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Transcript of doorstop interview: Brisbane: 6 November 2008: unemployment rate; Australian economy; global financial crisis.

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6 November 2008


Subjects: Unemployment rate; Australian economy; global financial crisis.



Well the focus for the Government has got to be squarely on jobs. We’ve got to make sure, the Government has to make sure that every decision it takes, whether it’s relating to fiscal policy or monetary policy, is focused on jobs, jobs, jobs.

We’ve got to make sure that as we go into these times of forecast slowing growth that Australians stay in work and that employment remains high. That has to be the focus of every effort.

We’ve already seen forecasts and estimates of increasing unemployment. The aim of the Government must be to make sure, as best it can, that those forecasts are wrong and all Australians who have jobs today have jobs a year from now and a year after that.


Is it a true sign of a recession, rising unemployment? Is that the true sign of a recession?


Well a recession technically is two consecutive quarters of negative growth, negative economic growth. But of course you can have an economy as big as Australia’s where you have positive economic growth but there’ll be parts of the country where it’s negative - we’ve seen that in the past. So when all of this is said and done, when all of the talk about banks and monetary policy and deposit guarantees, when all of that is


said and done, the key focus is jobs. Jobs, jobs, jobs. That has to be the focus of every government policy.


Mr Turnbull, should Australians be concerned about the prospect of the budget going into deficit?


Absolutely. John Howard and Peter Costello left this country with no debt. All of Labor’s debt was paid off and there was a substantial positive balance in the bank at the federal level. We left budgets in strong surplus. Now we’re now going, according to the MYEFO forecast, we’re going into a very reduced surplus, very significantly reduced.

The Government is spending half of what used to be this year’s projected surplus just before Christmas on a fiscal stimulus. The Government has got to think through every economic step with great care. We’ve seen them get so many points, so many steps in its response to the global financial crisis wrong. Right at the beginning of the year they were talking up interest rates, talking up inflation when, as we can see now, they should have been doing quite the reserve. They actually contributed to our economic problems by misreading the impact of the global financial crisis. And now we’ve seen of course the very adverse impacts of the unlimited deposit guarantee.

You’ll recall that we recommended there be a deposit guarantee at $100,000, and right across the board you’re seeing big banks, people in the finance sector saying the Government has got to bring that deposit guarantee back to that level - that level where it provides a high degree of security and reassurance to the vast majority of depositors but is not so big as to have adverse consequences for mortgage funds, the cash management trusts, for the finance companies that provide the wherewithal, the money, the finance to enable people to buy motorcars. They are feeling the consequences, the pain of the unlimited deposit guarantee that Mr Rudd put in place.

And why did he put it in place? Well he put it in place for the reason he does everything, because he wanted a headline. He has a political strategy, he has a media strategy, he is yet to find an economic strategy - and that’s what Australia needs.


Another headline. Lindsay Tanner, the finance minister, has said the worst of the economic crisis is over, do you agree?


Well I hope Mr Tanner is right. I’m optimistic. I’ve said right from the outset that we’re in a storm, we’ll get wet, we won’t sink. And one of the reasons I’m optimistic is because of the strong financial position the previous government left this country in.


So I hope Mr Tanner is right. I share his optimism. But you have to recognise that we’ve had a number of unpredictable events over the last few months, or unpredicted events in any event. So there will be challenges ahead. I would simply say this though to, not so much to Mr Tanner, but to Mr Rudd in particular: we are not helped, we are not helped at all by his constant use of this sort of Churchillian, emotional language.

When he said the other day, ‘next year is going to be ugly’, millions of Australians scratched their heads and said: ‘what does that mean?’ What does it mean? I was asked a couple of days ago at the local RSL in my electorate in Sydney, ‘what does next year being ugly mean?’ I couldn’t tell my constituent the answer, neither could Mr Rudd. What we have seen however in the MYEFO forecast is the forecast of economic growth next year, two per cent. Now that’s not as high as we’d like it to be, naturally, but it is a lot higher than it is in many other developed countries. So we are right - we’ve got to be positive; we’ve got to be confident. We should be optimistic.

Mr Rudd should be very careful when he talks about the economy to talk about it factually, talk about it accurately, rather than using language which rolls off his tongue and makes him sound like some great, you know, national leader in a time of crisis. He should be focusing on the facts. That’s what Australians need.


Is it right for Mr Tanner to say something like this? Is it responsible?


Look, I think Mr Tanner is expressing a very legitimate view and I share it. I believe, I hope that the worst of the economic crisis is over globally. Having said that, you cannot be… you know Mr Tanner’s crystal ball is as cloudy as mine. But that’s a perfectly reasonable comment and I don’t criticise him for saying that at all. It’s reassuring. It gives people confidence.

You know, you walk up and down talking to the small businesses here and what are people talking about? Confidence - they’re looking for confidence. And they recognise, whether it’s a big business or a small business, if you’re confident, if you’re confident your customers will be confident and your business will do better. If you lose confidence, if you become overanxious, if you become negative, then it becomes a self-fulfilling prophecy. And that’s why Mr Rudd’s got to be very careful. He would be better off just speaking factually about the challenges that we’re facing.


So you’re not going to attack Lindsay Tanner [inaudible]


Well, Mr Tanner has expressed an opinion. It is a reasonable opinion. It’s one shared by many observers. There are some people that are even more positive than him and some people that are gloomier than him but I think it’s a reasonable opinion and I am happy to share optimism and confidence.


I think really the person that Mr Tanner is differing from is Mr Rudd.

Mr Tanner’s remarks are completely at odds with the very gloomy, confusing, dispiriting comments that Mr Rudd has been making - and not just dispiriting but almost incomprehensible. And I come back to that fundamental question: if people in Australia are hearing the Prime Minister say ‘next year is going to be ugly’, what on earth does that mean? How much help does that give you in planning your household budget, deciding whether to go and take out a loan to buy something, to invest in a business? What does it mean? Stick to the facts. Let’s be factual. Let’s be confident. Let’s recognise our economy has great strengths, we face big challenges and the job of government is to make sure it doesn’t make those challenges and those problems worse.

To date Mr Rudd’s economic management has made a number of our problems worse and we’ve seen that both right from the beginning of the year and, of course, most recently with his efforts with the deposit guarantee, which he is now of course rolling back and which is causing so many adverse consequences for people whose savings have been frozen, for people who depend on finance companies in order to finance their business and their sale of motorcars and other products to their customers.

Thanks very much.