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ABC News 24: 12 Noon News -

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(generated from captions) Treasurer has just stepped up certainly have but I think the

so we might go to him now. Good

afternoon. I want to say a

couple of things about the

floods and then I'll get on to

the national accounts. I guess

as a Queenslander and having lived through and witnessed lived through and witnessed the

events in Queensland last year,

I think that I can and I

certainly think plenty of Queenslanders and people right

around the country identify

with what people are going through in northern NSW,

northern Victoria, right across

the country at the moment. And

I know from the experience last

year that the thing that year that the thing that really

helped a lot of people was just knowing that people were with

them, that people were thinking

about them and that they were

going to get the assistance

that they needed. I'm pretty sure they are going to get sure they are going to get the

assistance they need but I also think it's important just to

let everyone know that we're thinking of them at a time like

this because there this because there can be nothing more devastating than

having to leave your home to

see your possessions washed

away or damaged or whatever. So

a lot of people going through a pretty tough time at the moment. I want to acknowledge

that. Also I did want to say a

few things about today's

national accounts. I think the

number today is somewhat softer

than many people expected. It

certainly does reflect patch

Iness in our economy and certainly does reflect Iness in our economy and it

certainly does reflect pretty conditions at the end of last rugged global economic

year. This is the last national

account release prior to the

Budget, so there will be a lot

of interest in these numbers

from that perspective as well

and there's no doubt that these

numbers will have a detrimental

impact on our Budget bottom

line. Having said all that,

there is nothing in these

numbers that deters the

Government from bringing down a

surplus in 2012-13 although

obviously this makes that task more difficult. It's important

that we do put the number in

perspective, when you consider

the very see ver turbulence and

weak global conditions that mark the final months of last

year, the final quarter of last

year. If you consider it in

that context, this result is

pretty solid in the circumstances. We shouldn't

also forget that this number today is a backward looking

number, a snapshot of our

economy right at the fever

pitch of the European turmoil

at the end of last year. at the end of last year. While

global conditionles do loom

large and we have seen some pretty positive action from

European authorities since that

time, I think we can say that

some of the pressures emanating

from Europe have eased a little

since the end of last year but

there are ongoing discussions there are ongoing

in Europe as we speak. But if

you do cast your mind back to the last three months of last

year, you did witness the bout of global instability year, you did witness the worst

since the global financial

crisis. I'll take you through what occurred during what occurred during this

3-month peefrd at the end of

last yearful we saw the most violent swings in global

financial margs that we'd seen

since the aggressive. We saw a contraction in over half of the

major advanced economies, with

global unemployment rising even

further to very high levels and

we saw all of those rolling

crisis meetings right through

that period which did succeed

in I verting contagion in

Europe so that was really grim global backdrop to

grim global backdrop to the

national accounts that we're

talking about today so it's not

surprising to see quarterly

growth moderate here at home

especially as we did have a

particularly robust number for the September national accounts

and I think you would recall

that I made the point at that

time that we would be seen

pretty lumpy business

investment, strong business

investment but some outcomes outcomes in future figures and investment but some lumpy

I think we're seeing that

influence in the data today as

well and I'll explain that in

some detail later, but with with economies going backwards

like Germany, Japan, the UK like Germany, Japan, the UK and Italy in the last quarter of

last year, for to us have any

growth at all, in that three

month period I reckon is a

pretty good result. Because

we're simply not immune from that activity and those

influences but once have seen the influences but once again we

have seen the enduring resilience of our economy and

economy does walk pretty tall yet another reminder that our

in the world. So we have an

economy that is on track to

return to trend growth. We have

low unemployment, we have contained inflation, we have

very solid public finances and we have a huge investment

pipeline. Now that's a pretty

prized combination for

developed economy to have in prized combination for any

the circumstances of the global economy at the moment. I refer

to the detail of the numbers.

