Australian treasurer stops in Japan ahead of G20 summit
Updated
Australia's treasurer, Wayne Swan, has stopped in Japan while on his way to the G20 meeting in London. It's the first time an Australian treasurer has visited Tokyo officially since 1995. Mr Swan says the global crisis marks one of the most important moments in the two countries' bilateral relationship.
Presenter: Karon Snowdon, finance correspondent
Speaker: Wayne Swan, Australian treasurer; Richard Jerram, economist, Macquarie Bank; Kevin Rudd, Australian prime minister
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SNOWDON: Asia biggest economy is not a happy place right now. Japan has been especially hard hit by recession because of its dependence on exports. Industrial production is down by 9 per cent while just released figures show car production has crashed by 56 per cent. Australia's Treasurer Wayne Swan has made his first trip to Tokyo, though its not his first to Japan.
SWAN: I think coming back on this first bilateral Treasury visit since 1995 was an important thing to do and that's why I'm here.
SNOWDON: But its more than dropping in for a talk.
SWAN: The principle purpose here is to encourage people to invest in Australia, if they care to invest in our securities, well that's a good thing too.
SNOWDON: Japan has been a strong investor in Australia and now the Australian government is issuing bonds twice a week in auctions of up to 700 million dollars it hopes the strength of the economy will attract more. Its necessary to fund the government's rising debt from its stimulous packages and falling tax revenues.
Australia's government debt though is still less than 5 per cent of GDP. Its low compared to most other developed economies and miniscule compared to Japan's, now hitting 190 per cent of GDP. In this climate Wayne Swan will be hoping to shore up support in Tokyo for his plans for the G20 later this week.
That includes more government spending as part of the coordinated effort to fight the global recession. Stimulous measures he says are as important as IMF reforms, including a bigger role for China and more support for developing economies. Japan has committed about 2 per cent of its GDP to stimulating its economy so far.
Richard Jerram from Macquarie Bank says it should be double that.
JERRAM: They have one eye on the underlying debt position, and so they are reluctant to throw money at the problem. Of course what they don't seem to realise if they don't throw money at the problem, it's going to cost them more in the longer term, because the economy is going to be so weak, and that's going to hurt tax revenues significantly and push up spending.
SNOWDON: Wayne Swan has met with Japan's Finance Minister who according to media reports has said Japan is ready to implement stimulous measures that will "far exceed" 2 per cent of GDP. But in Europe further stimulous spending is facing growing opposition in the lead up to Thursday's G20 meeting ...
And now Australia seems to be lowering expectations that one its the major goals for the meeting won't be realised. In London, Prime Minister Kevin Rudd says a second meeting will be the place to decide the numbers. But he quotes the IMF which says the stimulous spending of the US, Australia, Europe and others so far has probably saved 20 million jobs worldwide.
RUDD: Had we not acted, would you want 20 million people unemployed, I don't think so. That's the action we commissioned only four or five months ago and a mechanism has been established for us to reflect on for what we need for the future and there will be a further summit.
SNOWDON: Wayne Swan remains hopeful.
SWAN: I thought that we had good unity of purpose at the finance minister's meeting a couple of weeks ago, I'm hopeful it can be repeated this leaders meeting.
SNOWDON: And facing the media, even in Tokyo the controversy over the Australian Government's refusal to allow a Chinese company to take over Oz Minerals because of its operation's proximity to defence force land followed the Treasurer who made the final decision, as he will in the much bigger Rio Tinto/Chinalco case. Wayne Swan:
SWAN: Both China and Japan and many other countries around the world invest in Australia, and Australia derives very significant benefit from that. In the case of this mine, it couldn't pass our national security test as part of that national interest test, and as a consequence, I couldn't approve the application. It's that simple.
