Transcript No. 99/64

Treasurer, first of all, the action in East Timor. What sort of constraints is it going

to put on the Budget?

TREASURER:

This will be a very major commitment for Australia in peacekeeping terms. We will have

a large number of soldiers on East Timor and of course they will be at risk. We will have

a big humanitarian aid effort in relation to East Timor and that will also have a cost.

There will be significant costs to the Budget as a result of our involvement. But our

involvement is right, it’s necessary, it has the full backing of the international

community, it’s our area of responsibility and we have to ensure that we have a

strong economy that can meet these challenges as they arise.

JOURNALIST:

Are you going to have to make adjustments to the Budget to cater for it?

TREASURER:

We will be working on costings once it becomes clear what’s required in

humanitarian terms and what the length of the commitment will be. We’ve done some

preliminary work. Yes, it will take new expenditure. Yes it will.

JOURNALIST:

What about the Defence Budget, does there need to be replacement of equipment and that

kind of thing?

TREASURER:

Well, we have a Defence Budget to replace equipment all the time. What’s different

about this is that we are going to have a significant military force stationed outside

continental Australia. And it takes money to equip and keep the ordinance and ensure the

supplies for those troops. It will also take money to do the humanitarian aid which is

going to be a big part of it. That will take new expenditures. That will have to be funded

as new expenditure in the Budget and we are currently working on costs in relation to

that.

JOURNALIST:

How surprised has the Government been by the demands from the Australian people for

Australian aid into Indonesia?

TREASURER:

I think the response of the Australian people has been overwhelming. Overwhelming in

support of the Government’s initiatives and overwhelming in support of the plight of

the East Timorese people. I think public opinion has been shocked at the killing and the

looting and the tragedy and the plight of the East Timorese people. There was strong

support for the Government to take the action that it has. We now have strong support from

the international community. This is a significant military engagement for our country.

This is the biggest military engagement we’ve had since Vietnam. And it is going to

be an expensive engagement and that’s a level of the commitment of the Government and

the people of Australia.

JOURNALIST:

Treasurer, you said that we can expect a significant impact on the Budget in this

current Budget. How about future years, what are you looking at for that?

TREASURER:

Well, once we’ve analysed the costs and we know the length of the duration,

we’ll start factoring that into the Budget. But we have a Budget in surplus. This is

our third year of a surplus Budget and it’s our strategy to keep the Budget in

surplus. So, we’ll have to ensure that we keep the Budget in surplus and we budget

for these sorts of events. It will mean that spending will have to be tightened in other

areas. But we’re not going to let down our troops and we’re not going to let

down the humanitarian effort. We are going to budget and we are going to pay for this.

JOURNALIST:

Are you worried about threats to the Indonesian economy? You mentioned some of that in

your speech.

TREASURER:

Well, Indonesia’s economy has in the last two years has been through a major

crisis – contracted something like 13 per cent. It has contracted. And you saw even

in the events of the last two weeks the crisis of confidence. Confidence in the economy

there is still fragile. You saw the effect on the exchange rate in Indonesia and in

relation to investors. So, it’s an economy that’s been through a very bad period

and confidence is still fragile. In the long term we want to have stable and prosperous

neighbours – that’s the point. Just as an economic downturn in Asia affected our

economy for the worse, an economic upturn will affect it for the better. And it’s in

our interests to have strong economies amongst our neighbours.

JOURNALIST:

Treasurer, there is a hostility in Indonesia towards Australia. Do you see that as

widespread or just some sections of the society?

TREASURER:

Well I think it’s important, just as we should understand Indonesia’s aims

and objectives, I think it’s important that they understand ours. And our aim and

objective here is to secure peace for the East Timorese people, to ensure that the United

Nations mandate is carried out and to prevent humanitarian tragedy. That’s what

we’re there for. And this is something that Australia is making a large commitment, a

large commitment in military terms, in aid terms, in monetary terms, in personnel terms.

And we’re doing it because we have the aim and objective of averting humanitarian

disaster. And I think it’s important that this is understood in Indonesia just as we

understand Indonesia’s aims and objectives. Thanks.