Treasury Place

Melbourne

Thursday, 13 July 2006

12.05 pm

SUBJECTS:

June Labour Force figures, economy, Federal/State relations, leadership

TREASURER:

The labour force figures today show really great news for all Australians. They show that in the month of June employment went up again, both full-time and part-time employment increased and whilst the monthly figures can bounce around, you get a better perspective by looking back over the course of the year. And if you look back over the course of the financial year which has just finished, 178,000 new jobs have been created in Australia. Around 107,000 of those new jobs created are full-time and about 71,000 are part-time. Our unemployment rate continues at 4.9 per cent – please turn the light back on, thank you – our unemployment rate continues at 4.9 per cent and we have the highest participation rate ever recorded – that is 64.8 per cent. That is more people are looking for work than we have had in the past and more people are able to find it and we have had 178,000 new jobs in the course of the last year.

This is what economic policy is all about. It is about creating a situation where people who want to work can find it and when you find a job it gives you the confidence for your family, for your future, it gives you the confidence to save, to invest and that is a big part of keeping the Australian economy strong. Questions?

JOURNALIST:

Do you think these figures will help counteract the trade union and Labor campaign against the Workchoices laws, Treasurer?

TREASURER:

Well, here we are after about two or three months – not a very long time – of the application of the new industrial relations laws and the ACTU promised that these new laws would lead to incredible hardship. Two or three months in, what do we find? We find that the unemployment rate is at 30 year lows, the participation rate is at all time highs and over the course of the year we have had 178,000 new jobs. So, I can’t find any support in these figures for the fact that Workchoices is going to destroy life as we know it. Now, it is still early days of course and I expect that over the months that are ahead people will still be assessing the impact of these laws, but I have no doubt at all that long term those changes will mean that there will be more jobs and higher wages. I have no doubt at all, in a structural sense they will mean more jobs and higher wages.

JOURNALIST:

Treasurer, when you look at these numbers, do you – given that we’ve had a string of really good numbers in the last two years – do you worry that it doesn’t get any better than this, that the next set of national accounts might be a bit weaker, or the next set of unemployment numbers might shift up again?

TREASURER:

You know, if you had said to me George that we could be presiding over a 4.9 per cent unemployment rate I wouldn’t have believed you ten years ago. I don’t think anybody did, I don’t think anybody thought that we would get to something with a five in front of it. So, this has exceeded everybody’s expectations. But what do we take out of that? Well, maybe we should just get more ambitious, maybe we should just keep working away. There was work done in the OECD back in the early 1990s, I believe, that talked about Australia’s natural rate of unemployment being around 7 per cent and we are now at 4.9 per cent, so aren’t we lucky that the OECD was wrong and things are much better.

JOURNALIST:

Would you expect interest rates to go up?

TREASURER:

Look, what you are seeing now is you are seeing an economy which has had continuous growth over a decade producing more jobs than ever before, with an unemployment rate which is lower than we have had in 30 years. There is nothing wrong with that. That is the object of economic policy. But in relation to interest rate policy, that is directed at keeping inflation low, we have to keep our eye on inflation. We can’t afford to have any wage increases which are not supported by productivity, we can’t afford to have secondary claims coming out of fuel prices, we must remain vigilant. That is the key to keeping interest rates low.

JOURNALIST:

Is that the better measure of your Workchoices reforms? That you can keep a lid on wages, my point being that we don’t have wage inflation (inaudible)?

TREASURER:

Well you see, what centralised wage fixation used to do, is it used to take an area of the economy which was profitable and apply wage settlements from that to the whole economy. Now, let’s suppose you had electricians working in the mining industry. Electricians in the mining industry would get a big increase and then an application would be made in the electrical award to apply that right across the board. That wage increase might have been sustainable in the mining industry but it wouldn’t be sustainable in a small plant in Moorabbin doing manufacturing. The good thing about getting out of centralised wage fixation is that justifiable wage increases in profitable areas don’t automatically get transmitted and that is why we have managed to avoid what has always been the problem during previous periods of low unemployment, which is wages breakouts which end in inflation and inevitably in recessions. So, wage bargaining which is done at the enterprise level and fixing appropriate wages to different parts of the country and different industries is very much a part of this story and the success of this story.

JOURNALIST:

Could you imagine the unemployment rate with a ‘three’ in front of it?

TREASURER:

There is always going to be an unemployment rate because people are between jobs, there is a mismatch between demand and skills, there will always be an unemployment rate. I don’t think there is a country in the developed world that has got unemployment down to three or something with a three in front of it, but you know, let’s keep it here and let’s see if we can get it to go lower. You know, as I said, these things bounce around from month to month but I think the fact of the matter is that the unemployment rate has now been below 6 per cent for well over a year I think, and that is just an amazing thing.

JOURNALIST:

Is it nice to be talking as a Treasurer again rather than a leadership aspirant?

TREASURER:

Well, I always talk in what all of my capacities are as Treasurer, as a Member of Parliament, as a member of the Government, but it is nice to be talking about the things that show the benefits of good economic policy and the object of economic policy is to so grow the economy that people can find jobs.

JOURNALIST:

Treasurer, events this week have shown that John Howard is much more popular than you are in the Party and the electorate, does that mean you actions this week have been (inaudible)?

TREASURER:

Look, over the course of the last several days I have answered all of the questions about all of these matters and there is nothing more that is going to be said by me, there is nothing more that can be said, I have given you full and frank disclosure and I am not going to say it over and over again every day.

JOURNALIST:

But if the Party and the public want John Howard to go on, isn’t that the right thing for him to do?

