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Shadow Treasurer comments on today's balance of payments figures and Nissan plant closure

PHILLIP LASKER: Shadow Treasurer, Peter Reith, says the trade result reflects the harsh recession. He joins us from our Melbourne studio. Mr Reith, thanks for joining us. Why do you say this result is due to the recession?

PETER REITH: Well, because when you analyse the figures, the export performance is pretty flat - in fact, seasonally adjusted, it dropped by one per cent. It's really on the import side where we've seen the turn around in this month's figures. It dropped 16 per cent, which really is dropping like a stone, and that just reflects the fall-off in demand pressures in the Australian economy. Australians don't basically have the cash to be buying imports.

PHILLIP LASKER: Although, some people might be impressed by the fact that exports held up.

PETER REITH: Well, they might be impressed. I think you need to look at one month's set of figures within the context of where we've been going in recent months. November's figure was an absolute shocker, following, in fact, the two previous months which were also in excess of $1.3 billion. And the ABS says in its commentary on this month's figures that the provisional trend estimate is actually one per cent worse than November. So, within that context, you've seen the demand pressures in the Australian economy falling off, and that's exactly what you'd expect in a recession - a fall-off on imports.

PHILLIP LASKER: But can we at least say that all is not lost - we're at least getting some improvement on the trade front and we have a very impressive inflation figure, so we have something to show for the pain?

PETER REITH: Well, we do have an impressively low inflation figure. It's the lowest figure for 30 years because we've got the worst recession for 60 years, and there's a bit of a gain on that. The real question is whether or not we can keep those low inflation gains. The market thinks that there's some pressures for a rebound in the inflation rate, and the underlying rate is a bit higher than the 1.5.

PHILLIP LASKER: Would you, or do you, think the economy is in need of further interest rate relief?

PETER REITH: I don't think interest rate relief is on the agenda. The markets have already sent a shot across the Government's bows on the possibility of further easing, particularly in respect of the forthcoming 26 February statement. Mr Keating doesn't have much room to manoeuvre. The fact is, we've got a massive foreign debt. There's a lot of nervousness about a pump-priming exercise, and it is, of course, but a distraction from the fundamental and structural reforms that the Australian economy so obviously needs.

PHILLIP LASKER: But would you agree it's not the amount of spending that people are concerned about, it will be the quality of the spending? Surely we need spending on our infrastructure at the moment?

PETER REITH: Well, the Government may well try and dress up this as a responsible package by perhaps introducing some measures that are interim only and which run a limited period of time. On our calculations, look, any pump-priming of an order of $2 billion is going to push the inflation figure up to over 7 per cent; it's going to massively increase our foreign debt, just at a time when we're struggling to meet our interest payments.

PHILLIP LASKER: And finally, Mr Reith, what's your response to the announcement by Nissan?

PETER REITH: Well, I think it is a tragedy - there's no doubt about that - and a lot of people are going to lose their jobs, nearly 2,000, and it is very hard to see those people being able to pick up jobs in what is continuing to be a recessed economy. And again, it just points to the need that, you know, we should be abolishing payroll tax, for example. Why are we taxing employers who want to employ people? Nissan are going into, in a greater way, the aluminium components part business. We could give that part of their business a real boost by abolishing payroll tax and reducing their transport costs.

PHILLIP LASKER: Well, Mr Reith, we'll have to leave it there. Thanks very much. Shadow Treasurer, Peter Reith.