26-September-2011
Portfolio Media Releases
Monday, 26 September 2011
Transcript: ABC AM Programme
Topic: Australia’s economic vulnerability
E&OE………………………………………………………
Ashley Hall:
Here the Acting Shadow Treasurer is calling on the Federal Government to fireproof the economy to protect Australia from another global downturn. Andrew Robb says some parts of the economy have tanked already. He says the Government should stop spending and the Reserve Bank should cut interest rates in response. Mr Robb claims Australia is highly vulnerable because the Government spent too much in its stimulus response to the last global financial crisis. Mr Robb is speaking with our chief political correspondent Sabra Lane.
Andrew Robb:
The borrowing and the spending and the borrowing and the spending has materially weakened our position in the face of another downturn and the Government should acknowledge that and then help with the community to deal with the problems that need to fireproof us for the future and I think it’s coming.
Sabra Lane:
Wasn’t that spending though used to steer Australia through the global financial crisis last time and Australia was one of the few OECD nations to actually avoid going into a recession?
Andrew Robb:
This is one of the great myths, I think, of the global financial crisis.
The reason we got through the crisis and got through it really within about nine months was certainly the first stimulus, the $10 billion which we strongly supported was very necessary because there was just an absolute collapse of confidence and that worked. But the fact of the matter is the economy, our economy, was totally different to other economies around the world in such good shape, no debt, you know $50 billion or more of assets built up, as well we had China buying our minerals.
Now they’re the reasons we got through the global financial crisis. In fact, the second and third tranches of spending actually have made us vulnerable. They’ve increased interest rates, they’ve increased borrowings, they’ve choked off finance for small and medium business and all of that has left us highly vulnerable in the face of any further serious downturn worldwide and I think it’s coming. I think there is going to be a further greater weakness in the world market.
Sabra Lane:
How bad do you think things are going to get?
Andrew Robb:
I’m not sure.
Sabra Lane: You say Mr Swan should fireproof the economy. How can he do that?
Andrew Robb:
For starters the Government has got to seriously start to cut spending.
Sabra Lane:
Well, most of the stimulus spending has completely tapered off, there’s not much of it left to go. Aren’t most of these problems beyond Australia’s control? Australia can’t be responsible for what’s happening in Greece or the political lack of will in the eurozone countries.
Andrew Robb:
Well, I’m not saying they are. I mean, we cannot control things outside of our country but that’s all the more reason to live within our means. We are not living within our means.
How can the Government stand there and say it is being fiscally responsible when in the middle, we’re almost two thirds of the way through the biggest mining boom in our history they’re still going to spend tens of billions of dollars more than they raise.
We need to pull our heads in, get rid of this carbon tax which is killing confidence and will add to costs, we need to stop government spending and I think there is a case for the Reserve Bank to now start to cut interest rates because the economy is already starting to tank in various areas. Some of our sectors are technically in recession now, the Government’s got to recognise it and I think the Reserve Bank should recognise it.
Ashley Hall:
The Acting Shadow Treasurer Andrew Robb speaking there with Sabra Lane.