SUKHOTSKI: APEC Finance Ministers have massed in Moscow ahead of next weeks summit in Russias Vladivostok but much of the talk is in Europe. Joining me now is Australias Finance Minister, Penny Wong. Penny, to what extent has Europe been the subject of your discussions today?
WONG: I think everybody is well aware of the risk that Europe, and the situation in Europe, poses to the global economy. I think weve all seen that. So, obviously we encourage the Europeans to continue with their path of reform and to lay out a sensible, clear path so that governments and markets understand very clearly what the reform path is.
SUKHOTSKI: What do you expect from APEC economies to do, for example, from that perspective?
WONG: I think the best contribution the APEC economies can make to the global economy is to continue to support growth in our own economies. Were very conscious across this region of how important it is that the region continues to grow. But also that we do address the longer term structural issues and that the reform agenda remains focussed on long term sustainability as well as growth in the near term.
SUKHOTSKI: Are you concerned about the possibility of a slow-down in China and, for example, if the European crisis continues and if there is a slow-down in China, will Australia, for example, require new fiscal stimulus?
WONG: First, in terms of China, I think that the Chinese authorities have a lot of room to move when it comes to their monetary and fiscal policies, and I think they have got a track record of doing that. So, whilst there has been some moderation in Chinese growth, our observation would be, and I think that its a sound one, that the Chinese authorities do have room to move to continue to support growth, consistent with the plan that theyve outlined on that front.
SUKHOTSKI: Do you think Australia may require a new fiscal stimulus?
WONG: At the moment, our economy is growing around trend. Weve got low unemployment, weve got contained inflation, and weve got a very strong pipeline of investment over half a trillion dollars and more than half of that at the advanced stage. My observation would be is that we continue to see a lot of strength in the Australian economy, hooked into what is a growing, dynamic region of the world.
SUKHOTSKI: So, you dont think that, for example, the mining boom is over?
WONG: In terms of the mining boom, first, of course commodity prices have come off their record highs; that was to be anticipated. And we anticipated that in terms of our budget settings. But, again, lets have a look at investment. A lot of investment still in fact mining investment in the year to June 2012 has increased by 72 per cent. So, theres a lot of investment and weve anticipated that as a result of that investment youll see a consequent increase in production in the medium term. So, my observation would be we didnt expect commodity prices to stay at record highs thats not what we anticipated but theres still a lot of investment coming in to Australia.
SUKHOTSKI: But will it hurt tax revenues, for instance?
WONG: Like every advanced economy, we are seeing a hit on revenue as a result of the global financial crisis and the fall out subsequently from that, for example in the context of asset values. But the way in which weve dealt with that has been to run a sound and disciplined fiscal strategy and to really limit spending growth in the years ahead and thats what the budget does.
SUKHOTSKI: But will it damage, for example, your pledge to return to budget surplus in 2012-13?
WONG: We are still committed to returning to surplus and to delivering the fiscal strategy we laid out when we engaged in stimulus to the markets and to the Australian people. And its also the right policy. We think its the right fiscal settings because weve got an economy thats growing around trend and returning the budget to surplus in those circumstances is the right call.
SUKHOTSKI: Many Australian businesses are complaining that the Australian dollar is quite high and hurting them. Do you have any plans in store to address that?
WONG: We remain committed to a floating dollar a floating exchange rate thats been the position of successive Australian Governments since the dollar was first floated. But youre right, the high dollar does impose difficulties on certain parts of our economy, and were very conscious of that.
SUKHOTSKI: But what could you do to lower the currency?
WONG: I think the better way to look at it is what can you do to support the change in the economy and to support growth and productivity and were doing a range of things. Obviously, investing in skills, one of the long term drivers of growth, one of the long terms drivers of productivity, to lift your skill base of the population, and of course our investments in infrastructure such as the National Broadband Network.
SUKHOTSKI: Would you say that the current exchange rate that the Australian dollar is quite high? Do you believe its quite high?
WONG: Certainly its higher than its long term average, but, as I said, we remain committed to a floating exchange rate.
SUKHOTSKI: In terms of growth, you say youre quite confident in further growth. What growth rate do you expect for the Australian economy? Is it still 3, 3.5 percent?
WONG: Around trend is what weve anticipated and thats what our budget forecasts indicate. And, as I said, theres a lot of evidence about the strength of the economy and weve certainly weathered the financial crisis in far better shape than most other advanced economies.
SUKHOTSKI: Next week were going to the APEC summit in Vladivostok. Do you expect any surprises?
WONG: I hope that well continue the good cooperation and the good dialogue that weve had at the Finance Ministers Meeting. APECs a very important Forum for Australia. Obviously we were very instrumental in establishing it; we regard it as a very important Forum because of our integration with the region and also because in terms of where the global economy is going, this is a critical region and a region that we know will continue contributing to global growth.
SUKHOTSKI: Vladivostok is just 100 kilometres from the North Korean border. Do you expect North Korea to pop up during the discussions? Do you expect some people from North Korea popping up at the summit?
WONG: I dont have any knowledge of that so I couldnt possibly comment.
SUKHOTSKI: Many thanks to you, Penny Wong, Finance Minister of Australia.
ENDS