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Channel 10 News -

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(generated from captions) Shadow Finance Minister Joe Hockey

joins us live in the studio to talk

about the economic crisis. Now the

IMF overnight came out and said the

economy is facing the most

dangerous shocks since the 1930, dangerous shocks since the 1930,

the great depression. How, do you

agree with that and if so how well

is Australia braced to weather this

storm? Well we've seen a total

collapse of confidence in

international financial markets.

Essentially it comes down to this -

if you lend a mate $100 and he

can't repay you and he won't repay

another you, you're not going to lend him

another $100. The tough part is

that you borrowed that $100 to lend

to him and so there's a crisis of

confidence. It's like the piping in

a house. It's just clogged up and

the question is how do we get the

money moving? Central banks around

the world have tried to pump money the world have tried to pump

in. Now we see in Britain following

the United States and Europe,

Governments are trying to pump

money into the system to keep money into the system to keep

credit flowing. So that small

business people and hom... As you

mentioned overnight we saw the

joint offensive, six central banks

from around the world cutting

interest rates, the RBA did interest rates, the RBA did the

same yesterday. Of the day before

rather. Is it enough to stave off a

global recession or in fact

depression? Well certainly it

doesn't look like it will be enough

to stop the world heading into to stop the world heading into

recession. The people that we most

fear for are those that are poorer

in the community, in our own

community and in the global

community, third world countries,

who have massive amounts of dent,

and who are the greatest credit and who are the greatest credit

risk. They are the once that are

least likely to repay the money. They're

They're the ones most vulnerable,

and in our own community, poorer

Australians who have borrowed a lot of money, who have very big risk on

their credit cards, should do

everything they can to tear up

their credit cards or pay off any their credit cards or pay off any

borrowings they have. If this uni

lateral offence on this global

turmoil that we're facing, by

cutting rates, isn't going to help,

what is? Well the best thing you

can do is try and stimulate

confidence, to talk about the

fundamentals, you know, Kevin Rudd

must be waking up every morning now

thanks god that John Howard paid

off all the debt this Government

had, because being debt free

tonight is the very best position

you can be in. So is that why we're

hearing from financial commentators

and economists that that our

Australian banking system is sound,

people don't have to woirbgs we

won't be seeing what we're seeing

overseas? Well that's right. Two

things - one is the Government does

not have any debt. Therefore it has

the huge capacity to inject money

into the financial system, if

necessary. Which other Governments

don't have the option of. The

second thing is we did not let our banks

banks go down that subprime lending

route. Those low doc, no doc loans simply don't develop in Australia as

forced as a a market. And the banks were

forced into a position where they

could only lend to people who could

afford to repay the money. So

Australian banks are in a very good

shape compared to the rest of the

world, but that certainly doesn't

mean that we're inknockated, we're

not and when the banks start to say

to small business that we're not

going to roll over your funding or

they're not going to lend that

extra amount of money to

to reasonivate, that's when it starts

to have an impact in Australia.

Before with go, the future, all

that being said, the future still

doesn't bode well, the IMF slashed

our growth rates overnight does for

next year 2.5%, 2009 2.2%.

Inflation not the issue so much

anymore but unemployment, consumer

confidence, all really big issues

going forward. How can we survive

as an economy when the other world

economys are falling over? The main

thing is to pump money into the

economy. First thing is the Rudd

Government has to abandon its tax

increases at the moment on things

like alco-pops and on cars, I mean,

that's bad policy, the second thing

is, we've got to get more money

into people's handballs and doing

that with the tax cuts is a great

idea and then the third thing is we

need to focus on making sure that

the Government has enough money to

come to the rescue in the next six

Ms, 12 months, or three year, if

that is necessary, but Australia

overall is getting some benefits,

one of them being the fall in the

Australian dollar is great for

exports, great for the tourism

industry and great for agricultural

expert port, that will help to

inknockate us against what's

happening in the rest of the world.