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Transcript of doorstop interview: Washington: 12 August 2008: visit to Washington; Australian economy; leadership; Iraq; emissions trading scheme.



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LEADER OF THE OPPOSITION THE HON. DR BRENDAN NELSON MP

12 August 2008

TRANSCRIPT OF THE HON. DR BRENDAN NELSON MP, DOORSTOP INTERVIEW WASHINGTON

Subjects: Visit to Washington; Australian economy; leadership; Iraq; emissions trading scheme.

E&OE………………………………………………………………………………......

DR NELSON:

What is clear from my time here in the United States is that the United States’ economy is facing significant challenges and it’s likely to continue to do so over the next year. It’s also very important for Australia that we focus on how the Chinese economy is going and, in setting domestic policy for Australia, that we avoid increases in taxes - which we saw in our May Budget this year - and also increases in expenditure.

This is a very hard year for Australia. It’s going to be a very hard year for our economy. We’ve seen the Reserve Bank increase its inflation forecast and also downgrade its estimates for growth in the Australian economy. And most importantly the fundamentals of the Australian economy which has been observed both by the Treasury here in the United States and by the International Monetary Fund are sound.

So whilst it’s going to be, and is a hard year for Australia, the fundamentals of our economy are very strong.

QUESTION:

On the economy the Reserve Bank has expressed deep concern. It’s forecasting rising unemployment; economic growth to fall. Just how bad do you think it’s going to be for the Australian economy?

DR NELSON:

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Well look, the first thing is that the fundamentals of the Australian economy are sound as a result of the previous government. We now have no commonwealth debt. We’ve got more than $100 billion invested in Australia’s future. But the Reserve Bank has downgraded growth for the Australian economy. We’re forecasting, and the Government in its own budget forecasted 134,000 people to be unemployed over the next year. The headline inflation rate the Reserve has now re-adjusted to five per cent toward the end of the year and we’ve had falling retail sales, flat-lining building approvals, reduced growth in business lending and also a reduction in business investment, and consumer and business confidence at record lows.

So it is going to be a very difficult year for Australia. It is absolutely essential that Wayne Swan, the Treasurer, actually do everything he can to increase confidence in the Australian economy and not reduce it as he was earlier in the year, talking up an inflationary crisis as it was described early in the term of the Government. And also we don’t certainly want to see any further increases in taxes.

QUESTION:

Is there a risk of a recession?

DR NELSON:

Well certainly the Reserve Bank has downgraded the growth forecast for the Australian economy but I don’t think anybody should be talking that sort of language in Australia. Whilst the rate of growth of our economy has slowed and is going to slow, we need to remember the fundamentals are absolutely sound. We also have over the last six to 12 months we’ve seen a bullish Reserve Bank, we’ve also seen the

Government talking up an inflationary problem in Australia and talking down the economy in the earlier part of this year, and we had a budget which increased taxes and increased expenditure, which was not what the Australian economy needs. The most important thing that the Government needs to be doing is to make sure that Australians appreciate that this is going to be a hard year for our country, that the fundamentals of the Australian economy are strong, as a consequence of the good leadership we’ve had over the last 10 years, and also to do everything we can to make sure that Australian consumers (inaudible) households are confident about their future.

QUESTION:

Should the Reserve Bank cut interest rates when it meets next month?

DR NELSON:

Well look I’m not going to enter into any discussion about whether the Reserve Bank should or should not cut interest rates. We know from the minutes from the last meeting that the Reserve Bank is concerned that the economy has been slowing and has left open the prospect of cuts in interest rates. But again the Reserve is forecasting headline inflation at five per cent by the end of the year and the economy slowing to around two per cent in growth by the end of the year. And it’s a climate especially

where the Government needs to make absolutely sure that it continues to reinforce

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that we’ve got strong fundamentals in the Australian economy. But I don’t think it is helpful for any of us in political leadership to be speculating about what the Reserve may or may not do.

QUESTION:

Can you tell us a little bit about the trip? Who you are meeting, the purpose of the trip and how it’s going?

DR NELSON:

Well the trip through London and New York and Washington has been to canvass political, economic, defence and foreign policy issues. I have met for example the Governor of the Bank of England, with Australian and UK investors, with US stock market analysts and US investors and ex-pat Australian business leaders in New

York. And here in Washington I’ve had meetings with the Deputy Secretary of Treasury, with the Deputy Director of the International Monetary Fund, the Deputy Secretary for Defense and the State Department. I’ve also met with people from the Brookings Institution, members of the Obama and McCain campaign teams. The essential purpose obviously is to have a good understanding of the state of the international economy, particularly in the United States and the United Kingdom and throughout Europe, the impact that that is likely to have on the Australian economy and the key decisions that need to be made in Australia. It’s also been important to ensure that I engage in the discussions about foreign policy and defence, particularly in the United States and especially in the context of what has been happening in Georgia, and the develops in Iran, Iraq, Afghanistan and of course in North Korea.