The figures show GDP rose by

0.4% in the December quarter and 2.3% over the year. We always expected that there

would be an impact from the

global turmoil and we've seen

considerable head winds in the

global economy reflected

global economy reflected in our

economy and we see this in the

data, for example, we see it in consumer caution with the household

household savings household savings ratio still

elevated at 9%, down a bit last quarter but still pretty elevated at 9%, down a bit on

elevated. We see subdued

consumer confidence, which has contributed to patchiness dwelling investment which contributed to patchiness in

detracted 0.2% from growth in

the quarter. And also weak

commodity supply led to incidence Europe and greater

commodity prices in the quarter

We've got something like $164

billion of investment planned billion of investment planned

for this year. That is 27%

higher than the same estimate

for the previous year so

essentially massive increases

to make up here and over here

to here. Whichever way you look

at it, the pipeline has just been strengthening and strengthening. These spectacular figures which strengthening. These are

really point to the investment

boom. My point is that this

investment boom is a resounding

vote of confidence in our

economy and it provides a solid

bed rock of support for our

economy in uncertain times. There are also cross currents

here that flow from this

investment boom particularly in resources. One of those resources. One of those cross

currents is of course a high dollar and of course that has

impacted also by global

instability and what that tends

to mean is that there are parts

of our economy that are growing

at vastly different speeds from

other parts. That is why the Government has been talking for

some time now about responding

to the challenges in a patchwork economy and

patchwork economy and you're

seeing this even more clearly

in the data we see today and

there are sectors of our

economy and regions of our

economy that are experiencing very substantial very substantial structural

pressures for change, flowing

from all of these developments.

But we are making these transitions in an environment

where our fundamentals are

strong. In the past we've had

to make these transition where

the fundamentals have been far weaker. And we have to weaker. And we have to make

this transition and we will

make this transition, we are

doing it from a position of

strength. So it's hard to look past the fact that these structural pressures are

impacting on sectors of our

economy but we are in the best

position to handle of them of

any economy in the world. I

guess this is demonstrated by

the next chart which just gives the relrelative position of

Australia and you've seen it

before but it's updated, the

position compared to other advanced major economies. This

chart shows that we have grown

our economy by 7.#% on pre-GFC

levels. Every single major

advanced economy is lagging far

behinds and a number of them

still have not got back to

where they were. Not vonl three

of the seven major advanced economies not returned to their precisis output level but four

out of seven major economies are now in reverse having

contracted in the December

quarter. That's the backdrop to

the data today and the point is

that in ordinary times this

would be seen as a soft number,

but the last three months of

last year were far from

ordinary. This is quite a solid

number in the circumstances and

I believe it is one of the

dividends of getting the big

economic calls right. We've got

to get right our plans for the

future includinging returning

the Budget to surplus in 2012-13 because recent events in European have underscored

the importance of maintaining a

credible fiscal policy, maintaining our commitment to

surplus sends a message

surplus sends a message of confidence to the world but it

also importantly provides a

Reserve Bank with maximum

flexibility to respond to any further change in further change in the global economy. I want to finish economy. I want to finish on

making a few remarks about

something we've been something we've been talking about all week. I think we should

should never look past the fact

that Australia as achieved an extraordinary result throughout some of the most difficult

economic times in our economic times in our history. When we look at Europe with

double digit unemployment, we

look at the devastation that

that brings to communities

throughout Europe and elsewhere

in the United States it really

rams home how well Australia

has done and how resilient we

have been, but but that

resilience is not just a question of the numbers that

we're talking about today or

any numbers on a page in a

Budget paper or in a

publication from the bureau.

It's about the great bulk of our people advancing their

opportunities and having the

optimism that we as a country

can do even better in the future. The point I mad earlier

in the week at the press club is that optimism flows from

opportunity and the challenge

for Australia is to max mime

the opportunities that flow

from the resources boom and the

Asian century. And turning this

into the Australian century in Asia, not just Australia being

a passenger in the Asia

century, is the aim of so much

Government policy that we are putting forward at the moment

to maximise the opportunities

that flow particularly from this

this investment boom and

spreading them to every corner

of our country REPORTER: The Reserve Bank sat on its hands

this week and the ANZ bank

tells us that they'll review their interests on Friday.

their interests on Friday.

