Interview with Peter Cook
Bloomberg TV, Gyeonju, Korea
22 October 2010
SUBJECTS: G20 Finance Ministers' Meeting; Global economy; Global Exchange Rates; Australian Dollar; MRRT
COOK:
Is there a sense of urgency right now, that given all the currency tensions, that something positive come out of these sessions?
TREASURER:
Well, I've just come from the first session. I think there's an appreciation that the global recovery is patchy and it's uneven. I think all Finance Ministers understand their responsibilities to their respective nations and to the global economy and they're applying themselves seriously to some very important discussions that are on the agenda this weekend and we've commenced that over the past hour and a half.
COOK:
Well, we've had the Treasury Secretary of the United States, Tim Geithner, sort of put the US position forward in a letter to you and your fellow G20 colleagues, talking about perhaps targeting current account balances as just one means to try and address some of these global issues. What do you make of the Secretary's proposal?
TREASURER:
Well, Tim Geithner, I think has made three very constructive suggestions in his letter. I'm sure Finance Ministers want to talk about those in detail. I think they are constructive. I think we always have to be aware however, that not one size always fits all, but I think they have been received by Ministers very constructively, and we'll go through that discussion through tomorrow.
COOK:
At the end of the day the communiqué that comes out tomorrow, will it represent real progress, do you think? I know you're just at the beginning of these discussions, but how much pressure do you all feel given again these currency trends, to come up with something constructive?
TREASURER:
Well, I've been to a number of G20 Finance Ministers' Meetings over the past three years and essentially we prepare the ground for the Leaders. I think it is important that we indicate a direction and we indicate where the work has got up to, what progress we've made, but ultimately the key decisions here do lie finally, in the hands of Leaders.
COOK:
What about the question about a currency war right now? Australia obviously, you are dealing with a very strong dollar, the implications of that for your economy, the questions about China and the undervalued Yuan. Where does that stand right now? At the end of the day you're all going to deal with that?
TREASURER:
Well, Australia is committed to a floating exchange rate and our Dollar is strong and that reflects how strong our economy is relative to other developed economies, and it also reflects the very high commodity prices that we're seeing globally, and it also reflects the dynamics within international commodity markets. Australia, for its part, believes that a floating exchange rate or more flexible exchange rates globally are best in the global economy and best for individual countries. But that's something that Ministers will work their way through over the next day.
COOK:
And you've seen some of your counterparts here have stepped in to affect currencies in some ways. You all are on the sidelines there. What do you make of that? As you sit in this room there are certain nations who are not making the decision Australia has?
TREASURER:
Well, I think it reflects some of the global imbalances that we're dealing with as we talk about a framework for strong, balanced and sustainable growth, they're the issues. Currency issues are there, but there are other structural issues within developed and developing economies. Currency issues are important but they're not the only issue on the agenda when it comes to a broader agenda for structural reform in the global economy and in developed and developing countries.
COOK:
The Australian economy has been doing better than a lot of others have fared coming out of the financial crisis. What's your sense right now of the global recovery? Is it at risk, as the South Korean President suggested this evening?
TREASURER:
Well, the Australian economy is in great shape. We avoided recession. We've got a strong pipeline of investment. We've got very strong employment growth and we're on track for surplus in 2013. But of course outside the Asia Pacific I think it is very uneven and it's very patchy and we have to be aware of that because no region can be immune from the outcome in other regions in the global economy.
COOK:
Let me ask you one question if I could, a specific Australian question. And a lot of folks around the world have been following carefully, the national mining tax situation; the disagreements there. Where does that stand right now with regard to industry given some of the questions that have arisen in recent days?
TREASURER:
Well, this is a very important tax reform for Australia. We're working our way through some of the issues. We are working through a committee which is headed by Mr Argus who is a very prominent former miner in Australia. We believe we will resolve all of those issues and what we will do with the revenue from the Mining Tax is invest in national saving, invest in infrastructure and bring down company taxes, and that's what we want to do.
COOK:
Alright. Well we'll wait and see. Treasurer Swan, thank you very much for your time. Appreciate your time joining us here on Bloomberg.
