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Transcript of doorstop: Pat Farmer; ANZ job ads; economy; road funding; Baby Bonus; interest rates; Alexander Downer.



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TRANSCRIPT of

HON. PETER COSTELLO MP Treasurer

Doorstop

Monday, 5 August 2002 12.10pm

 

SUBJECTS: Pat Farmer; ANZ job ads; economy; road funding; Baby Bonus; interest rates; Alexander Downer

TREASURER:

It's great to be here in Macarthur today and to open the electorate office of Pat Farmer, who is doing an outstanding job in Canberra, one of the great additions to the Federal Parliament and he enjoys widespread support from this area and I am just here to support him, to open his office and to hope that he'll continue to win the trust of the people of Macarthur.

JOURNALIST:

Treasurer, the ANZ job ads have just come out for this month, 0.6 per cent, the third month in a row. Saul Eslake was saying that that means conclusively they're on the way down. Is that the way you see it?

TREASURER:

We think that employment growth will continue over the course of the year, in fact job vacancies are up about 9 per cent over the course of the year. But, that will make inroads into unemployment over a period of time. We're not forecasting significant reductions in unemployment until next year, provided that the international economy remains strong. The most important question at the moment is really the United States economy. News over the weekend confirmed that the US economy had three negative quarters, in 2001, that is a pretty substantial recession. Australia, of course, defied the US recession. But we are not immune from world developments.

We have got to keep our economy strong. We are the fastest, the strongest growing of the developed economies, but all of these things are going to make the task a pretty, pretty tough one, to stay there over the course of 2002 and 2003.

JOURNALIST:

Last week, I think, you were talking about the impact on the real economy if that happens. We are now seeing confirmation of shrinking jobs growth. That can't be much clearer though, can it?

TREASURER:

Well, I think you have got to separate the American economy from the Australian economy. Last week what I said is, if you have substantial falls, as you had in the US stock market, sooner or later you would expect that to work into the American economy. Now the American economy had a severe recession last year. You have now had economic recovery in the United States, but extreme stock market volatility. The risk that I have warned of, is that that volatility could flow back into the American economy. How would that affect Australia? Well, it could affect Australia by affecting our export markets. The United States economy is the largest economy in the world and we are big exporters to the United States, so if the US slows down that would affect our markets. But we have not seen that moving back into the real economy of the United States yet. The real economy of the United States appears to be still growing after

that severe recession. The risk is, if this volatility in the United States were to flow back into the American real economy.

JOURNALIST:

Most economists would forecast another reduction in jobs growth next month. How would that put Australia then, more, in a much worse position, surely?

TREASURER:

Well, it would leave Australia as the strongest growing economy in the developed world. But, you know, having outperformed the world in 2001 and 2002, we don't want to get complacent. We can't afford to be complacent about economic policy. That is why the Government's running a strong economic policy to keep Australia at the top of the table in terms of world growth.

JOURNALIST:

But Treasurer obviously, you know, this is a real impact and you're concerned about jobs growth, you have to be, don't you?

TREASURER:

Well jobs growth is continuing in the Australian economy. Jobs growth is continuing, it is meeting new entrants into the market. The question is, it has to exceed new entrants into the market before unemployment could fall. We forecast that unemployment would fall over the course of 2002 and into 2003. And we have a pretty strongly growing economy at the moment. Retail trade is good, interest rates are at historical lows, inflation is low, we will be getting our GDP figures in a month's time. These are the important indicators as to where the Australian economy is.

JOURNALIST:

Mr Costello, one of the most important issues out here at the moment is the on and off access ramps on the F5 Freeway. John Anderson came out here a month ago and said that the Federal Government would give two thirds of the funding.

Why not fund the whole lot instead of this to-ing and fro-ing between Federal, State and the Local Government as to who will pay for the one third?

TREASURER:

I don't know that there should be any to-ing or fro-ing. I think it is pretty obvious if Mr Anderson's offered to fund two thirds that between the other two levels of Government coming up with the one third shouldn't be that hard and I am pretty surprised that they haven't done so already. But if the State Government and the local council want to also make a contribution, as you would expect they would, for the local community and for the state community, it wouldn't be too hard for them to, I think, match the offer that Mr Anderson's made, and I pay tribute to the work that Pat's done in relation to this.

