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Rudd concedes economy is slowing -

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Rudd concedes economy is slowing

The World Today - Friday, 1 August , 2008 12:10:00

Reporter: Lyndal Curtis

ELEANOR HALL: Australia's economy is looking sicker by the day with retail sales dropping, demand
for credit slowing and home lending at its lowest level in more than two decades.

Responding to questions about his economic management, the Prime Minster, Kevin Rudd, conceded this
morning that the slowdown is likely to result in job losses.

But Mr Rudd fended off questions about whether his government had been putting the brakes on the
economy too hard.

In Canberra, chief political correspondent, Lyndal Curtis reports.

LYNDAL CURTIS: After a couple of weeks spent enjoying the twists and turns of debate in the
Opposition over climate change, reality has come thumping back in for the Government.

Already grappling with a major economic change in the shape of an emissions trading scheme, now the
Government's grappling with a change in the economy as the omens begin to look uncomfortable.

In two interviews this morning, on AM and on Melbourne radio 3AW, the Prime Minister has stepped
cautiously around questions about whether the Government has slowed the economy too far.

KEVIN RUDD: We believe that we have done the responsible thing through a $22-billion budget surplus
and remember that surplus is there to provide also a buffer for uncertain global economic times
ahead.

CHRIS UHLMANN: Are you concerned the economy is slowing too fast?

KEVIN RUDD: We believe that in terms of the budget settings for this government's approach to
fiscal policy, we've got those right.

LYNDAL CURTIS: He's also danced around questions about whether jobs will go. And he's baulked at
buying into talk of a recession.

NEIL MITCHELL: Do you accept that a recession is a possibility?

KEVIN RUDD: I believe that we have a strong policy course of action to see this economy through. We
are in the best position, a better position than most other economies in the Western world given
our strong budgetary position; independence of our Reserve Bank and as well as a clear strategy of
economic reform.

NEIL MITCHELL: OK, do you accept it is a possibility?

KEVIN RUDD: I believe that we have a responsible strategy for the future.

LYNDAL CURTIS: He says the Government can't solve economic problems besetting the world but can,
through action already taken in areas like tax cuts, cushion the blow.

Economic clouds do have silver linings for some - house prices and house values may be falling -
that's bad if you own a home - not so bad if you're looking to buy. Although Mr Rudd wouldn't buy
into that.

KEVIN RUDD: Well housing affordability is a deep concern facing all Australians and it affects
people differently at different parts of the country.

CHRIS UHLMANN: So it is good news that house prices are falling?

KEVIN RUDD: I would say that housing affordability is a challenge facing many households across the
country and it affects people in different ways in different parts of the country.

LYNDAL CURTIS: A slowing economy has also increased the prospects for interest rate cuts and the
Prime Minister has put the banks on notice that they will be expected to pass any falls on.

KEVIN RUDD: Look at the overall profitability levels of our banks, they are huge. Therefore I
believe they have got a responsibility to pass on.

LYNDAL CURTIS: Mr Rudd also had a message for China - which isn't allowing free access to all
Internet sites during the Olympics as it promised to do.

KEVIN RUDD: My attitude to our friends in China is very simple. They should have nothing to fear
from open digital links with the rest of the world during this important international celebration
of sport.

NEIL MITCHELL: So you will raise that with them?

KEVIN RUDD: Yeah, absolutely.

LYNDAL CURTIS: Some plain talking in the guise of helpful hints from the sidelines have come the
Opposition leader's way this morning.

Nationals Senator Barnaby Joyce has told News Radio Dr Nelson has a tough job and should be given
more latitude - but.

BARNABY JOYCE: And I don't think he will have to worry about pushing Brendan. Brendan will
understand the reality of the situation, if it obviously doesn't improve, that is a no-brainer. If
the situation doesn't improve, Brendan knows better than anybody else, what the result of that
would be.

MARIUS BENSON: And what would the result of that be?

BARNABY JOYCE: Oh, well I've said if the numbers don't improve before the election, I imagine that
Brendan would decide that he would probably have to move on.

LYNDAL CURTIS: Senator Joyce, who doesn't have a vote in the Liberal Party room says no one is
racing out for the job. But some MPs are trying to get former Treasurer, Peter Costello, to the
starting line. Mr Costello hasn't given a signal he wants to stay but he hasn't gone yet.

A Channel Seven report that he had turned down a lucrative job offer overseas offer buoyed some in
the draft Costello camp; although one person close to him says they wouldn't expect he'd head
overseas for his post-political career because he's something of a homebody - as it's been written
elsewhere - someone who when he wants to relax fires up the BBQ. His family is in Australia and his
youngest child still at school.

And there's the question of whether he'd do what he's never done before and that's put himself
forward for a vote on the leadership. One former leader turned commentator John Hewson was also in
the helpful hints game on Sky this morning.

JOHN HEWSON: Yeah, when I look back at Peter's career he's never had the balls to challenge or make
a move to actually move, to get the job in circumstances where he could have got it.

LYNDAL CURTIS: The Opposition leader is one of those urging Peter Costello to return to the
frontbench; although not all the way to the front.

Dr Nelson has told ABC Local Radio in Adelaide this morning he intends to lead the Opposition to
the next election.

BRENDAN NELSON: I am absolutely determined with everything that I've ever done in my life to see it
through and I will lead us through to the next election.

ELEANOR HALL: That is Opposition leader, Brendan Nelson ending that report by Lyndal Curtis.