Given this number today, do you agree that

agree that the Reserve Bank sat on its hand and do you think

the ANZ bank should maybe drop it rates? The Reserve Bank takes

takes its decisions

independently from the

Government. I read their

statement yesterday, like all

of you would have read their

statement and athey'd the point that should global that should global conditions change, should there be a

deterioration in the global

economy, they had

flexibilitibility to adjust

rates zoup wards. As for the

major banks' taking out of

cycle decisions about the

future of rates, I've made my position on that abundantly

clear. The PM yesterday was

asked about when we would have

- when you would know what sort

of impact floods had on the

Budget and I understand you

won't be in much more of a position than she was yesterday

to tell us but can you give us

a rough time frame and a rough time frame and process

for what information Government will getting before it works

out roughly what its impact has

been? It depends on how long they last to start with. Even

evaluating the damage when evaluating the damage when the damage goods are under water is

impossible to do. We had a lot of

of experience of this with the Queensland flooding Cyclone Yasi and

Yasi and so on, and it does

take a long time to get a real

handle on it but I think we

really fine tuned our processes

for doing all that, particularly because of the

magnitude of what happened in

Queensland, we set up that reconstruction authority which

had a supervise ory agency and

the way in which they now

collect data is a huge advance

on where we were as a nation in

the past. I've been the past. I've been to briefings up there where before

I went up to Tully for I went up to Tully for example

at the againling of the year

for the one year anniversary of

Cyclone Yasi I went into the reconstruction authority in

Brisbane. They could put up the

town of Tully on the screen,

they could zero to every

damaged house and tell me where

every one of those houses was in in terms of reconstruction or

not and why not. So I think

that this sort of approach and this knowledge is now being shared through disaster management

management organisations across

the country. I think we are in

a far better position now to respond. We got the money out

pretty quick up in Queensland

and I think that will flow and I think that will flow as

quickly as it K we're pretty

good at getting Centrelink out

in those communities, but

depends on the scope and size

of what happened in NSW, there may need to be other

institutional responses but the answer at the moment is we

don't know. The really big thing that changed up in

Queensland - this was for the

first time in our history - was

the massive deployment of armed

forces which really really made

a huge difference. I don't know whether that's required in NSW

but we will do what we have to

do but as a result of our recent experiences in

Queensland both State and

Federal Governments now have a

better handle on how to handle

really big natural disasters, how to collect the data, how to

process it and so on. REPORTER: Given the big banks

are doing their own thing ,

does that make monetary policy

a less effective tool than it

was during the GFC. I'll was during the GFC. I'll leave

- I'll refer you to his

statements but my point is that I don't believe this has been

the case in the circumstances we're currently in to not pass

through rate cuts or to go for

through rate cuts or to go for

out of cycle changes. I made

that point very clear but I'll leave the leave the commentary of the Reserve Bank Governor on his

views about what it does

monetary policy to him. Your

determination to get back into

surplus is made surplus is made harder, more

difficult, wouldn't you have difficult, wouldn't you have to

look at further spending cuts

to achieve that? There's no

doubt that there'll have to be significant savings because we still have an economy which is

going to be growing around

trend but what we are seeing I believe is the circumstances where

where revenues are going to be

further depressed by the

conditions that I've just

described to you. A combination

of factors that I've referred

to here, the higher to here, the higher dollar, the

impact on and consumer

confidence with events in

Europe. Those sorts of issues. You would

You would have recalled I'm

sure from the mid-year review

which we brought down at the

end of November that we wrote

down revenues by a further $20

billion across the forward

estimates in the mid-year

update. Taking the total right

down from pre-GFC levels to

$140 billion. So I fear that

there will be less revenue and we will certainly need to go

through another savings

exercise because as you know, we've been exercising very,

very considerable expenditure restraint as we've followed our

fiscal rules to come back to surplus in

surplus in 12-13. This will

make that task harder but we

think we absolutely need to do

it given the circumstances,

growth hat trend, given what is

going on in Europe, we got to send a

send a signal to the word that

we're in good fiscal nick and

that's what we'll do.