JOURNALIST:

What about, there's this $12 million worth of Sustainable Region Funding over 3 years that the Federal Government's given to Macarthur. So, could the shortfall be, the $2 million that we need, could that be used from that funding?

TREASURER:

Well, that's for sustainable regions and you don't rob Peter to pay Paul. We want good sustainable regions and we want the ramps. And we have got two thirds contribution from the Federal Government, it shouldn't take too long before the other levels of Government, I think, kick in.

JOURNALIST:

Mr Costello, twice in Campbelltown in less than a year, very good. This area is known as Nappy Valley to a lot of people and the Baby Bonus has copped a bit of flack out here. Are there any plans to review it for the next financial

year, or any plans for paid maternity leave?

TREASURER:

Well, the Baby Bonus is a new payment which has never been there before. It is in addition to Family Payment Part A, Family Payment Part B. It is in addition to the maternity allowance and it is in addition to child care, and it is a Baby Bonus which has never existed before, which is $500 to $2500 per annum, for 5 years. Now, the sums that are involved in that, obviously, are much larger than any sums that would be available for maternity leave, which I think is 14 weeks. So, the Baby Bonus is certainly a very substantive financial incentive which has never been there before. People are now starting to get it...

JOURNALIST:

So you're pretty happy with how it's working?

TREASURER:

...and I think it has been warmly welcomed by people who are beginning families. And I would say to people who are beginning families that they should apply to it, but not just for that of course. That is in addition to Family Payment Part A and Family Payment Part B, the maternity allowance and also the Government's provision in relation to child care. And I think one of the biggest changes that emerged out of the tax reforms of the Government, was the way in which it improved opportunities in relation to child care.

JOURNALIST:

What about fresh tax incentives? Is the Government having another look at that, is there any possibility of that?

TREASURER:

Well, we were elected in November, October, November last year, and we have already introduced another new financial incentive - the Baby Bonus - for families with children, so, you can't do everything at once. But I am very pleased that we have been able, in the last 8 months, to have been able to introduce this entirely new incentive for families. And of course, that is an addition to all of the other family benefits which the Government has in place.

JOURNALIST:

Do you think, talking about the mortgage belt out here, that people can stand another rise in interest rates, because it is being looked at this week?

TREASURER:

All I would say is, when our Government was elected mortgage interest rates were 10.5 per cent and now they are about 6.5, which is, what, a 40 per cent decline in interest rates. So, that has helped a lot of families and I think one of the things that home buyers know, is that Liberal policy has helped, very directly, in buying homes. Now, those mortgage interest rates are at all time lows, leaving out the events of September the 11 th, 30 year lows, and they have helped a lot of families. And, it does not come about by accident, it is careful economic policy and we intend to keep careful economic policy going.

JOURNALIST:

Given those circumstances people have overstretched now, and I read this morning that they are even giving up their Pay TV to meet the mortgage rate. If it gets any tougher they might have to hand over, so, do you think now it would be good to hold the line?

TREASURER:

I don't comment on future movements in interest rates and that's the end of it.

JOURNALIST:

Do you believe that people have actually overstretched and any that huge movement forward would really put the real

economy under pressure?

TREASURER:

Well, you have got to remember this, as you bring interest rates down, one of the reasons you bring them is so that people can borrow, so it would not surprise, if, on the lowest interest rate in 30 years, people have borrowed. That is part of the strategy, that is what kept the home building industry going when the world was going into recession. How did Australia avoid recession when the world went into recession, when America went into recession, when Japan went into recession? Well, one of the things was that we gave incentives to home buyers, and on low interest rates people took up the money. So it is no surprise that they would borrow. That is one of the reasons why you have low interest rates.

JOURNALIST:

Mr Downer has apparently made some comments today about future leadership. Would you be happy to have Mr Downer as a deputy in any Costello-Liberal Government?

TREASURER:

I have got a lot of respect for Alexander Downer and for the work that he has done. I think he has been a very fine Foreign Affairs Minister. I have worked closely with Alexander over a number of years and I think he has got an enormous contribution to make. And I am sure he will make it in whatever capacity he can, both now and in the future. And the only advice I would give him is stick to the Foreign Affairs and give up the singing.

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