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Transcript of doorstop interview: Parliament House, Canberra: 9 May 2008: Budget; inflation; economic growth; welfare card.



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DOORSTOP INTERVIEW

PARLIAMENT HOUSE CANBERRA

9 MAY 2008

SUBJECTS: Budget; inflation; economic growth; welfare card

TREASURER:

I just thought I'd say a few words about the Budget. It's four days to go. We're burning the midnight oil. We're crossing the t's and dotting the i's. It's a very important Budget.

We've got no choice in this Budget but to rein in spending if we're going to spare families from rising prices, rising inflation and rising interest rates. So, it's been a very substantial savings exercise in this Budget.

JOURNALIST:

How important will it be in the Budget to encourage Australian families to save themselves, to encourage national savings?

TREASURER:

I think it's very important that we do encourage people to save in uncertain times. As you know, there's a slowing world economy at the moment, international uncertainty and, of course, we've got inflation. So, in times like that it's always important, if people can afford to, to save a little for a rainy day.

JOURNALIST:

How many jobs will be lost if you slow the economy?

TREASURER:

Well, the Government's objective is not that at all. The Government's objective is to have strong growth with low inflation. And you won't get strong growth and low inflation unless you rein in spending and deal with interest rates. That's the whole point - high inflation and

high interest rates strangle growth. That's the problem. We've got to get growth on a sustainable path. And as you can see, there's a slowing world economy. So, the task for us is to build a strong surplus so we can invest for the future, and to build a strong surplus so we can have an impact on inflation.

JOURNALIST:

(inaudible) sustainable path, won't that necessarily retard employment growth?

Transcript of 09/05/2008

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TREASURER:

What's been going on is eight interest rate rises in three years has slowed the economy, and a slowing world economy will slow the economy. The task for us is to build a strong surplus to put downward pressure on prices and inflation and invest for the future, particularly to expand the productive capacity of the economy so we can grow more strongly with lower inflation. That's the objective of the Budget.

JOURNALIST:

(inaudible)...don't you slow it down, and when you slow an economy down, don't you shed jobs? Doesn't that follow?

TREASURER:

No what's been slowing the economy down has been eight interest rate rises in three years. That's why we've got to do everything we possibly can to put downward pressure on prices, downward pressure on inflation. That's the central objective of this Budget - so we can grow the economy with low inflation. If you have high inflation and high interest rates, you have slower growth.

JOURNALIST:

Will your Budget slow the economy further?

TREASURER:

No what our Budget will do will be to strike the right balance, to have sustainable growth with lower inflation and lower interest rates in the long term. That's the whole objective. Eight interest rate rises in a row and record high inflation is slowing the economy. That's why we've got to deal with inflation in this Budget. That's why our central objective is to tackle inflation in the budget because it's so important to sustainable long-term growth and wealth creation in this economy.

JOURNALIST:

(inaudible) that the Reserve Bank have inflation (inaudible).

TREASURER:

You'll have to wait for the Reserve Bank and their publication later today.

JOURNALIST:

Your objective in the Budget is not to slow the economy at all?

TREASURER:

No the objective of our Budget is to produce sustainable, long-term growth with lower inflation. That is terribly important. High inflation and high interest rates strangles an economy and it erodes the living standards of working Australians. Our objective is to get sustainable long-term growth - and that includes job growth - with lower inflation.

JOURNALIST:

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What do you term as sustainable on a percentage...

TREASURER:

Well, we'll have to see those forecasts on Budget night.

JOURNALIST:

Can you (inaudible) target range?

TREASURER:

No, I can't. That's what the Budget's all about.

JOURNALIST:

(inaudible)

TREASURER:

He's just plain wrong. And you'll see that on Budget night.

JOURNALIST:

Just in relation to the welfare card, I mean, would you like to see further changes to encourage people to be able to quarantine elements of their welfare if that's what they need and require?

TREASURER:

This Government is serious about welfare reform and my colleague, Jenny Macklin, will be making some comments about that later this morning. She's dealing with reforms when it comes to the child protection - so terribly important - to the future of those children and the health of the communities they live in. But I'll leave the detail of that for Jenny Macklin.

JOURNALIST:

But on principle, I mean, surely the idea of quarantining welfare payments to pay for basic necessities shouldn't be something that's limited to the indigenous community?

TREASURER:

That's a matter entirely for Jenny Macklin, and she'll talk to you about that later this morning.

JOURNALIST:

(inaudible) that you'd be able to sustain record low unemployment through the next financial year?

TREASURER:

What I'm confident of is we will have sustainable growth and sustainable employment growth and we will meet our objective of tackling inflation in the longer term to have sustainable growth well into the future. And you'll see all of those forecasts on Budget night.

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JOURNALIST:

(inaudible) sustainable growth, you're not saying you can sustain record unemployment?

TREASURER:

What I'm saying is you'll see the forecast on Budget night.

JOURNALIST:

When you talk about encouraging national savings, I take it that you don't think superannuation's the only way to do that?

TREASURER:

I'm not buying into what may or may not be in the Budget.

JOURNALIST:

Treasurer, when you're looking at your surplus of 1.5 per cent of GDP, Lindsay Tanner said the other night that it would be excluding any windfall gain from the resources boom, is that the case, that you're getting 1.5 per cent of GDP excluding (inaudible)?

TREASURER:

You'll see all of the detail and all of the figures on Budget night.

JOURNALIST:

inaudible)

TREASURER:

There's four days to go.

JOURNALIST:

Is there a danger if the surplus is higher than 1.5...

TREASURER:

Can I make it very clear, I make this very clear: we intend to build a strong surplus in this Budget. And why? To put downward pressure on inflation, to provide the capacity to invest for the future, and lastly, as a buffer against international uncertainty. So, there'll be a strong surplus on Budget night.

JOURNALIST:

Mr Swan, just for the lay person, and no doubt, mugs like us, you say you've been burning the midnight oil. What isn't locked up? How late is it until you lock up the final surplus figure? What's the actual process that's going on right now?

TREASURER:

It's getting very close to being locked up, Sam.

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JOURNALIST:

Do you want to share with us what you were burning the midnight oil on, other than writing press releases about it?

TREASURER:

Well, Sam, you may be lucky to get that invitation down to the Treasury.

JOURNALIST:

Is the glue dry on this Budget book?

TREASURER:

I haven't been to the printer yet. Thanks.

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