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Transcript of doorstop interview: New York : 18 January 2013: Australian Economy; Global Outlook; MRRT: Lance Armstrong

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THE HON WAYNE SWAN MP Deputy Prime Minister Treasurer

Doorstop NEW YORK



SUBJECTS: Australian Economy; Global Outlook; MRRT: Lance Armstrong

TREASURER: Well, I’ve just finished addressing senior American business leaders about challenges in the global economy and of course the resilience in the Australian economy.

In terms of the global outlook, I think 2013 could be a better year in the global economy provided American and European leaders get the decisions right. Now is not a time to slash and burn; what we have to do now is get the decisions right for growth and jobs into the future.

In terms of the Australian economy, we need to have a discussion about the facts. The Australian economy is 13 per cent bigger than it was five years ago. We’ve got to lock in the gains of the last five years with policies for the next five years which maximise the opportunities which will flow from the Asian Century.

In terms of the Australian economy, it’s very important that we have a debate about the facts - absent all of the exaggeration. Our future is not assured and what we need is a plan for the future that maximise the opportunities which flow from the [Asian] Century.

But in terms of the domestic economy and in terms of the international economy, I am cautiously optimistic about the future. But we shouldn’t let that caution morph into excessive pessimism.

JOURNALIST: Were you able to convert any of the Tea Party in there into the idea of the deficit being something that is sustainable?

TREASURER: I think we had a good discussion and good question and answer session there.

I think they understand the importance of good fiscal policy in Australia. Our fiscal consolidation has given the Reserve Bank the opportunity to adjust interest rates down very substantially. They understand the importance of good fiscal policy in Australia, and good fiscal policy in Australia has put us in the position of having an economy which is 13 per cent larger than it was five years ago.

JOURNALIST: What’s the difference between what the US is doing and what Australia is doing in general terms? Or is it just pure luck in the commodities? What’s going on there?

TREASURER: What Australia has put in place over a long period of time is good fiscal and monetary policy, and the consequence of that is strong growth. The Australian economy has a very substantial pipeline of investment in resources, but we’ve also seen very good growth over a long period of time right across our economy.

JOURNALIST: The mining boom, is it over?

TREASURER: Well, there are three phases of mining, investment and production in Australia. It started with a price boom which came off over the past year but now has got very substantial investment in mining. That’s got a long way to run. And that’s got to be followed by an expansion substantially in production and an expansion of exports. So the mining boom, if you like, and investment in mining has got a long way to run in Australia.

But I was at pains to point out that the Australian economy is much broader than mining and the opportunities for investment are much broader in agriculture, education and a whole range of service industries. That’s what I spoke to them about today.

JOURNALIST: With the prospect of actually getting something out of that mining tax? Is that looking good in the future do you think?

TREASURER: Well what we’ve seen in the last few months has been a substantial crash in the price of commodities, there’s been some return in that, but as we go forward we’ll have to see how the numbers pan out. The fact is that profits-based taxes depend on high prices, and when prices go down that has an impact on profits-based taxes.

JOURNALIST: Any revenue from that tax?

TREASURER: What we’ll have to do is we’ll have to see the future course of prices. We can’t draw conclusions from one particular month or one particular quarter.

JOURNALIST: What about the six month period (inaudible)?

TREASURER: We can’t draw conclusions over a short period of time when prices have been low. We have to have a look over a longer period of time and we’ll have to see where prices go.

JOURNALIST: Are you able to give an indication to anybody, perhaps six months, how the tax has performed?

TREASURER: Well, what I’ve said before and what the Tax Office and Treasury have said, is that there are confidentially provisions within the Tax Act which don’t allow the authorities to distinguish between resource rent taxes.

JOURNALIST: So, there’s going to be no unveiling of how the mining tax is doing?

TREASURER: Well these are matters not for me, these are matters for the Treasury and the Tax Office, and they follow the law.

JOURNALIST: Simply change the law, isn’t that an option?

TREASURER: Well, the confidentially provisions of the Tax Act are very important to every taxpayer. People should think very carefully about the importance of law in this area.

JOURNALIST: (Inaudible) the deficit, there’s no prospect obviously of a surplus in the near future?

TREASURER: Well, what we said at the end of last year is that a surplus in 2012-13 was unlikely as a consequence of very substantial revenue write-downs in all taxes associated with profits. The consequence of that is that a surplus will be unlikely in 2012-13 and that is what I outlined at the end of last year.

JOURNALIST: (Inaudible) how have you found the reaction to Australia’s economic performance, and are people literally asking for (inaudible)

TREASURER: There is very strong recognition of the resilience of the Australian economy because unlike other developed economies, Australia has got low levels of debt, Australia has solid growth, and Australia has bright economic prospects for the future.

JOURNALIST: But surely at this time isn’t this the sort of trend when you should be in surplus, you should be handing down a surplus when the economy is buoyant and has been for so long?

TREASURER: What the government has been doing has been putting in place a balanced, responsible fiscal policy, and we have put in place a very substantial fiscal consolidation over time. What we decided at the end of last year was to let the automatic stabilisers operate in an environment where further revenue write-downs would lead to a loss of jobs and growth should we cut harder.

JOURNALIST: Have you identified somewhere where you can (inaudible)?

TREASURER: We just said that it would hurt jobs and growth if we were to cut further as a consequence of a revenue write down which flowed from a higher dollar and lower commodity prices.

JOURNALIST: Two other programs that are going to get guaranteed up and running are national disability and education is going to get a bit of kick along (inaudible)?

TREASURER: Well, I don’t do budgets in interviews from New York.

JOURNALIST: Obviously, the talk of the town here at the moment is Lance Armstrong - you got any thoughts about that?

TREASURER: I think many people who have followed Mr Armstrong over a long period of time are saddened and shocked by these revelations. There is no place in sport for drugs, not ever.