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Transcript of doorstop: Parliament House, Canberra: 3 February 2009: Nation Building and Jobs Plan; Economic Security Strategy; temporary deficit; banks.



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DOORSTOP INTERVIEW PARLIAMENT HOUSE, CANBERRA

3 FEBRUARY 2009

SUBJECTS: Nation Building and Jobs Plan, Economic Security Strategy, Temporary Deficit, Banks

TREASURER:

Today the Rudd Government will announce a Nation Building and Jobs Plan to support Australian jobs, but most importantly, to invest in future economic growth. This plan will strike the right balance between supporting jobs now and investing in critical nation building projects for the future.

JOURNALIST:

Will there be tax cuts brought forward?

TREASURER:

I'm not going to speculate about what may be in the package later today. That will be all out there for you to see later on.

JOURNALIST:

But what made you decide to do it today? What tipped the balance?

TREASURER:

There's no doubt that in the past couple of months a dramatic collapse in global demand caused by the global recession. It's had a dramatic impact on economies right around the world, and that has made it imperative for the Australian Government to respond, and to respond in a timely and decisive way.

JOURNALIST:

You say this will be a Nation Building and Jobs Plan. You made the claim in the last stimulus package that 75,000 jobs would be created. Do you stand by that, and will you make a similar claim in relation to today's package?

TREASURER:

Well, certainly the economic security package that we announced in October arrived precisely at the right time, because what we now know is that in the month of December, right around the world demand collapsed. And if you look at what happened in retail sales around the world - in the United States, in Great Britain and many other countries - there was a very sharp contraction in demand.

Now, there is evidence out there today from retailers that suggests that our economic security package that was delivered through December did have a positive impact, because it was delivered precisely at the right time. The Rudd Government prides itself on being ahead of the curve, and we put that package out there in a timely way. And we believe that events since that time have further affected the world outlook with a very sharp contraction in demand. You've got the IMF at the moment now talking about global growth of only half a per cent.

Now, there have been three revisions by the IMF since MYEFO. They have all involved a very substantial downgrading of growth. That has implications for Australia, which is why the Rudd Government is putting in place this plan - this Nation Building and Jobs Plan - to support Australian jobs and to support future growth, most particularly through investment in nation building.

JOURNALIST:

But Treasurer, to the question that David asked. The claim was that 75,000 jobs would be created, not supported. Where are those jobs?

TREASURER:

Well, the claim was that up to 75,000 jobs would be supported by that package. We believe the package has had a positive impact. Let's be very clear about one thing: the impact of the global recession is substantial and it will cause unemployment to rise. What we can do, through packages such as a Nation Building and Jobs Plan, is that we can have an impact to cushion the full force of that on our economy. We cannot stop the full force of this on our economy, but we can cushion its impact. And its impact was most certainly cushioned by the Economic Security Strategy that we announced in October, as you can see in some of the data that is coming through from the retailers today.

JOURNALIST:

Treasurer, by unleashing a second stimulus package, will it inevitably force us to go into deficit as you mentioned the other day, but in terms of the shear scale of this package?

TREASURER:

Well, a temporary deficit has been imposed on Australia by the rest of the world, and what you saw yesterday is the magnitude of that in terms of the revenue downgrades. Today we will provide a full update of all of that, so all of the figures will be there for everybody to see.

But the Australian Government has the very strong view - and it's the view the IMF has - that in these circumstances there does need to be a strong response from government when private demand collapses, because if there isn't a strong response from government, more jobs will be lost. This Nation Building and Jobs Plan is all about supporting jobs right now, but also putting in place the critical nation building investments for the future to support future economic growth.

JOURNALIST:

Treasurer, Julie Bishop says given all taxpayers have done to support the banks, the banks are under some sort of obligation to pass on the rate cut in full. Do you agree with that assessment?

TREASURER:

Well, we certainly think that the banks ought to be passing on the full rate cut as soon as possible, but what we also have to bear in mind is that we live in a very difficult international environment and funding costs move around. I'd certainly like to see the banks pass on any cut in full in a timely way. But for now, the most important thing for Australia is that we have both fiscal policy and monetary policy working together to strengthen growth and to support jobs in the face of a global economic recession. Thanks.