E&OE
18 November 2008
Interview in Mexico - ABC Radio
Subjects: Global financial crisis, Cuba
INTERVIEWER: [inaudible]…the economic global recession, how do you see it?
STEPHEN SMITH: Well, our economy is more diverse now than it was ten or twenty years ago. There are more diverse export markets for us, China, India the ASEAN economies combined and so we are not as dependent now as we have been historically, either in our economic relationship with the United States or earlier than that the United Kingdom. So because of that diversity, we think we are as well placed economically as anybody, if not better placed than most, to sustain the worst consequences of the global financial crisis.
In addition to that, we have had very strong prudential regulatory requirements and financial services regulation for a considerable period of time. So we haven’t suffered the worst excesses of the sub prime mortgage difficulty for example. So diversification plus regulatory financial strength we think and hope will see us through the worst excesses. But we’re taking every precaution to try and ensure that we continue to have positive economic growth. We recently announced a $10 billion fiscal stimulus which will take effect from the beginning of December and we are looking if there’s more that we can do on that front, including bringing forward infrastructure investments to keep the business investment cycle going.
INTERVIEWER: Australia has always had a very generous, almost open door policy to immigration. Will this have to be curtailed, or reduced to a certain extent because although you say that prudent measures that were taken, the economy crisis is going to wash over all of us sooner or later. Will this affect immigration into Australia?
SMITH: Well, we are a country of migrants. Part of our great strength as a modern Australia is the consequence of our post–World War II migration programme, which is historically and initially from Europe but more recently from Asia and Africa and in small numbers but, again slowly but surely, from South or Latin America.
But we’ve always taken into account both in terms of our permanent migration programme and our temporary migration programmes, economic circumstances of the day. Currently our permanent intake is at a record high level. But we will take into account economic circumstances as Australia always has when we look at both the mix and the extent of our migration programme. There are two aspects to it: our permanent programme and our temporary programme.
One of the problems that we have had for some time which the current Government is seeking to address very assiduously is skilled shortages so we run a range of temporary migration programmes to get the skills that we need, often in a technical area, but also often for information technology, but also in areas which are very strong in our economy, particularly in the minerals and petroleum resources areas. But we always make these judgements looking at the overall economic circumstances and we’ll continue to do that.
INTERVIEWER: Is there a way, you are heading towards the APEC Summit in Peru, is there a way for the combined strength and the effectiveness of APEC to lessen the effects of this worldwide recession, and obviously a box of pencils together is a lot stronger than just one pencil on its own?
SMITH: Well that is a very good summary or analogy of the Australian attitude to the significant modern day international problems that we have. Whether it’s global financial crisis, whether it’s climate change, whether it’s disaster relief, or whether it’s international terrorism, there’s equal futility in a country not acting as there is in a country acting alone. So, most, if not all of the key problems that we have to confront are best confronted by acting regionally and acting multilaterally.
The great advantage of the APEC meeting is that is comes right on top of the G-20 meeting of finance ministers and subsequently leaders. There are a number of lessons out of the G-20 meeting, one of which is this is not the time to retreat to protectionism, this is time to continue our advances on openness and access.
APEC is the premier economic, trade and investment institution of the Asia Pacific. Nearly a third or a third of its members are also members of the G-20. Eight or nine members of the G-20 are members of APEC. We think it can give considerable impetus to the messages from the G-20, and so we think it is opportune that APEC is meeting hot on the heels of the G-20.
We certainly expect and Australia will certainly argue that APEC should reinforce the messages of the G-20, particularly the successful conclusion of the Doha round, and not retreating to protectionism at a time when openness is the best thing we can do to extract maximum economic growth out of international economy.
INTERVIEWER: As you said the Doha round something has got to come out of this tremendous disappointment when it failed.
SMITH: Well, we were bitterly disappointed, getting so close but falling at the last hurdle. We are very pleased that the G-20 meeting effectively breathed life back into the talks, not just a passing mention but an expressed direction by the G-20 leaders for their trade ministers to take up the cudgels. And APEC will be the starting point of that.
INTERVIEWER: What do you think - and this is a very general question – what do you think is going to be able to beat the world recession. I was in Hong Kong a few days ago speaking to somebody talking about thousands, hundreds of thousands of jobs being lost not just in Hong Kong, but right across Asia which is a growth potential area. I was told the economic crisis could last often between fourteen months and two years. What is it going to take to beat this, not just Australia, but what do you think is going to take to beat it?
SMITH: Well I think Asia is better placed now to deal with the problem than it was a decade or a decade and a half ago. Asian countries, ASEAN countries in particular made a range of changes to their prudential and financial arrangements as a consequence of the Asian financial crisis. Again we’ve got a number of countries who are better placed to absorb the difficulties.
I think there are two things that are required, one is confidence, and the second is action. And confidence is about international community, international economic community, seeing governments taking coherent and coordinated and decisive action which is why we strongly support the G-20 framework, countercyclical fiscal stimulus, not retreating to protectionism, improving the prudential and regulatory arrangements, making sure that in financial services we have a financial service entry that deals in the real economy, not in an abstract economy. So confidence I think is one key.
The second key is trying to as best one can to keep economic growth in the positive. Whilst we are expecting lower growth throughout Asia, including China, with a bit of luck it will be slower but still positive economic growth. Whilst we know now that the adverse consequences are going to be much worse than we originally expected or feared, there is still in our view, some chance that overall, the Asian economy or Asia itself might stay in positive economic growth terms. That would be a good thing for Australia in terms of our trade relationship, but a good thing for the world generally as we see in the first decade of this century economic power shifting inexorably to the Asia Pacific region.
INTERVIEWER: Final question for me (inaudible), in a speech in the UN, the Cuban Foreign Minister, Felipe Perez - Roque who was here in Mexico some weeks ago called for an end to the US economic blockade which has been on for what, forty-seven years? What is Australia’s position on this? The United States has maintained this economic blockade rigidly for most of our lifetimes, and the Cubans are saying, and some other nations, I think the EU as well is saying perhaps it is time that it be reviewed and considered. What is Australia’s stance on this?
SMITH: Well, Australia’s position is reflected by the stance that we take when the Cuban economic resolution comes up before the General Assembly each year as it recently has. Together with the vast bulk of the international community, we support the General Assembly resolution which says the time has come to review those arrangements; the time has come to contemplate whether it makes ongoing economic sense for the embargo to continue.
So the Australian position is reflected by our stance on the General Assembly resolution and our stance has been the same for a decade and a half. It has been also the attitude of the vast bulk of the international community. What individual nation states do of course is a matter for them. A General Assembly resolution is not binding. The United States has a long–standing, strong view about this matter.
In Australia’s case, we have diplomatic relations with Cuba and we have a very small trade and investment relationship or contact with them. But we support, as does the vast bulk of the international community, the General Assembly resolution which essentially says the time has come to contemplate whether the ongoing restrictions are a sensible thing to continue. Thank you very much for that.
INTERVIEWER: Thank you very much indeed for the opportunity.
[Ends]
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