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'Just plain dumb': Swan rejects fiscal 'stupidity' warning

Wayne Swan ... rejects Bernie Fraser's comments.

Wayne Swan ... rejects Bernie Fraser's comments. Photo: Getty Images

Federal Treasurer Wayne Swan admits economic growth is slowing but has rejected criticism that pursuing a budget surplus is an act of government ‘‘stupidity’’.

The national accounts for the September quarter are due for release at 11.30 am (AEDT).

‘‘I wouldn’t be surprised if growth had come off,’’ Mr Swan told ABC television on Wednesday.

Bernie Fraser ... "stupidity of government".

Bernie Fraser ... "stupidity of government". Photo: AFR

Economists are forecasting growth of 0.6 per cent in the quarter for an annual rate of 3.1 per cent.

That will be a marked slowdown from the 3.7 per cent rate recorded in the 12 months to June, and more than 4 per cent to March.

Mr Swan has rejected warnings by former Reserve Bank governor Bernie Fraser that Australia is suffering from the ‘‘stupidity of government’’ by looking for a budget surplus while monetary policy is going the other way.

‘‘It’s just plain dumb,’’ Mr Fraser told The Australian Financial Review.

Mr Swan dismissed Mr Fraser’s warnings.

‘‘No, I don’t believe he is correct,’’ he said.

Instead, Australia was enjoying the ‘‘reasonably healthy combination’’ of solid growth, low unemployment and a strong investment pipeline, he said, so the government was giving the central bank room to move on interest rates.

Mr Swan and business groups are urging the major banks to pass on the Reserve’s 0.25 per cent cut to its cash rate.

‘‘Their net interest margins are healthy,’’ he said.

‘‘They should pass this cut through in full.’’

A day after the decision to lower the rate to 3 per cent only three banks - NAB, ING Direct and Bank of Queensland - have responded.

ING has passed on the full cut while NAB and Bank of Queensland lowered loan rates by 20 basis points.

The Australian Bankers Association insists the major banks are holding back decisions because they want to be competitive.

‘‘They are sitting there at the moment desperately wishing their competitors show their hand first so they can undercut,’’ CEO Steve Munchenberg told ABC television.

Shadow treasurer Joe Hockey said Labor had now warned the banks more than 55 times to pass on official rate cuts in full.

‘‘The banks have ignored them, which is no surprise because ultimately no one listens to the government,’’ he said.

Opposition Leader Tony Abbott said the record of previous coalition governments showed the banks almost always passed on cuts in full.

‘‘Since Wayne Swan has been the treasurer the banks have invariably procrastinated,’’ he told reporters in Brisbane.


  • 2013 will show that Mr Fraser is correct...Australia is going to fall of it's perch.

    Date and time
    December 05, 2012, 9:31AM
    • Factor in the cost of the NBN and the "surplus" disappears anyway.

      Rainier Wolfcastle
      Date and time
      December 05, 2012, 10:01AM
    • The ALP Government needs to brace for a huge financial global crisis triggered by what is happening in USA. To do so Australia needs to stop wasting money on illusions and feel good policies which do not achieve anything measurable. Classic example is the carbon tax. It is absolutely no value to fight global warming. Globally there will be 50% increase in coal power stations by 2035. The Hon Combet signed to donate ten percent of the carbon tax to UN and it is worth more than a billion dollars a year.

      The Govt decision to sell uranium to India will have a far greater effect on fighting global warming but has not been sold as such so as not to annoy the politically correct brigades.

      Dr B S Goh
      Australian in Asia
      Date and time
      December 05, 2012, 10:04AM
    • Watch what happens to house prices over the next couple of years.


      Date and time
      December 05, 2012, 10:12AM
    • Burnie is saying that we should be spending more.....I can live with that. Lets get some big projects on the table. Government debt to GDP is way under that of the 90's ......go for it, I say.

      Date and time
      December 05, 2012, 10:14AM
    • They're both wrong. Talk about dumb and dumber! We have a bloke arguing for a deficit versus a bloke pretending to be aiming for a surplus.

      The simple fact is that this government proposed a surplus four years into the future when it should have aimed for a surplus no more than two years into the future. Remember the intervening four years of the mining boom? We recorded massive deficits each year, so now that we have reached the point of the promised surplus, they have found it coincides with a global downturn. Everyone knew of the chances of a double-dip recession, but Rudd gave himself an opportunity to spend like a drunken sailor for four years. They made their bed, now they have to lie in it.

      Date and time
      December 05, 2012, 10:21AM
    • WOW HISTORIC STATEMENT THIS ARTICLE, not only stupid but Swans reply backed the stupidity saying growth and jobs etc were going good when in FACT we all clearly see they are spiraling down fast, massive job shedding, increased population growth, many businesses failing and struggling to survive, and super fast housing decline and decline in mining, and slashing of Govt services and most handouts are related to new arrivals. And this blind man is a treasurer. Bernie has top credentials and is totally correct, so, roll on election.

      Date and time
      December 05, 2012, 10:25AM
    • We will struggle through until the next election. Unfortunately Australia was spolied by Keating and Costello for nearly a quarter of a century. They introduced sensible economic reforms and applied astute economic management. The current mob is a bunch of economic nongs. I wouldn't trust them with a chook raffle. The short-term political imperative is its priority, not the long-term good of the country. Swan isnt a swan, he is a goose. And a cooked goose at that.

      Cooked Goose
      Date and time
      December 05, 2012, 10:28AM
    • Our economy is in real trouble and we are all about to pay the price for 5 years of economic incompetence by Labor. YOU are about to be whacked with your share of the bill for all the reckless spending, the waste and poor policy decisions.

      Date and time
      December 05, 2012, 10:34AM
    • I've got the solution! Let's keep on borrowing to pay for increased Govt spending on lavish entitlements and bureaucrats. Surely we can keep doing that forever.

      Let's let our kids and grandkids can pay off our debts so we can all get bigger TVs and playstations.

      Date and time
      December 05, 2012, 10:38AM

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