Download PDFThursday, 6 November 2003
Transcript
Trade Minister Mark Vaile
Doorstop interview - Canberra, ACT
Vaile
This morning we have witnessed the ratification of a convention for the protection of albatrosses and petrels -and the Republic of South Africa have signed that. That gives the required number of countries to bring that into force, and of course we are pleased about that. But also this morning we have launched an exhibition on treaty making and focussed particularly on the treaty on the Antarctica. We had the honour of having Dr Phillip Laws here this morning, who was one of the key architects in negotiating that treaty and who actually conducted about 19 exhibitions to the Antarctica. It is very important that the broader Australian public have access and understanding to what international treaties are about, and why on behalf of Australia the Government engages in those. And certainly in the last seven years why we have endeavoured to make the process far more transparent, and given the Parliament greater opportunity for scrutiny of treaties after they have been signed by the Government. And so this is good measure and something that we see as very, very important.
Journalist
Minister, before it pours, could I ask you about interest rates. What sort of effect will that have on export industries?
Vaile
Obviously we are watching very closely the levels of the currency. We need to recognise firstly though that the 20-year average of the exchange rate on the Australian dollar since it was floated is US70 cents. It is around that at the moment. I just hope that .. Presumably part of the decision was based on the imminent improvement in the US economy. I hope that call hasn’t been made too early by the Reserve Bank in nudging interest rates up.
Journalist
Farmers though are doing it tough already. Surely this is going to hurt even more?
Vaile
Well, I think we need to look at the international dimension. The indicators are that there’s the prospect of improvement in the international marketplace. We’ve put a lot of measures in place in Australia that have certainly improved the competitiveness of our exporters in terms of reforms in the taxation system, reducing the incidence of company
tax and personal tax, removing indirect taxes off the backs of our exports, which has removed billions of dollars to make them more competitive. The industrial relations circumstance in Australia is much better than it ever has been in the past -on the waterfronts in terms of getting exports out. So you can’t just look at one aspect in isolation in terms of what’s going on in the economy in terms of our competitiveness and our efficiency. You have to look at the entire spectrum of policy settings that affect that. And, you know, fluctuations in currency exchange rates will move on a daily basis. We had a lengthy period of time of extremely competitive exchange rates and our exporters took great advantage of that. Obviously they are a very professional bunch of businesses
in Australia, and they would obviously reflect on the prospect of, one day, a higher dollar, and factor that into their business plan.
Journalist
Minister, the rise in interest rates is likely to strengthen the dollar even further, isn’t it?
Vaile
Well it is going to depend. I mean, I am no economist. But certainly what will have an impact on the dollar, I think, is what happens with the US economy between now and the end of the year. And that’s my point. I hope that the Reserve Bank in their decision to move interest rates by 25 basis points, and being based on presumably the prospect of a stronger global economy, is right. Because if a stronger global economy kicks in in the
last quarter of this year, it will also obviously have an effect on exchange rates. But most importantly, it will have an effect on demand for Australian product going out of Australia.
Journalist
So what is your prediction [inaudible] global market and the rising dollar ….?
Vaile
Well, what we’ve seen in the latter part of this year is the drought beginning to recede in Australia, although there are still many parts of particularly eastern Australia that are still severely effected. That circumstance has improved. We’ve seen the SARS outbreak in East Asia come under control, and a lot of work going into place to ensure it doesn’t happen again. And if we see an improvement in the global economy, the opportunities with more to sell and more buyers looking to purchase in the international marketplace, the prospects for the next 12 months are certainly very much positive.
Journalist
There’s no problems with inflation, which is what monetary policy aims at. Are you fully supportive of the RBA’s move?
Vaile
We have a clear understanding and the Reserve Bank has a charter that they work to in terms of assessing how they set monetary policy. And the Government doesn’t comment
on that. We have our settings in terms of how we manage the economy, how we are responsible in terms of fiscal policy. We have very limited fiscal stimulus measures in place at the moment. But monetary policy is the responsibility of the Reserve Bank. And you’re right, they look at inflation, they look at wages, they look at unemployment. They also look at the broader economy and how that’s running. And as I say, I hope that one of the aspects that, I presume, they have looked at in this is the global economy, and I hope that they are right.
Journalist
That’s hardly a great endorsement though, that you hope the RBA’s got it right?
Vaile
Well, we’ve seen signs of the US economy improving. It remains to be seen if that’s going to continue. Now, that’s completely out of our control, and certainly not in the control of the Reserve Bank, but it will have a profound impact on what happens globally and certainly within Australia, over the next 12 months.
Journalist
Were you surprised by the move yesterday?
Vaile
There’s been a lot of talk in the media and by economic commentators over the last couple of months that the possibility of an interest rate rise coming. And certainly, given the history over the last couple of years in terms of the direction of interest rates not just here but globally, and where they sat in Australia -any move was broadly recognised by commentators and economists as upwards.
Journalist
What if we continue to see more upward movements?
Vaile
I am not prepared to comment or speculate on what’s likely to happen in the months to come. I just repeat my point that we certainly hope that the global economy -as initially indicated in the move upwards in growth in the American economy -continues to go in that direction. And the Australian economy is probably the best placed in the world to take immediate advantage of that.
Journalist
Minister, how many species of albatross are there? There seem to be conflicting reports there.
Vaile
Well, there are many species of albatross and they are all subject to some of the international fishing practices, with long lining. This treaty, this agreement is about trying to get the countries that have an impact on that to do something about the conduct of those fishing practices, to assist all those species of albatross.
Thank you.
ENDS