REPORTER: Any ideas where

you're looking? No. This is now

really into that Budget process

that we go through every year and the dance we do for a

couple of months but the fact is we'll go about our business

of doing the budget the normal

way that we do around way that we do around this

year. This is my fifth Budget,

throw in a couple of throw in a couple of major

economic statements and four or

five MYEFO s. In some way it's

going to be the harder of them all because

all because of the reasons that I've been through today.

REPORTER: Do you think the

growth will come from to get

back to trend, clearly there'll be some investment recovery but

to get from these numbers here back to trend? You're an expert back to trend? You're an expert

in this David and as you know

the negative quarter will drop

out. This is a bit below trend

as you've just observed but I

think that we are on track to record growth around record growth around trend.

That's possible you can do the

calculations if your head as to

what you think that might be

but it's achievable and if you

look here we've got got export growth, we've got high levels of investment, we've got even

in the circumstances moderate consumption in circumstances

where you might have thought it

had been a little weaker so in

term of where we are, we're

tracking about where we thought

we'd be overall in MYEFO. The

September quarter was a little

stronger and we thought , this

has been a little weaker but

we're sort of tracking around that. REPORTER: 2.5% growth for

the half year? The question is,

you said that that was close to

friend, what do you regard friend growth as friend growth as being? About 3.25 and that's where I think

we're are. We're on track to

record around trend growth.

REPORTER: Can I ask you about

the charity status of

organisations like Greenpeace and you mentioned yesterday your position on conflict with your position on conflict with

the coal industry. Do you think

that organisations that are that organisations that are get charity status should be

allowed to retain that as long as... Why

as... Why should a coal miner

in your State pay full tax

while somebody who wants to

knock over his job... I made my view about this really clear

yesterday. It's a very good question. The sort of

activities are help activities are help rensible.

The coal industry is a The coal industry is a very important wealth generator and

driver of jobs and prosperity

for Australia. And it will

continue to be for a long time to come. Unfortunately there are some in the are some in the environmental

movement who don't understand

the fact that you can reduce

carbon pollution and still have a viable coal industry and

indeed we need a viable coal

industry unless you want to

tank the global economy. If you

go back to Stern for example

who wrote the Bible on all of

this, in all of his modelling

he still envisaged that coal would supply about 50% of

global power by 2040 or 50.

Let's get that fact on table z

to why this is such a purile

gesture when it cams to

achieving the aims of this

Government and everyone of good

heart has about reducing carbon

pollution. People are abusing their charitable their charitable status, that

is a matter for the tax

commissioner, I don't interfere

in those matters. And if they're public activities bring

them to the attention of the tax commissioner and they're not behaving in a way

consistent with their

charitable status that's where I expect action will be

taken. Has there been a coup in

the ACTU and do you believe the ACTU and do you believe

Dave Oliver is the best man for the

the job? How would I

know Geoff Lawrence, I've just read, has resigned. I read, has resigned. I think he

was a terrific President of the

ACTU. He was a great guy A good

person to work with. I haven't

seen any statements as to why

Mr Lawrence resigned, but I

certainly wish him all the best

for the future. I wouldn't have

the faintest idea who is going to take his place. I'm not

going - it's entirely up to the

ACTU like me telling other

people they should elect

another organisation or

companies or

whatever. REPORTER: In relation to your comments in recent to your comments in recent days

about influence, do you favour

capping expenditures by capping expenditures by third

parties as recommended by a joint parliamentary committee

late last year, wouldn't that

be a tangible way of trying to

restrict campaigning which

people like... If you could

find a way to do it, that's the big challenge here. If you

could find a way to make it to

work it would be a great idea

but as someone who has looked

at this issue over 25 at this issue over 25 years,

they've never been able to come

up with a constitutional way to do it. That's problem. REPORTER: Warwick Mckibon is in the 'Financial

