Subjects: Economy, budget, Ryan by-election, foreign investment
E&OE................................
LIEBMANN:
Good morning, Prime Minister.
PRIME MINISTER:
Hello there, Steve.
LIEBMANN:
I'm not sure that it is necessarily a good morning if you take at the headlines this morning - Economy Hits the Wall, Economy on the Ropes, Recession Looms. Can you assure Australians this morning that we are not heading into a recession?
PRIME MINISTER:
Steve, I don't believe we are. I think we have to recognise the truth of the December quarter having contracted. That's undeniable and that's a disappointment. But we should also remember that just because you go back in one quarter that doesn't wipe out five years of growth and strength and progress. And the fundamentals of the economy are still very favourable.
LIEBMANN:
So you're confident the economy is strong enough to bounce back.
PRIME MINISTER:
I'm very confident it will bounce back. I can't predict with absolute precision the size of that bounce back but if you look at the fundamentals, inflation is very low, interest rates are falling and our budget is not in deficit, it is in surplus. But we have been hit by a number of things, some of them domestic, some of them from overseas. The high price of fuel has certainly had a dampening effect on the economy. There were some transitional impacts from the introduction of the GST, particularly on the housing industry. It sucked activity forward and, as a result, after the GST was introduced, there was a slowdown in activity. Now, that is essentially a transitional matter.
Now, I think we have to keep a sense of perspective and balance. I'm not pretending that it wasn't a setback and it isn't a disappointment but we don't want to go to the other extreme of using extravagant language. I mean, the economy hasn't hit the wall. The economy has had negative growth in one quarter and I think we have to keep it in perspective.
LIEBMANN:
Will your budget still be in surplus, the next one?
PRIME MINISTER:
Well, we will be delivering surplus budgets.
LIEBMANN:
No question.
PRIME MINISTER:
We will deliver a surplus budget.
LIEBMANN:
Do you anticipate more interest rate cuts by mid year?
PRIME MINISTER:
Well, the economists and the commentators are predicting that.
LIEBMANN:
What are you predicting?
PRIME MINISTER:
I don't disagree with what they're saying but I don't want to get into the exact business of forecasting interest rate reductions or, indeed, other adjustments.
LIEBMANN:
Could it not, though, be argued that further interest rate cuts would confirm that the domestic economy is weak and might that not reflect on your Government's economic management?
PRIME MINISTER:
Well, some people will say negative things about the Government no matter what happens. I expect that. I notice that Mr Beazley is saying that the GST is like a wrecking ball in the Australian economy. Well, not only is that wrong but I would say to him that if he really believes it's a wrecking ball, why doesn't he promise to get rid of the wrecking ball.
LIEBMANN:
You're going to make great play of the need for sound economic management in your election campaigning but can't it now be argued that you and Treasurer Costello have, in a sense, compromised your credentials and damaged your reputation as economic managers?
PRIME MINISTER:
Well Steve, election campaigns, when they come, are about choice and not just to focus on us but also a focus on them. And, of course, when they were last in office they delivered 11% unemployment, 17% interest rates and $85 billion of government debt. We've had one negative quarter. That doesn't remove the five years of strong growth, the low inflation, the low interest rates, the $50 billion of debt repayment and the strong budget position. I mean, you have to look at the whole picture. Now, sure yesterday's figures were a setback for Australia. I mean, forget about the political impact on me or on Kim Beazley. The important thing is what it means for Australia. But it's important we don't lose perspective. Just because we've had one bad quarter we don't throw up our arms and say, everything is going wrong. Everything is not going wrong. We still have some fundamentally sound economic indicators. There has been a slowdown in activity. There are some transitional explanations for it and we have to keep a sense of balance and a sense of perspective.
LIEBMANN:
Yes but, I mean, sooner or later you've got to draw the line in making the comparison between your Government and what Labor did when it was last in government. And in recent times we have seen you reverse decisions at a time when you told us they couldn't or shouldn't be reversed.
PRIME MINISTER:
Well, in the end, Steve, the line drawing is done by the public. I mean, the public will judge me and the public will judge Mr Beazley. The public, at the time of the next election, will make a choice and that is our democracy. I can but try and put things into proper perspective. It's my responsibility, ultimately as Prime Minister, to face reality plainly but also to try and keep things in perspective. And I think it's very important that the community is not panicked by such suggestions as the economy hitting the wall. I don't believe the economy has hit the wall. I believe the economy has had what it plainly has experienced and that is negative growth in the December quarter.
LIEBMANN:
All right, two quick questions. There's a report in the Herald Sun in Melbourne today that foreign investors now earn more than $700 billion of Australian assets and that figure's going to go to a thousand billion in the next 18 months. Are you worried that we're losing control of our key industries and our national identity and that will become an election issue?
PRIME MINISTER:
Well, like everybody else, my heart is with Australian ownership. My head tells me that an economy as small as Australia, which is part of the world economy, cannot put up the shutters against all foreign investment. That is ridiculous. But in making decisions on foreign investment proposals we always try and make a national interest judgement.
LIEBMANN:
Okay, final question. If Ryan, if the Ryan by-election produces a really bad result for the Coalition would you even consider standing aside for the sake of the Party?
PRIME MINISTER:
Well, I will always do what the party wants me to do. I'm Prime Minister through the gift of the Liberal Party and I will always do what is in the best interests of the party. I don't hear the party saying to me that it isn't in their best interests for me to continue in my current position and I will always do what the party wants and that is what I've always pledged to do and what I'll continue to do. Now, what happens in Ryan, I don't know, I think it's very tough for us but we've got to keep a sense of perspective about these polls and about by-elections. We've had.the Hawke Government suffered huge by-election swings in 1988 and that government survived in office for another eight years. I mean, we just, once again, we've got to keep a sense of perspective.
LIEBMANN:
Okay, thanks for your time.
PRIME MINISTER:
Okay.
[ends]