TREASURER:

As I said to you over the last three days in press conferences all over the country I have answered every question that every journalist has thrown at me and I have answered them fully and frankly with complete disclosure and I am not going to repeat them on a daily basis.

JOURNALIST:

Once he’s canvassed (inaudible) in the Party Room as he is doing and he is giving a commitment on his future and that is a commitment to stay, will you give a commitment to stay as Treasurer?

TREASURER:

I don’t know if you heard the answer I just gave, but over the last three days in press conferences all over the country I have answered every question that every journalist has wanted to put to me and I have given you full and frank disclosure and there is no point in repeating it on a daily basis.

JOURNALIST:

(inaudible) leadership challenge?

TREASURER:

I don’t know if you heard my answer, but over the last three days all over the country, in every press conference, I have answered every question that every journalist has put to me and I have done it in a full and frank way and there is no point in repeating it on a daily basis.

JOURNALIST:

Treasurer, do you concede that before this leadership challenge, there were polls showing Government’s primary vote is falling, does that concern you?

TREASURER:

I don’t know if you heard my answer, but in press conferences all over Australia, with every journalist throwing every question on every issue, I have answered fully and frankly and there is no point in going over it over and over again.

JOURNALIST:

Does it concern you that the Government’s primary vote is falling under John Howard?

TREASURER:

Well, I think you heard my answer.

JOURNALIST:

When will you be inclined to talk about it again?

TREASURER:

I think you heard my answer.

JOURNALIST:

At what point over the last three days did you decide that you had enough questions on this?

TREASURER:

Well, after I had answered every question there was…

JOURNALIST:

Was there a point yesterday (inaudible)

TREASURER:

No, no, no, no, you can only answer every question that there is so many times and I make myself fully available to the nation’s press. I did it on Monday, I did it on Tuesday, I did it on Wednesday, I answered every single question that there was – and I did that deliberately because the world moves on, you don’t go over the same ground day after day after day. We get on with the real business of helping people, of creating jobs, of keeping mortgage interest rates secure, and of going about the important business of governing in the nation’s interest.

JOURNALIST:

On COAG Treasurer, are you broadly supportive of the national reform agenda and do you agree with the principle that the States should share in gains that flow from that?

TREASURER:

Here’s what I think and here’s what the Federal Government thinks – of course it is important that we have, for example, high standards of literacy in schools and high standards of education. And that is in the interests of everybody and it is in my interest as a parent, it is in every parent’s interests, it is in the Federal Government to see it and it is in the interests of the State Government to see it. It is not a question of people having to be given a financial incentive to do it. That is what we are elected to do. You don’t get elected and say ‘well, I am not going to increase literacy standards unless I am given some reward for doing it’. You get elected to say ‘I am getting elected because I want to increase literacy standards’. That is what a Government is there for. So this idea that you can’t expect governments to do what they are elected to do and what is in the interests of the public unless there is some financial incentive, I don’t agree with that. No I don’t. And I have not heard that proposition before and the Federal Government does not agree with it. The Federal Government believes that each tier of government is elected to do the very best that they can for the public and it is not a question of having to have a financial payment to do it. It is an obligation to the voters to do it.

JOURNALIST:

So the States are being too greedy and the Prime Minister should refute their claims?

TREASURER:

Well, I have said to you that the view of the Federal Government is that we should all be working in our own areas of responsibility to produce the best that we can for the electorate and it is not necessary for financial payments to be made to get that. What is necessary is for each level of Government to do what it is required to do to the best of its ability because that is what the public wants and that is what they are entitled to.

JOURNALIST:

On changes to the media laws, what is your view, what is your personal view, what do you think should be done?

TREASURER:

Well, I don’t know if Senator Coonan has announced her policy yet, but I agree with her policy.

JOURNALIST:

Is that right?

TREASURER:

Yes.

JOURNALIST:

You don’t have a personal view?

TREASURER:

Well, my personal view is I agree with her policy. Yes.

JOURNALIST:

Coming into COAG Steve Bracks said that he would rather deal with the Prime Minister than you because he says you put personal ambition ahead of what is best for the country. How do you respond to that?

TREASURER:

Well look, I would say this – after ten years of being Treasurer we have had nine surplus budgets, we have retired $96 billion of Labor debt, we have brought interest rates down from over 10 per cent to around 7 per cent, there have been 1.8 million new jobs created in Australia, real wages have gone up by 16.3 per cent, we have established a Future Fund to ensure the security of Australia’s future. It’s those kind of outcomes, where people can find jobs, where families can afford homes, where the future is going to be much more secure, that’s what economic management is all about. And there is the record. It can be compared to the previous ten years, and it can be compared to other countries. But I think people should look at results.

JOURNALIST:

Given all of that, after 10 years as Treasurer, why do you think it is the case that you don’t have more Party Room support than you do?

TREASURER:

Well, I think that is the fourth time you have asked the same question, and I think it is the sixth time that I have given the same answer. Nice try, it was James Talia, Channel 9.

JOURNALIST:

Just one question that wasn’t asked yesterday is whether you feel it would be best for all concerned if the Prime Minister made his intentions clear before Parliament resumes?

TREASURER:

Well look Michael, it is a matter for him. He has indicated that he is going to consider that and he is going to make a statement and that is a matter for him. I think, as I said yesterday, after he has considered the matter he will make a statement. There is an indication today as to when that might be and when we know what that is then there will be an appropriate time to respond.

JOURNALIST:

Is August a good time do you think?

TREASURER:

Well, I am not going to give any advice to anybody on that. That is a matter for him. Thank you all very much.