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Transcripts from the Prime Ministers of Australia

Transcript 11824

Interview with Tracy Grimshaw, Today Show

Photo of Howard, John

Howard, John

Period of Service: 11/03/1996 to 03/12/2007

More information about Howard, John on The National Archive website.

Release Date: 15/03/2001

Release Type: Interview

Transcript ID: 11824

Subjects: Australian dollar; Ryan by-election; foot and mouth epidemic.

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

GRIMSHAW:

Mr Howard good morning.

PRIME MINISTER:

Good morning Tracy.

GRIMSHAW:

Two days out from a crucial by-election and your backs are against the wall and the dollar crashes through the 50 cent barrier. I guess this mornings news headlines are the last thing you need.

PRIME MINISTER:

Well as far as the dollar is concerned there's nothing particularly magical about 50 cents in economic terms. What is happening at the moment is that financial markets around the world are in some turmoil and the American dollar in those circumstances is seen as a safe haven and everybody flocks to the green back and that affects the level of everybody else's currency. The fundamentals of the Australian economy don't warrant a dollar as low as it is at the present time, and put aside any political rhetoric and point scoring and just look at it. We have low inflation, we have low interest rates. Even though growth slowed in the December quarter we're still coming off quite strong growth. We have very low Government debt. I mean our Federal Government debt is about 6.5% of all the wealth we generate in a year. In Japan, by comparison, it's at 130%. So the fundamentals of our economy don't warrant a dollar at that level for any period of time.

GRIMSHAW:

And yet isn't the dollar a key indicator of how the world sees us, and indeed how we see ourselves.

PRIME MINISTER:

No, I think the exchange rate of the Australian dollar is a reflection of a combination of things. We are still a small country, we are still seen by the rest of the world as a commodity country and that is partly true, it's not wholly true. And when you have turbulence on financial markets, the smaller currencies often get a little trampled. That doesn't mean to say that the economies of those smaller currencies aren't being well run, but it does mean that they can get trampled. Now it's very important that we be realistic, but it's also important we don't talk things down. I denigrate completely off the back of a change in the exchange rate talk of a recession. That is not justified by the facts. I don't care who uses that language it is not right to talk in real terms of a recession. I mean when you use the word recession in the Australian language you're not talking about just one quarter of negative growth, you're talking about a complete collapse of confidence. I don't find that in the Australian community.

GRIMSHAW:

I want to come to pointers to a recession in a moment, but six years ago the now Treasurer, Peter Costello, rated the Keating Government a failure when the dollar was at 70 cents.

PRIME MINISTER:

Well look, I'm dealing now, I'm not really interested in going back six years or six months, my responsibility as Prime Minister now . I mean you know, we can have a semantic debate about that, I mean I am addressing a real live situation that is important to the Australian public this morning, not some kind of sematic political debate about who said what six years ago or who said something now. I mean sure the dollar has gone under 50, there's nothing magical about that level. I don't believe that the fundamentals of the Australian economy, whatever side of politics you're coming from, look at them, I don't believe those fundamentals justify such a rate.

GRIMSHAW:

Alright, lets look at some of the fundamentals. Consumer confidence has plummeted to near recession levels. Dun and Bradstreet says we that we inevitably heading for a recession, and they're not alone despite the fact that you say we're not. The dollar is struggling. Do you still believe the economy's going to bounce back into the black.

PRIME MINISTER:

Tracy none of those three things you quoted with respect are fundamentals. I mean consumer confidence is a public reaction to a change in economic indicators dramatised by headlines and reporting. I mean if you have headlines saying Australia hits the wall off the back of one quarter of contraction, well of course people are going to be a bit nervous. Of course they are. A Dun and Bradstreet report with great respect is not in fundamental - when I talk about fundamentals I talk about inflation, I talk about the fact that the budget is in balance, I talk about the fact that our debt is only 6% of our annual wealth production. I talk about the fact that we have bought about major economic reforms that have enabled us to weather other economic storms. Remember the gloom and despair from some when the Asian economic crisis overwhelmed this part of the world. They said it was going to gather up and engulf Australia. Well it didn't.

GRIMSHAW:

Alright, lets look at Ryan. You've told the Liberal supporters, traditional Liberal supporters in Ryan that a vote for Labor will not be a protest against your Government but an endorsement for Labor. Does that put you back against the wall a little bit with that tactic? I mean what are you going to say on Sunday if in effect they vote for Labor, they give Labor that endorsement.

PRIME MINISTER:

Well Tracy I'm being realistic. I mean the published opinion polls suggest that there's going to a be a protest vote by Liberals and I'm addressing those people and I'm asking them not to deliver a protest vote, because although they may see it as a protest vote it will in fact be taken by the Labor party as an endorsement of all the negativity of the last five years. Now I'm a political leader addressing a reasoned argument to people who I perceive may think this is an occasion to deliver the Government a kick even though they don't want to change Government. Because in by-elections people sometimes think well look I'll just give them a tickle up and then come the general election I'll come back. Now I'm saying to those people in Ryan if you do that then it will be taken by the Labor Party as an endorsement of negativity and I think the last thing we want at the present time is a political approach built entirely on negativity. I've never been like that. I'm critical of the Opposition when that's justified but I've always stood for something, I've not just stood against things.

GRIMSHAW:

You have simplified the BAS, you have finally removed the GST spike from petrol, you've given a $150 million grant to new home buyers. You must be wondering what more you can do to turn your Government's fortunes around.

PRIME MINISTER:

Tracy I don't expect those things to sort of have a dramatic and immediate effect in Ryan, or indeed anywhere else.They were necessary. But I would make that point that as far as the political position is concerned it's nine months, eight or nine months before the election and the political climate immediately before Christmas when I sat in this studio, or even at the beginning of the year, was very different from what it is now. What does that tell us? It tells us in a few months time it can be different again.

GRIMSHAW:

Alright, let me look at another issue. Britain has not managed to contain the foot and mouth epidemic. Are you convinced that we are doing absolutely everything possibly to protect ourselves?

PRIME MINISTER:

Well we are, but let me say that we will spare no resources and we will bend every effort and if more is needed then the resources will be made available immediately. This is very much a national crusade or cause. I mean it would be catastrophic for this country if foot and mouth disease were to come to Australia. And I thank everybody involved, I thank the wharfies, I thank the quarantine services, I thank everybody who so far has sort of joined the fight to protect Australia. It is a great national cause, it means a lot to this country and we will not spare any effort to keep this wretched disease out of the country. It's terribly important. We haven't had it for 130 years and it really means a great deal to the future of this country that we keep it out.

GRIMSHAW:

Okay, we'll leave it there. Thank you for your time.

PRIME MINISTER:

Thank you.

[ends]

Transcript 11824