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Sky News First Edition -

View in ParlView

Interview with David Speers

Sky News

20 March 2009

SUBJECTS: IMF Report; Global Recession; Labour Force Forecasts; Economic Stimulus Packages; Fair
Work Bill; Queensland Election

SPEERS:

Treasurer, thank you for your time. Is Australia now headed for a recession, in your view?

TREASURER:

Well, I think this IMF report this morning just confirms how much worse the global outlook will
become. For example, David, it says for this year developed economies will contract by three per
cent, and remember that comes on top of a seven per cent annualised contraction in the December
quarter. So, there's a substantial slowing once again in the global economy. This is about the
fourth revision from the IMF in a relatively short period of time and there's no doubt that has
obvious consequences for Australia in terms of growth and also in terms of unemployment. It's a
pretty tough outlook and a grim outlook for the globe and that will impact upon Australia.

SPEERS:

Well, what are those consequences then for growth and for unemployment?

TREASURER:

Well, certainly it will impact on growth in the Australian economy and that will push unemployment
higher. But as you know, we are going through a budget process at the moment and our forecasts will
be updated in the forthcoming Budget. But this has human consequences and it underlines the
importance of the Government's approach to cushion the economy from this global recession. In
particular, this report underlines the importance of economic stimulus and it certainly calls on
many countries around the world to do more. Fortunately, we started early with economic stimulus -
first of all with the Economic Security Strategy last October and again with the Nation Building
and Jobs strategy announced in February. The one thing about this report is that I think it
actually sounds the death knell for the Liberal Party's 'sit and do nothing' approach.

SPEERS:

Well, I'd like to get to that in a moment. But just getting back to this question of a recession,
the last IMF forecast for Australia was actually a contraction this year of 0.2 per cent, albeit a
very small contraction. Now that it's updating the global outlook in a far worse position, as you
say, developed countries going back three per cent in a contraction, what does this mean for
Australia? Is the writing on the wall? Are we now in a recession?

TREASURER:

Well, it certainly will mean slower growth and it does mean higher unemployment.

SPEERS:

Growth rather than contraction?

TREASURER:

Well, I can't speculate about what that figure will be. I think it would be irresponsible to do
that. But I can certainly say the consequence is slower growth and higher unemployment, which is
why the Government moved so decisively, particularly in February when we brought down the Nation
Building and Jobs Plan. It was obvious then that there'd been a further slowing in global growth
and we acted decisively then. We saw some figures yesterday, David, in terms of retail employment,
and retail employment actually went up in Australia as a consequence of our economic stimulus
strategies. What we've got to do is everything within our power, as the IMF says, to cushion our
economy from the impact of this very savage global recession.

SPEERS:

You did mention earlier, I just want to clarify that the forecast for unemployment which Treasury
last month said would hit a peak of seven per cent. That will now be higher than seven per cent?

TREASURER:

Well, certainly growth will be slower. I can't tell you how much higher it will be. That is for the
forecasters and we will update our forecasts taking all the data into account as we normally do in
the budget process.

SPEERS:

Okay, but those figures from Treasury last month are now out of date?

TREASURER:

Well, certainly there's an impact here because what we've had is this marked contraction yet again
in the global economy. The IMF themselves have revised down their forecasts over a period of a
couple of months - four times. So, what we're seeing here is a sharper contraction in the global
economy and the consequence of that is for Australia slower growth and higher unemployment.

SPEERS:

Now, you mentioned the stimulus spending the Government has engaged in so far. The IMF certainly is
saying that developed countries like Australia will need to stimulate more over the course of this
year and next, so are you prepared to and are you considering further stimulus measures?

TREASURER:

Well, first of all, David, we've got about two per cent in the system for this year. That is the
amount which is recommended by the IMF. And remember that almost three quarters of the Nation
Building and Jobs Plan is direct investment in schools, in energy efficiency and housing. And most
of that direct investment kicks in in the second half of this year and through next year. So, we
are certainly well placed with our Nation Building and Jobs Plan to respond to the challenge that
the IMF has highlighted. But if further measures are required, we've said all measures will be on
the table.

SPEERS:

Treasurer, on industrial relations, early this morning the Senate did pass legislation but with
significant amendments to what the Government wanted. The Coalition, along with the two cross
benchers, Nick Xenophon and Steve Fielding, changed the definition of a small business from 15 to
20 employees so that more businesses are entitled to the more relaxed unfair dismissal rules. Will
the Government now concede defeat on this point so that it can get something through the House of
Representatives?

TREASURER:

David, we are absolutely determined to keep our promise to the Australian people. The Liberal Party
are still trying to inject adrenalin, if you like, into WorkChoices. They simply can't let it go.
We made a solemn commitment to the Australian people and we intend to keep it. So, we are not going
to be doing anything other than sending that legislation back up into the Senate.

SPEERS:

Still, the Liberals say that if you don't change that definition of a small business you will be
the ones who are protecting WorkChoices.

TREASURER:

No, the Liberal Party are clinging to WorkChoices. They are WorkChoices addicts, David. They simply
cannot let go of this creation of the Liberal Party which we promised to the Australian people we
would remove, and that's what this legislation is about.

SPEERS:

Alright. So, if there's no backdown from either side, you will have a double dissolution trigger.
Is that something you'd like in the back pocket?

TREASURER:

I'm certainly not speculating about that. Because you see the Liberal Party said only a short
number of months ago that they would support our measures to remove WorkChoices. Now, Malcolm
Turnbull is such an opportunist - he's under pressure from Peter Costello who's the architect of
WorkChoices - he's moved over to head off Peter Costello and the consequence of that is that
they're now opposing the removal of WorkChoices.

SPEERS:

Just finally, Wayne Swan, Queensland voters, you amongst them, head to the polls tomorrow. The
election eve opinion polls show that Lawrence Springborg has maintained a very narrow but
consistent lead over the last few weeks. What's your prediction for tomorrow? Do you think Labor
can still win?

TREASURER:

I think it could go right down to the wire. The stakes are really high here. In the middle of a
global recession you've got Premier Bligh, who is committed to a large infrastructure program which
will create jobs, and you've got the Liberal and National parties and Mr Springborg, who don't even
recognise that we've got a problem with the global recession, promising to cut jobs by 12,000 and
to pull back a critical infrastructure program in the middle of a global recession. The stakes are
really high. I think it will go down to the wire but I think Anna Bligh has got the right values
and the right plan for Queensland.

SPEERS:

Still, senior Labor figures have told me this has been a badly run campaign. You have been
involved, of course, in many Queensland campaigns for some 30 years, you're a former state party
boss there. Do you concede that the marginal seat campaign hasn't been as well targeted and
properly run as it should've been this campaign?

TREASURER:

Not at all. This is about the ideas, it's not about the technique of the campaign. What's at stake
here is the future of Queensland and the strength of the Queensland economy, which is threatened by
the Liberal and National parties. And Anna Bligh, there's a Queenslander who gets it, who wants to
invest in infrastructure and also understands that we need to cushion the economy from the impact
of the global recession. And on the other side, you've got Mr Springborg who wants to let the
market rip and leave the state undefended at this critical time.

SPEERS:

Alright. Treasurer, Wayne Swan, hopefully we'll talk to you on election night here on Sky News with
our coverage. Thanks very much for talking to us this morning.

TREASURER:

Thank you.