QUESTION:

Are you concerned at all to be out of Australia at a time when there’s, you know, all the leadership speculation and poll numbers and things like that. Out of the spotlight, is that a good thing?

DR NELSON:

Well this is my job. It’s an important responsibility that I have and I intend to keep doing it.

QUESTION:

But the latest Newspoll shows that your rating is the lowest since you were elected Opposition Leader?

DR NELSON:

Well I don’t comment on any of that. I just do my job.

QUESTION:

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But in the past when Labor for example was going through you know Newspolls, ratings were falling for Opposition Leaders, the Coalition was always calling for a change of leader. Don’t you feel the same pressure?

DR NELSON:

Well we are eight months into this. I’m very determined and I will continue to keep doing the job.

QUESTION:

Is it personally disappointing though to see those poll numbers so low?

DR NELSON:

Oh well I don’t comment on any of the polls. So I’ll leave that to you guys.

QUESTION:

Has anyone here said anything to you expressing disenchantment or concern about Australia’s position in Iraq or a decision to withdraw the combat troops? When the Prime Minister was here, you know, we were told everyone was understood, the President has said that you know go right ahead, but what are you hearing?

DR NELSON:

Well look I think it is an open secret that the United States would have preferred that Australia continue to have a military presence in central southern Iraq. But the decision of the Australian people in electing a government that chose to remove the battle group is one that is deeply respected and has been honoured by the United States. From our perspective it was always the case that our deployment of combat troops in Tallil, in central southern Iraq, would continue on the basis of conditions on the ground. The conditions have certainly improved in Iraq generally over the last 18 months and especially in the south over the last year. But from our perspective we would have preferred that Australia maintain a training element in central southern Iraq to further increase and accelerate the training of the Iraqi security forces.

QUESTION:

I understand that you’ve met with the President’s environmental adviser this morning. What has he told you that’s able to feed into your position on Australia’s emissions trading scheme?

DR NELSON:

Well the obvious thing is that it is a very complex issue - climate change - and how the United States will address it with a cap and trade emissions trading scheme is going to be extremely complex, both in policy and politically. Obviously there will be a new Administration sometime early next year and both of the presidential candidates are committed to a cap and trade emissions trading scheme. But it’s also

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very obvious that the United States will do everything it can to maintain the strength of the American economy in the process of being a part of a genuinely global response. It’s also clear that for the Americans what the developing countries, China and India in particular, do will be extremely important in forming the political debate with hopefully what will be the passage of legislation during the term of the next Administration. I don’t think anybody should underestimate how politically difficult it is going to be in the United States to pass legislation for an emissions trading scheme if there is not commitment and action coming from the other major emitters throughout the world. It’s going to be especially difficult, whatever the political colour of the future congress in the United States and for that reason I think Australia needs to be very much informed, in terms of how we implement our emissions trading scheme, by what the major emitters in the rest of the world are actually doing.

QUESTION:

So how should the Australian position therefore change if you think that there’s going to be this reticence in the US?

DR NELSON:

Well as we have said previously the most important thing for Australia is that we’ve got to be a part of a genuinely global response to addressing climate change. We need to do so by maintaining the strength of the Australian economy and also to ensure that we’re able to provide competitive, cost effective, low emission, reliable energy to Australian industry and Australian households. In order to do that we’ve got to look carefully at what the rest of the world does. We’re 1.4 per cent of global emissions. We must look at what the United States and China and India and the big emitters are actually doing so that in implementing our emissions trading scheme, which should be done methodically and responsibility with an eye to ensuring we protect our economy as much as our environment, we’ve got to make sure that in commencing it that we start in a way and we proceed in a way which minimises any disproportionate adverse economic impact in Australia - which in plain language means protecting jobs, industries and particularly vulnerable lower income households. One of the key messages that from those that I’ve spoken to in both Europe but particularly the United States is that we cannot afford to basically transfer money from low income American or Australian households into the pockets of already wealthy people who

are running utilities in other countries.

QUESTION:

During your trip have you kept in touch with your Liberal colleagues and been discussing with them their concerns; these issues over leadership?

DR NELSON:

Well I’m not going to comment on any of that at all.

QUESTION:

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So you won’t say whether or not you’ve been in regular touch with people back home about…..

DR NELSON:

Well I’m not going to discuss any of it at all.

QUESTION:

Is it upsetting for example you know there’s now a Facebook page trying to recruit Peter Costello to the leadership? Is that sort of thing personally insulting?

DR NELSON:

Well look again, I’ve said it publicly and I’ve said it privately to Peter Costello, it’s his decision. He’s earned the right to make the decision in a time that is appropriate for him and his family and the people of Higgins. And personally I’ll be very happy if he chooses to stay. But that’s his decision and he made an announcement after the election last year and I’m sure in the not too distant future he will tell Australians what he intends to do.

QUESTION:

Well that announcement was that he was going to retire from politics. So do you expect him to stick to that?

DR NELSON:

Well, again, I’m not going to comment on it beyond what I’ve already said.

[ends]

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