Doorstop Interview
House of Representatives Entrance, Parliament House, Canberra
9 September 2009
SUBJECTS: G20 Finance Minister's meeting; Economic Stimulus; Prostate Cancer Awareness Month
TREASURER:
Look I have just returned from India and the G20 Finance Ministers' meeting in London where there was overwhelming support for stimulus to support jobs and to support growth in the global economy. I think there was a recognition there amongst Finance Ministers that to withdraw stimulus now, given how fragile the global economy is, would be a threat to jobs and growth into the future. So you've got a very strong list now of global bodies and national bodies supporting stimulus. You've got the G20. You've got the IMF. And of course in Australia you had a very strong statement from the Australian Chamber of Commerce and Industry only the other day, because they recognise that stimulus keeps customers coming through the door. It supports the construction industry. It supports the retail industry. It's absolutely critical to supporting jobs and growth in a fragile international environment. And of course the only person, the only person not supporting the stimulus is Malcolm Turnbull and the Liberals. They stand out not only nationally, but internationally. Parties of both sides of politics around the globe are supporting economic stimulus for good reasons – to support the economy because of the fragile global outlook. So you've got Malcolm Turnbull out there in Siberia and you've got the business community in Australia supporting stimulus, you've got the Australian Chamber of Commerce and Industry all supporting stimulus. And now of course you've got the Access Economics report today which points to how important stimulus has been in supporting employment in the retail sector and how important it will be going forward to support employment in the construction sector. So to withdraw stimulus, as the Liberals now advocate, is simply a recipe for lower growth and higher unemployment.
I just wanted to say a couple of words too about Prostate Cancer Awareness Month this month. There is a function here in Parliament House tonight to highlight the importance of prostate cancer awareness, and that function will be saying to people get involved in raising awareness about prostate cancer in our community. It affects something like 20,000 men each year. Sadly, something like 3,000 men die from prostate cancer each year. It's important we raise awareness in the community and it's important that everybody is involved.
JOURNALIST:
Treasurer, while the global outlook may be fragile, Australia's economy is being quite resilient thanks to the stimulus. We're in a different place to the rest of the world's economies. Why is it not appropriate now to reassess the package?
TREASURER:
Well because we're not immune from what's happening in the global economy and because global growth has been so strongly supported by economic stimulus. If it wasn't for our economic stimulus, growth in the year through to June would have been negative 1.3 per cent. So it's a very…
JOURNALIST:
It's done its job hasn't it?
TREASURER:
You're saying because it's been successful, it should be withdrawn, that we should pull the rug out from under the recovery. The maximum impact of the stimulus in terms of the cash payments has been in the June quarter. The maximum impact of the stimulus in terms of the direct investment and infrastructure spending, will be in the September quarter. And as we go forward, stimulus is gradually withdrawn. It is gradually withdrawn from December on and that was designed that way. The stimulus was designed to be temporary and targeted, and that's what it is, and as private sector demand recovers, as we go through next year, the stimulus is withdrawn. But to withdraw the stimulus right now would have a dramatic impact on confidence, and it would certainly be a recipe for far higher unemployment. Because all of the optimistic forecasts that are out there are predicated on stimulus being delivered as we've put in our Budget.
JOURNALIST:
Is the Government negotiating with Victoria to compensate it for the withdrawal of social housing stimulus money?
TREASURER:
Well there have been discussions going on about the stimulus packages with the States, but I don't intend to buy into any of those individual discussions.
JOURNALIST:
Most economists say that interest rates will go up next year…
TREASURER:
Can I just say that in relation to the point that was just made - interest rates in Australia are at emergency low levels, and just as the stimulus is designed to be withdrawn over time, starting in the December quarter, the Reserve Bank takes its decisions independently about interest rates. But at some stage in the future, as growth returns, those rates will be adjusted. Just as the stimulus is withdrawn, there will be adjustments over time on interest rates, independently by the Reserve Bank. But any effort to draw a link between the continued delivery of stimulus and any change independently in the cash rate by the Reserve Bank is absurd, and wrong, and it is simply part of this scare campaign that has been run by the Liberal Party, because they are so embarrassed that they went into the Parliament in February and opposed stimulus.
And when they voted against that stimulus in February, they voted for sending Australia into recession. And what they demonstrated was the monumental misjudgement of Mr Turnbull and Mr Hockey.
JOURNALIST:
[Inaudible]… with the roll-out of the stimulus package, what would you have done differently if you had your time over again?
TREASURER:
This stimulus package is very effective, it's very timely and when there's been analysis of stimulus packages around the world, Australia is deemed to be one of the most effective stimulus packages in the world. There will always be issues around the edges of a package of this size. We work our way through those methodically and that is the right way to go about it. But this stimulus package has been one of the most effective in the world. It has been successful, but we are still in a fragile international environment and we must continue to put this in place to support confidence, to keep customers coming through the door, to make sure our construction sector is supported, and to maintain that support is critical for the future of the economy.
