We can handle another GFC: Swan
- — 30 August, 2010 09:39
Australia is well placed to deal strongly with another global financial crisis, should one arise, federal Treasurer Wayne Swan says.
"We are very well placed to make judgments should those events occur, but those events are not in train as we speak," he told Network Ten on Sunday.
"We know there is more unexpected weakness in the United States economy, but we would deal with those conditions should they arise in the same way in which we have dealt with them over the previous two years - very strongly and very effectively."
When it comes to the Australian economy, investors are more worried about the unresolved impasse of a deadlocked parliament.
Global financiers are unlikely to take comfort from Swan's refusal to rule out bringing back tariff barriers in an attempt to woo a key rural independent.
North Queensland MP Bob Katter has advocated protection for agriculture and a ban on Filipino banana imports.
Asked if Labor would bow to Katter's protectionist sentiments, Swan was coy, despite being asked three times.
"I'm not going to pre-empt the outcome of those discussions," he said.
"I'm not ruling them in either. We're not going to play the rule in or rule out game."
Dismantling Australia's trade barriers has been the centrepiece of Labor's economic legacy since the Whitlam government cut tariffs by 25 per cent in 1973.
The subsequent Fraser coalition government re-erected tariff walls before the Hawke government began tearing them down again in the late 1980s.
Rural independent Tony Windsor expects to make a decision about who to support by the end of the week.
Fellow unaligned MP Andrew Wilkie says he will have an answer by Wednesday.
The Australian dollar would take a hit if the political limbo continued, AMP Capital Investors chief economist Shane Oliver said.
"The resultant uncertainty is likely weighing on business and household spending decisions and also on investor confidence, which is not good given the rising risk of a return to recession in the US," he said.
"Hopefully, if the issue is resolved soon and satisfactorily then the impact should prove to be temporary."
A sustained recovery is tipped for the Australian economy no matter who forms government.
Economists are expecting national accounts data on Wednesday to show a growth pace of 2.8 per cent.
This is slightly below Treasury's forecast of 3 per cent growth for this financial year.
For the June quarter, economists are expecting a 0.9 per cent expansion, with ANZ putting the "solid but unspectacular" number down to strong consumer spending.
The pick-up in household spending is expected to be reflected in July retail sales data when it is released on Tuesday.
