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US economy and trade prospects, Parliament House, Canberra, 16 October 1998: doorstop interview.



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THE DEPUTY PRIME MINISTER AND MINISTER FOR TRADE

 

TRANSCRIPT

Doorstop by Tim Fischer on US economy and trade prospects

16 October, Parliament House, Canberra

 

Fischer:

 

I’ve just taken a phone call from Andrew Peacock, our Ambassador in Washington at some length. Andrew was in very good form this day, we were discussing the US economy, the Federal Reserve’s surprise interest rate reduction onto other matters, which leads me to comment on that.

 

Whilst day to day exchange rate movements are one thing and I don’t make comment on day to day exchange rate movements with the Australian dollar. I do make the broad observation that overnight we’ve had a reminder that Alan Greenspan and the US Federal Reserve remain absolutely focused on ensuring that the US economy remains in positive territory. That the US economy remains in growth mode and in making that observation I make the related observation that Australia’s exports to the USA are up. They’re up by around 40 percent year on year and continuing to climb and if we can continue to keep the world’s largest economy in positive territory that’s good news for Australian exports and Australian jobs.

 

I make the related point that Japan will always be for the foreseeable future the world’s second largest economy, Australia’s largest trading partner. I will be having talks next week with Peter Grey, the Australian Ambassador who’s returning to Canberra next week to further evaluate things in Japan. Our exports to Japan for this first 8 months of calendar 1998 are up 7 percent, but we’re going to have to keep working harder and harder at our export efforts given the very turbulent world trading times. I would add that it’s a situation where our diversification is paying dividends. Exports to Europe up 35 percent and we are pushing in all directions including South Africa and South America with export diversification. Exports means jobs and this is a message which the Government will be pushing very hard over this next period.

 

Q:

 

Do you believe the Fed’s cut would provide scope in this country for a reduction?

 

Fischer:

 

I don’t speculate on interest rate movements, never have, never will. But what I will say is we have by a balanced budget, Peter Costello getting through to that balanced budget one year early, would of course help ensure a lower interest structure generally.

 

Q:

 

So conditions are more favourable for interest rates....

 

Fischer:

 

I do not make a specific comment on the prospectivity of the matter you raise.

 

Q:

 

Can you rule out a rise in interest rates in Australia?

 

Fischer:

 

The same answer applies. I do not make speculative comments about interest rates or day to day movements of the Australian dollar. Obviously exporters and importers follow all these things very closely. I just make the broad observation that I said during the election campaign I had confidence that Alan Greenspan and the US Federal Reserve will remain absolutely focused on what might have to be done, what it takes, to ensure the US economy, the world’s largest economy remains in positive territory.

 

Q:

 

But the downside for us is that a lower US interest rates means a stronger Australian dollar. We’ve seen the dollar rise five cents over the last week isn’t that going to punish exports?

 

Fischer:

 

There are a range of factors relating to exchange rates and as Minister for Trade I am very mindful of those, but I do not comment on the day to day movement of those exchange rates.

 

Q:

 

Good to see the dollar go up though isn’t it?

 

Fischer:

 

I make no comment. Good try.

 

Q:

 

There’s been some confusion in the US about what’s motivated this latest cut. Was Mr Peacock able to shed any light on that?

 

Fischer:

 

Ambassador Peacock and I discussed certain aspects which are best left internal to the processes of government. Let me say that no doubt these are matters which will emerge. I must say there’s a lot to be quietly confident about the Australian economy, not withstanding the difficult times. I don’t rule out the whack we are getting in some of our key markets and that’s why we have been diversifying. But at the end of the day, we have a balanced budget, we have strong prudential regulation of our banking system. Our big banks have little exposure to the huge tranches of debt that are rinsing around the world and causing great havoc at the moment. So our situation trade wise is solid, but no complacency.

 

Q:

 

Which sectors are benefiting Mr Fischer when you say all these export growth is up?

 

Fischer:

 

Just take one. Barbeques Galore of all things, trading as slightly different name in the US, Beefeater Barbeques, is a very good example of the diversity of Australian know-how and manufacturing industry, that the equivalent of Barbeques Galore Australia as Beefeaters are going very well right through to the IT industry. A lot of our software product is actually making it in the US, places like Comdex, the US computer trade fair, and of course against all odds we are even exporting Australian wine to the US, and a raft of other products.

 

Q:

 

Mr Fischer Ian McFarlane the Reserve bank Governor indicated earlier this week that there might be room for a bit of regulation of international capital markets and that sort of thing....does the Government have a similar view on that?

 

Fischer:

 

I’ve asked for a copy of his speech, it’s in my briefcase and I’m about to fly to my electorate. I’m going to read the speech in full before I would make a comment, but it did attract my attention.

 

Q:

 

Mr Fischer how concerned are you that the US Congress has not signed off on Fast Track?

 

Fischer:

 

Well that did fall over during the campaign, I think there was a bit of mischief politics in the timing of that vote this time around. The US Congressional elections take place on Melbourne Cup Day - two big events in the world that day will be the Melbourne Cup and the US Congressional elections. My wife and I hope to get to the Melbourne Cup this year. But it’s a case of the US does need Fast Track, we do need a millennium trade round of negotiations, we do need better market access, there is no such thing as a level playing field. I am disappointed by the lack of resolve by the Congress.

 

Q:

 

Mr Fischer are the Nationals happy with the Prime Minister’s decision to revisit Mal Colston’s vote?

 

Fischer:

 

Yes, and on all those matters such as Cabinet, I have a scoop for you as I have to race to the airport. I can advise of one particular slot which has been filled, a very important one, a very capable operator. I affirm the Prime Minister and I, the Liberal and National Parties have signed off on Garry Nehl, Member for Cowper, being…the Deputy Speaker in this Parliamentary term. Good luck to you all.

 

ends.

 

Parliament House, Canberra, ACT 2600   Tel (06) 277 7420   Fax (06) 273 4128

 

 

KD