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Transcript of doorstop interview: Washington DC: 23 September 2011: G20 Finance Ministers Meeting; global economic outlook; Australian economy

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THE HON WAYNE SWAN MP Deputy Prime Minister Treasurer

Doorstop Washington DC

23 September 2011 (US time)


SUBJECTS: G20 Finance Ministers Meeting; global economic outlook; Australian economy

TREASURER: Well, these meetings of the G20 and the IMF come at a critical time in the global economy. The global economic recovery is fragile, sovereign debt issues weigh heavily on Europe and the United States, and of course we’ve got a long and painful recovery ahead in both Europe and the United States. As the IMF has said, the global economy is entering a dangerous phase.

Now three years ago, we sat in these same meeting rooms and contemplated the global economy falling off a cliff. Three years on, we do confront a serious outlook. In the six months that followed from the three years ago, through the G20, through the IMF and other multilateral institutions, we put in place a series of initiatives which restored growth. And here again through our multilateral institutions, what we must do is work our way through to the G20 Finance Ministers’ Meeting and the G20 Leaders Meeting in October and November, making sure that we prepare our response to these events.

I think what all Australians can be confident of is that we are better placed than just about any other advanced economy to deal with these circumstances. The IMF predicts that the Australian economy will grow faster than other advanced economies as a whole. We’ve got strong public finances, low unemployment, very low debt and a clear plan to return our budget to surplus in 2012-13. And of course we’ve seen overnight Standard & Poor’s have reaffirmed our top tier AAA credit rating. They’ve affirmed that on the basis of our very strong fiscal situation, our strong balance sheet and our public policy stability. And of course, we saw yesterday from the Reserve Bank the reaffirmation of the strength of our financial system. So Australia is not immune from all of these events in the global economy but Australia is in better shape than just about any other advanced economy. Over to you.

JOURNALIST: Mr Swan, Tony Abbott is warning of a possible global double dip. Do you see that possibility? How likely is a global double dip?

TREASURER: Well, I think the IMF has outlined its view of global growth, and it says that risk is on the downside but they are still talking about global growth of the order of 4 per cent. I think it is far too early to be making those sorts of dire

predictions. What we must do is put in place through the G20 framework for strong, sustained and balanced growth, a series of reforms in both advanced and emerging economies to strengthen the economic position for the future, and that’s precisely what we’re discussing here and precisely what we will discuss as we go through the G20 Finance Ministers’ and Leaders Meetings later in the year.

JOURNALIST: Based on the discussions you’ve had here so far, are you more or less confident now than you were coming here?

TREASURER: Well, I think there’s a pretty sober mood in the meetings here. I think policy makers are realistic. The Europeans are putting in place a range of responses to deal with their sovereign debt problems and challenges in their banking system. I think what everybody here is determined to do is to work through our multilateral organisations to ensure that we do everything we can to assist the Europeans and to make sure that whatever we can do globally is done in the weeks and months ahead.

JOURNALIST: Confidence is obviously a big issue. Can we afford the time between now and when the G20 Leaders meet in November for a bold action plan?

TREASURER: Well, I don’t think it’s the case that people are not working now on putting in place concrete and practical solutions. You’ve seen the decisions which have been taken by the Europeans and they are being put in place as we speak and we’ve heard reports on the implementation of those reforms through the meetings today. What also we’ve done through the G20 and through the IMF is to reaffirm that multilateral institutions will do everything they can working with the Europeans to make sure that their response is as effective as possible.

JOURNALIST: How do you compare the atmospherics now with 2008?

TREASURER: Well, I don’t think 2011 is like 2008. I’ve made that point on many occasions, but because of the experiences back then in 2008, it is very important that policy makers step up to the plate and implement the agreed commitments that they’re putting in place and to do it as swiftly and as decisively as is possible.

JOURNALIST: Mr Swan, do you see any evidence that China will actually let the yuan appreciate? (Inaudible)

TREASURER: Well, I think we’ve made it very clear through the G20, through our framework for strong sustained and balanced growth that moving to more market-based exchange rate mechanisms is an important structural reform along with many others required to strengthen growth and to deal with global financial imbalances.

JOURNALIST: Is there any sign of China doing it?

TREASURER: China has been a participant in all of these discussions and I believe they come to the table in good faith.

JOURNALIST: The Aussie dollar is weaker with the flight to the US. Analysts are saying the commodities boom is over. I’m curious about your assessment.

TREASURER: Well, as I said before the strength of the Australian economy compared to other developed economies is not in question. Australia is a major commodity producer and our commodities are still in demand globally and there is still strong demand for our commodities in the Asia Pacific. But when we brought down the Budget in May this year, we made it very clear that whilst commodity prices were at record highs, and indeed have been at 140 year highs, they will not stay there forever. But as we go forward commodity prices will ease somewhat but they will be higher than they have been historically.

JOURNALIST: So do you see the dollar moving through…

TREASURER: No, I don’t speculate about swings and roundabouts in the dollar. I’ve never done so and I don’t intend to do so today but the Australian dollar has been higher in recent times because our economy has been strong. Our economy, as a developed economy, has been stronger than many other developed economies. Our terms of trade have been historically high. That’s what the dollar has reflected.

JOURNALIST: A light-hearted question. I’m curious, in the rarefied air of finance ministers and bankers, do you ever get a hard time for a Euromoney award?

TREASURER: Well, I had a number of colleagues today remark about the strength of the Australian economy and reflect on the fact that Euromoney can recognise that strength, particularly in current circumstances.