Doorstop Interview
Parliament House
4 May 2010
SUBJECTS: RBA interest rates decision; housing supply; Newspoll; Resource Super Profits Tax; Clive Palmer
TREASURER:
Look this is a tough decision for families and for small businesses. Unfortunately this is one of the difficult consequences of an economy that is recovering better than other advanced economies.
But as the Reserve Bank itself has observed today, rates are returning to more normal levels. But I would just note that for many people with mortgages, they are still significantly below where they were at their peak.
The fact is the Australian economy is recovering. That is good for employment, that is good for families.
The whole focus of the Government through the tax package we announced on the weekend, and through our no frills Budget, will be to make sure that growth is sustainable for the long-term to make sure we attend to the capacity constraints that will emerge in our economy.
Everything the Government is doing in the short-term and the medium-term is directed at making growth sustainable for all Australians.
Over to you.
JOURNALIST:
You say a no frills Budget. Does this now put pressure on you to reign in spending even more to make sure that there are fewer interest rate rises as the year progresses?
TREASURER:
I think it's worth actually having a look at the statement from the Reserve Bank today. It makes this point, it says: 'under these conditions output growth over the year ahead is likely to exceed that seen last year even though the effects of earlier expansionary policy measures will be diminishing.' The point I want to make here is that economic stimulus is being withdrawn. It will detract from growth to the tune of one per cent this year. To the tune of 1 per cent. It's very important to keep that in mind.
What is happening with monetary policy and the decisions taken by the independent Reserve Bank, is that they are bringing rates back to normal. Rates could never stay at record lows forever. So the Government has been pulling back, winding back, economic stimulus. What the Reserve Bank has been doing has been returning rates to normal. That's tough, that's difficult and unfortunate for many families and small businesses, but that is a difficult but inevitable consequence of a return to growth because the Australian economy is recovering faster than any other advanced economy. Our unemployment rates are low – very low by international standards. If you look at what's happening elsewhere in the world, unemployment rates are almost 10 per cent in the United States. If you look at what's happening in Europe.
What we have achieved here in Australia has supported employment, and supported so many families, through what has been such a difficult period elsewhere in advanced economies.
JOURNALIST:
Treasurer, will this prick the housing bubble?
TREASURER:
Well, the issues in housing are long-term – a lack of supply – it's a problem that has taken a long time to develop, and one which the Government has been focused on from day one. It has been made worse by the impact of the global recession. And unfortunately during the global recession and its impact here, what it meant that was that much finance that was flowing to multi-unit development did not flow, and that has further constricted supply.
What has the Government been doing in response to all of these things, the long-term problem? The short-term problem caused by the global recession? We've put in place a housing rental affordability scheme, we've put in place funds to support State and Local Governments do more in the area of land supply, and critically as part of our stimulus we put in place a very significant increase in the supply of social housing. There are three big initiatives the Government has operating, recognising from day one that we had a problem in terms of housing supply. And we have to do more. We are working through the COAG processes to deal with many of the issues that are constraining supply in the Australian housing market.
JOURNALIST:
Mr Swan, are you satisfied with Kevin Rudd's performance? It seems an increasing number of voters aren't.
TREASURER:
Well, I don't think that we judge the performance by one opinion poll. I think Kevin Rudd has done an excellent job. I believe that opinion polls come and go, so I'm not going to become a commentator on opinion polls.
What Kevin Rudd is focused on fairly and squarely is the national interest, and you could see that yet again in the tax plan that we put forward on Sunday. You'll see it again in the no frills Budget which will be produced next week.
JOURNALIST:
Can I ask you about the Resource Super Profits Taxes? How much of this plan is negotiable? Is the figure of 40 per cent negotiable?
TREASURER:
I've outlined…
JOURNALIST:
Would you also entertain a plea for it not to apply to – to only apply - to prospective projects?
TREASURER:
I've outlined the detail of our resource Super Profits Tax. Within that detail I've outlined I've said that we will enter into discussions genuinely with the industry. I have said, and the papers we issued on Sunday said, that we would be talking to industry particularly about transitional arrangements for existing projects. The discussions with the industry and the Treasury have commenced, we have a consultative committee that is working on this now, the detailed membership of that also has been announced, and those consultations are taking place with industry.
JOURNALIST:
What is non-negotiable?
TREASURER:
Well, I'm not engaging in a negotiation through the press. What we are engaging in…
JOURNALIST:
So the 40 per cent is non-negotiable then?
TREASURER:
No don't put words in my mouth. What I've said is we outlined the detail in the press releases on Sunday. They've outlined the design of the tax. We are now entering into discussions genuinely with the industry, and that's where I will leave it.
JOURNALIST:
Treasurer on interest rates, the RBA said in its statement that it believes this will return borrowing rates to average. Do you agree with that? And politically speaking that is better for you isn't it, better to have these interest rates now than during the campaign?
TREASURER:
Well, sorry this is not a matter of politics. We have an independent Reserve Bank that sets rates independently of the Government. That's the job that they do, and they've done that yet again today.
JOURNALIST:
What do you think of Clive Palmer's claims that projects in WA and South Australia are not going to go ahead because of the Super Profit Tax?
TREASURER:
Well, Clive Palmer acts in the interest of his own fat profits. He doesn't act in the interests of the Australian people. And my job is to act in the interests of the Australian people – to make sure they get a fair share. Thanks.
