GLEN BARTHOLOMEW: Well, as things look worse in Europe there are new warnings today of an economic slowdown in Australia's key trading partners, particularly China, which could see a drop in demand for our raw materials. And the Treasury Secretary Martin Parkinson yesterday told a Senate Committee that while Australia's Budget position was incredibly healthy, if the world slowed further the Government could go back into deficit to stimulate activity. Let's get a Government view on those issues and what might happen next. Marius Benson is speaking to the Trade Minister now, Craig Emerson, who's in Tokyo.
MARIUS BENSON: Craig Emerson, there are reports of evidence of a slowing-down in China's economic boom; that the steel mills that rely on Australia's raw materials in particular are cutting back production. You've just been in China: what's your impression?
CRAIG EMERSON: My impression, Marius, is that the Chinese authorities will sustain a healthy growth rate. They have the capacity to do that. We do know that there are difficulties emanating out of Europe. But China is committed to healthy growth in its 12th five-year plan and, further, to spreading the benefits of growth to the west and changing their composition, if you like, from export-led growth to domestic consumption-led growth. So, all of that diversification means that there's some insurance against any further slowdown in Europe.
BENSON: So growth still, but will it be slower and will that affect the demand for Australian raw materials?
EMERSON: It's difficult to be a forecaster on economic growth in China. But there's no doubt that the Chinese are committed to healthy growth. And I think that Australia, because of the work of previous Labor Governments — also to an extent previous Coalition Governments — is well integrated with the economy of China in the fastest growing region on earth. And we want to build on that.
BENSON: It is a very interdependent world, though. And Europe is clearly slowing down; demand for goods from China from Europe is slowing. And there was a statement yesterday to Senate Estimates from the Secretary of Treasury Martin Parkinson. He says Australia's very well placed, even amongst the global uncertainties, but he says if the financial system globally does become clogged, it's a different world: all bets are off. That's taken particularly to mean that Australia's devotion to returning the Budget to surplus should be reviewed. Will it be reviewed if the circumstances become more serious in terms of global slowing-down?
EMERSON: There's no reason to believe that there will be anything like a massive global slowdown beyond those figures that are contained in the Budget forecasts. And I think they are the ones to which Martin Parkinson refers.
BENSON: So, come hell or high water, there will be a surplus this year?
EMERSON: What I'm saying is there's no reason to believe anything other than what's in the Budget forecasts, which themselves factor in the developments that we are seeing in Europe. So we believe that we've got the right settings and a good Budget to return the Budget to surplus.
BENSON: Well, you've been in China talking trade — there's talk specifically of Australia becoming China's food bowl. That's brought a mixed response here in Australia: some people encouraging that view — that it will open up areas that Australian agriculture can't deal with at the moment; others critical of China becoming such a big player in Australian agriculture. What's your view on that?
EMERSON: The idea of supplying more food onto global markets, which China can then participate in purchasing, obviously is a good one. We can benefit from extra agricultural production. I'm surprised that Barnaby Joyce, and to an extent also Senator Bill Heffernan, seem to think it's a bad thing that we want to increase rural production in this country. Both of them are supposed to be representing rural interests. It's this Government that is actually doing that by looking at the capacity of Australia to increase its agricultural production, which means more jobs in regional Australia, more regional development.
BENSON: Craig Emerson, there's some criticism today of the Australian workforce — or the Australian potential workforce — from some of the major players in the resources sector, saying that those in the East who are unemployed are not prepared to go west, and they lack the initiative to staff the boom — which prompts the need for international workers to be brought in. Is there something wrong with the Australian workers?
EMERSON: There's increased mobility over the last little while. Obviously, some workers will be reluctant to just pull up stumps and move their families to other parts of Australia, but we'll do whatever we reasonably can as a Government to facilitate mobility.
BENSON: Craig Emerson, thank you very much.
EMERSON: All right, Marius. Good to talk to you.
- Minister Emerson's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555