Review' arguing that Review' arguing that the carbon

price should start at $10. He's

also arguing that if the price krarns when you go to the

floating price that the difference will be effectively

a tax on industry. Do you think

the prices are still the prices are still about

right at $23 and

right at $23 and is there any

scope to review that given that Europe seems to be in the doldrums? No. Joe Hockey doldrums? No. Joe Hockey is

giving a speech just about now

on various aspects economic but

one of his points is that the Coalition should prepare policy

based around a dollar, reaching

$1.25, some market experts said

it could go as high as $1.25

and needs to be a policy

response to prepare for that.

Is that something you share? I

don't. I think it's don't. I think it's deeply irresponsible. I never comment

on the level of the dollar, but

the real challenge the Coalition's got is they've got

a $70 billion hole and if they don't get some sort of fifkical

rectitude they would wreck or

economy if they were in power

which I don't think they'll

ever achieve. It's just

remarkable today, you've got Mr remarkable today, you've got Mr

Abbott out there confirming

he's going to increase the

company tax rate to fund his

paid parental leave scheme. And

at the same time, arguing he's

somehow going to cut company taxes whilst he's

simultaneously increasing them

while they admitly have a $70

billion hole in their starting

point. None of that adds up.

REPORTER: Tony Abbott has been

in a school in Adelaide today

saying that it's in your DNA to smash independent schools. I

think he's basing that on the

recent Gonski review which I don't think you've made any commitment of that kind to.

What do you make of those comments and the Opposition's

attempt to what some people

might describe as verbal

you? He's just increasingly

desperate. He's in ra policy cul-de-sac. He's got nowhere to

go and he's just lashing out.

All of the time. The fact is

that since the mid-60s we've that since the mid-60s we've had a big commitment in this

country in the Labor Party to an independent sector in education, church and charitable and that's grown

over the years and that's as it

should be and the basic

principle of Gonski takes all of that into account. REPORTER: Back on

Back on the subject of, Back on the subject of, this

you've warned of a hit to

revenues because - we see

company tax, company profits down this

down this year and you talk

about the reasons why, yet company tax collections have

been holding up, in other words they're tracking MYEFO quite

well, is that going to change

or is there some way in which

in fact these national accounts

are not being fully reflected

in the hit to the much you're

actually bringing in?. I don't

think they're tracking think they're tracking MYEFO.

What you're referring to is you see an increase but it is not

consistent with where we

expected them to be increasing

to. They are already down, of

that there is no doubt. On what we had forecast. In MYEFO In MYEFO, absolutely. How much

plielt you be short? As you

well know because you follow these things, it's too early to

say. That is the whole point, because what appears to be happening is that happening is that the accumulated losses which have

travelled a I and I long from the global financial crisis and global recession, are

impactinger is veerly on

revenues and more severely than

the Treasury had the Treasury had forecast. Had any State Treasurers contact

you about the very sharp fall in

in State revenue so far this

financial year? No. I've heard

a couple of them saying that

they are talking to me but but

they haven't and they are

writing me a letter but it hasn't arrived. hasn't arrived. Look,

seriously, thrf is a degree of

revenue weakness and it's too early to tell the exact magnitude of

magnitude of that and all of magnitude of that and all of

the detail causes of it. But it

is there. You and the PM both

stated the economics benefits

of returning the Budget to surplus but if revenues are

down significantly on the face

of these figures, can it get to

a point where cutting is going

to be detrimental to the economy I believe it's really

important to return the Budget

to surplus. It sends a very

clear message to the world that

Australia is in good nick F you

wanted any reminder of the importance of. That importance of. That look at

what is going on today around

Europe and secondly I think it

reinforces the capacity

therefore of the Reserve Bank

to deploy monetary policy. Thanks. That's the Federal Treasurer Wayne Swan Treasurer Wayne Swan speaking in response to the release of today's economic growth figures

of 0.4% in the first quarter of