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Transcript of press conference: Parliament House, Canberra: 7 September 2005: National accounts; petrol prices.

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Wayne Swan MP Federal Labor Shadow Treasurer


SUBJECTS: National accounts; petrol prices

SWAN: I just want to talk about the national accounts first of all. Can I say I’m surprised and very pleased by the growth: 1.3 percent for the June quarter, 2.6 percent for the year. It’s also pleasing to see the contribution that’s come from business investment, capital formation up 7.9 percent for the year. That’s quite encouraging.

But there are two key reasons behind this growth performance that is weaker than the average. Because while we have better than expected growth, we are still behind our long term average rate of growth of 3.7 percent. We really need, as a country, growth in the 3’s and the 4’s and the 5’s. Our long term average is 3.7, so when we have 2.6 for the year, we have to say that we must be much more ambitious for our country.

Now there are two key reasons behind the weaker growth performance. Firstly, over the year, productivity is down 1.4 percent and secondly, as a consequence, our export performance is still disappointing. While export volumes have begun to rise, up 1.9 percent for the year, import volumes are up 10.4 percent. So if you have a look at it, growth is still below the average. As I said, we need growth in the 3’s and 4’s and 5’s. Our productivity growth is still down substantially and our export growth is down and being dwarfed by the growth of imports.

That’s why we say we desperately need in this country a broad-based agenda, a new economic agenda, to lift our productivity. To lift our productivity to make us more competitive so we can, in the long term, lift our growth rates substantially above what they are at the moment.

We think there’s a lack of ambition in this Government when it comes to skills and education, a lack of leadership when it comes to infrastructure, and a lack of concern when it comes to innovation. We do need to lift our economic performance so we get those growth rates with the 3’s and 4’s and 5’s in front of them, not the 1’s and 2’s. So I’ll leave it there on the national accounts. I’m happy to take any questions.

Journalist: How do we do that? How do we raise the platform?

SWAN: Well we’ve got to make ourselves much more competitive and we’ve got to make ourselves much more productive. That’s why we have to have the investment in our skills, in our education and in innovation. The Government shows no concern in this area whatsoever, and we need some national leadership when it comes to infrastructure. That’s not there either. And we also need fundamental tax reform to

put some incentive in the system. There’s no one measure, no one measure that will give us the competitive and productivity edge that we require but we must be attending to all of them. All the Government has is a narrowly based, ideological agenda on industrial relations for which there is no proof that it will do anything about our declining productivity. We need a broad-based new economic agenda that invests in our people, lifts our productivity and lifts our growth rate back to the averages that we came to expect in the 90’s.

Journalist: The Prime Minister’s happy and says he pleased with the figures today.

SWAN: Well, I’m quite encouraged by the figures today but we can’t be complacent, and the truth is that we’re still running growth rates well behind what is required, well below what we would expect. What you saw from the Prime Minister today is what I call an ‘ambition gap’. An ambition gap when it comes to skills and education, an ambition gap when it comes to infrastructure, when it comes to innovation, when it comes to taxation. This Government’s just got its feet up, it’s pushed the snooze button, it’s got one or two ideological preoccupations, but no broad-based economic agenda to lift our growth rates in the longer term.

Journalist: The Workplace Relations Minister said those reforms you just criticised were about … (inaudible) … doesn’t he have a point there?

SWAN: No. It’s a short term ideological agenda which is aimed at cutting wages and taking this country down the low wage path, not down a high productivity path that we require if we are to meet the emerging competitive pressures from China, Asia and India.

Journalist: What role do you think higher petrol prices are playing in … (inaudible)?

SWAN: Well there’s no doubt that they are going to put tremendous financial pressure on many family budgets. If you have a 10 cent rise in the price of petrol or a 20 cent rise in the price of petrol that’s a very substantial impost on the family budget on a weekly basis. So I certainly think it will have a significant impact over time, but we don’t know how long they will stay high and how high they will be into the future, no-one can accurately read that but it will certainly have some impact.

Journalist: There’s a debate going on between the Premier of New South Wales and the Prime Minister over what can be done about petrol prices. Morris Iemma says it’s all too easy for John Howard to blame the international oil market and leave it at that.

SWAN: Well, the Prime Minister today was crying crocodile tears over petrol prices. He said at one stage in his press conference that the tax cuts that he handed out in the May Budget were going to assist families to cope with rising petrol prices. This is the Prime Minister who dudded 7 million taxpayers in May and gave them a miserly $6 a week which has now been more than gobbled up by the tremendous increase in the price of petrol. So if he was really concerned about the fundamental cost of living pressures, and particularly the increase in the price of petrol, he might have found some political will to give a decent tax cut to the hard working taxpayers of Australia who have made our economy strong and who were left out in his budget plan.

Journalist: (inaudible) … not decrease the excise in fuel?

SWAN: Look, we wouldn’t make any irresponsible commitments in that area. Acting in this area costs a lot of money. We have to be responsible but we are continually looking at the issue of fuel prices and what action we can take in the short term as well as the long term. I mean we’ve already said, Kim Beazley’s made this very clear, that in the long term we do need to develop a domestic liquid market to decrease our

reliance on imports. That is absolutely essential in the longer term so we’re not having this debate in 10 or 20 years time. We do need to do something about profiteering, no doubt about that. We do need to get the ACCC to formally monitor petrol prices. I, like most other consumers, have noticed the pattern where prices rise towards the end of the week and there’s a very simple reason for that - people are filling their cars up to travel on the weekend. That concerns a lot of consumers out there so there are some things we can do. We can look to our long term self-sufficiency and that’s very important, and that means dealing with the alternative fuel issue. We can deal with some real competition and anti-profiteering measures in the market, but I couldn’t possibly make any commitments in the area of taxation. I know people are extremely concerned about that and I know that it agitates people that the Government has actually put a tax on a tax. I just think John Howard’s crocodile tears today were a bit much given his recent record.

Journalist: Would you support some form of formal enquiry that perhaps Morris Iemma is calling for?

SWAN: That’s the job of the ACCC and that’s why we have called for a stronger approach, particularly to section 46, but also formal monitoring of petrol prices by the ACCC. That’s not occurring at the moment.

Journalist: Mr Swan, what do you think of the fact that the profit share of income … (inaudible) … ?

SWAN: Well, a healthy profit share is a good thing, but it’s all a question of balance. We’d like to see investment grow and it is growing and that’s a good thing. We’d also like to see productivity rise and the incomes of workers rise in line with that productivity. That’s a healthy thing for the economy. But what we wouldn’t like to see is what the Government aims to do with its so-called industrial relations reforms, which is to slash the incomes of some of the lowest paid workers in our community. That’s not an investment in productivity for the future of those families.


Wednesday 7 September 2005 Contact Jim Chalmers 0417 141 676