TRANSCRIPT
THE HON PETER COSTELLO MP

Doorstop Interview
Zinc at Federation Square
Melbourne

Thursday, 31 July 2003
9.00 am

SUBJECTS: Airport Security, Building Approval Figures, Economy, Exchange

Rates

JOURNALIST:

Should Australia, or why isn’t Australia following the US’s lead in upgrading

security levels for our airline industry?

TREASURER:

The Australian Government takes advice from its intelligence agencies

and from its security agencies. Now, we have put in place numbers of

measures to strengthen Australia’s security in relation to aviation-very,

very tight measures. If any additional measures are required, we do that

on the advice of our security and our intelligence agencies, who give

us advice as to what is required for Australian conditions, and we set

them according to Australian conditions.

JOURNALIST:

What intelligence do you have to show that there will be no local implications?

TREASURER:

Well look, the Government has put in place already numbers of measures

including full searches, including x-rays, including sky marshals on

planes. This is a Government which has made a huge investment in relation

to security, over a billion dollars in the 2002 Budget, so we have really,

really done everything that has been advised by our intelligence and

security agencies, and we continue to follow their advice.

JOURNALIST:

This week we have had some building approval figures showing the market

is still running pretty hot, is there any concern that it will over-heat

at all?

TREASURER:

Well, the fact of the matter is, that if building approvals are strong,

and building construction is continuing, that will add to supply, so

you would think in relation to prices, that if anything, that would actually

have the effect of moderating prices. Strong building approvals and strong

construction is more likely to moderate prices of housing, rather then

to increase it, so I wouldn’t take that as a sign that prices are continuing

to go up. I would take it as a sign of the fact that because prices are

high there is still demand for supply, because interest rates are low,

there is still demand for supply, that because employment prospects are

strong, people are still buying houses, and that would be consistent

with a strong domestic economy which, by world standards, Australia is.

JOURNALIST:

Still on the economy, there is concern amongst some economists saying

that exports could be done on the second quarter, coming into the second

quarter GDP figures, any concern that, some doubt about the Government’s

numbers there?

TREASURER:

Well look, it is a difficult time for Australia’s exporters, we have

acknowledged that fact. You have a weak world economy, a weak US economy,

what that means, when the rest of the world is weak, that they don’t

have the same capacity to buy Australia’s exports. The US economy is

running weak, then Americans don’t have same capacity to buy Australia’s

exports. If Japan is running weak, Japanese don’t have the same capacity.

If Europe is running weak, Europeans don’t have the same capacity. So,

weak world economy make it less a demand for Australia’s exports. The

second thing that has dramatically affected Australia’s exports, we have

lived through the worst drought in a hundred years. Agricultural exports

are down something like 24 percent and until the drought fully breaks,

until farmers get their crops in, until they re-build their stock, agricultural

exports are going to be down.

JOURNALIST:

Treasurer I know you don’t comment on interest rates, but on this subject

you have in the past commented on exchange rates. Would you rather see

the Australian dollar closer to 60 cents than 70 cents US?

TREASURER:

I am not naming a particular exchange rate but I will make this point.

When the Australian dollar went down against the US dollar in early 2000,

that gave exporters a super competitive exchange rate. It gave them a

lot of help. As the exchange rate has come back, a bit of that help has

been withdrawn, they know that, that has had an effect in relation to

Australia’s exports. But you do need to remember of course that it is

not just the Australian dollar, it is the US dollar. The US dollar was

rising all through the period of 2000, and now the US dollar has come

off a bit, and that is because it was too high and it has corrected.

This has been – a big part of the story has been the US dollar – rather

than the Australian dollar. Thanks, have a good day.