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Transcript of doorstop interview: Brisbane: 31 August 2009: economic stimulus; interest rates.

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31st August 2009


SUBJECTS: Economic stimulus; Interest rates

TREASURER: Economic stimulus has been absolutely critical to supporting employment and supporting business throughout this year, and of course economic stimulus is the reason that Australia is one of only two advanced economies that grew in the March quarter. So we have strong growth, we have lower deficit, and lower debt than just about any

other advanced economy.

But to withdraw stimulus now would threaten the recovery. To withdraw stimulus now would simply kneecap the recovery and lead to much higher unemployment. That’s the advice that the Government has received from the Treasury. To withdraw stimulus now would threaten the recovery, stall the economy and cause higher unemployment. And of

course if the Liberals had their way Australia would be in technical recession right now, because there is no doubt that the stimulus in March produced that GDP number - a very important number which has supported confidence in the Australian economy.

JOURNALIST: With the threat of interest rates going up and economists seem to think sooner rather than later, is it time to start winding back some of the stimulus spending?

TREASURER: Well these are matters for the Reserve Bank. And I think the Reserve Bank Governor has himself said that the emergency level of interest rates that we have at the moment - the lowest in something like fifty years - will at some stage go up into the future. But that is entirely a matter for the Reserve Bank. Nobody likes to see interest rate rises. But what we do know is that economic stimulus at the moment is absolutely vital to supporting businesses, to keeping customers coming through the door and to supporting employment. The livelihoods of tens of thousands of Australian workers and businesses depends upon

strong economic stimulus supporting our economy. And of course the stimulus is temporary and it is targeted, and it is designed to be withdrawn from year’s end as private economy recovers.

JOURNALIST: Are you confident that the Reserve Bank won’t change rates tomorrow?

TREASURER: Look these are matters for the Reserve bank. I have never commented on the Reserve Bank processes that are in play. The Reserve Bank is independent. It takes its decisions; they are entirely a matter for them.

JOURNALIST: (Inaudible)?

TREASURER:Well our stimulus is in place right now and it is supporting employment particularly through the school modernisation program, the energy efficiency measures, and of course the social housing measures. They are responsible - those measures - for the employment of tens of thousands of tradies and of course they’re keeping customers going through the doors of tens of thousands of small businesses. Those measures are flowing through the economy right now; you will see it in the June quarter national accounts. And those measures will flow through the rest of this year and through next year. But the stimulus begins in terms of its impact to phase down from the last quarter of this year. So the stimulus will be withdrawn as economic recovery proceeds globally.

JOURNALIST: Are you expecting a revised forecast of unemployment figures to be better than expected?

TREASURER: Well we always put out our mid-year report, if you like, towards year end and new forecasts will be provided then. There is no doubt that the economic stimulus has strongly supported employment in the Australian economy, and that’s a good thing. And if the forecasts are revised down a little, well that will be a good thing as well.

JOURNALIST: Obviously you didn’t spend much on your mobile phone in the past year, any comment on what some other politicians spent?

TREASURER: Well I haven’t seen the estimates you’re talking about. It’s news to me.

Thank you.