuan or would you worry as was indicated on the

markets today that if growth slows that that will

have a serious impact on the

Australian economy? I don't

discuss daily movements in the

currency of Australia or

other country. The strength of

the Australian dollar reflects the relative strength of the

Australian economy compared to

other developed economies. It

reflects in particular the

strength of the moment and it also reflects to stop extent to stop extent divergent

movements of international currency markets but primarily

the strength of the dollar is a reflection of the reflection of the strength of the Australian economy and I am quite optimistic about growth

in the Asia-Pacific, which I

think will continue to ensure that the Australian one of the strongest developed economies. One final subject before we conclude, I was in China a couple of months ago and everywhere I went I was questioned about the process

surrounding Australia's new

mining tax regime. Now there's this latest question mark

raised by the big miners BHP, Rio and Xstrata about Rio and Xstrata about the status of State mining

royalties. Will you consider

going back to the original

proposal to absorb royalties into this new tax to

try to resolve the problem? Firstly can I say in the time since we have announced the Minerals Resource

Rent Tax there has continued to

be a surge of investment in the Australian mining industry, including investment from China, so the announcement of the Minerals Resource Rent Tax

has had no impact in terms of

inward investment. Inward

investment has tended to

investment has tended to grow,

particularly from China. We're dealing with a range of issues

to do with the MRRT through the Argus

Argus Committee and that is

where we will progress issues such as State royalties and I

don't propose to comment on

that anymore. What should the

big miners do? Just suck it up

if the States do increase their

royalties after the new regime

is in place if the Commonwealth

is not compared to accept liability? We're happy to have a conversation with the a conversation with the mining industry about this matter.

The Argus Committee is talking to the industry about this many other matters and those consultations will continue. It

would leave a big revenue hole and stop your promised tax cuts

and reduce your ability to get the Budget back into surplus in the promised timeframe? I'm

very optimistic that we very optimistic that we will

see a positive outcome for the

MRRT and that's very important for Australia because it will

then be used to lift our

national savings, to invest in infrastructure and importantly

to make overall taxation much more competitive for all

Australian companies. They're very

very much. Good to be with you.