Transcription of Finance News Network Interview with Minister for Finance and Deregulation, Penny Wong.
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today is the Minister for Finance and Deregulation, Penny Wong. Penny, thank you so much for joining us today.
Penny Wong: It’s great to be here.
Lelde Smits: First up to the Australian share market, how would you rate the S&P/ASX 200 index’s performance this year?
Penny Wong: Well I think the first thing we should look at is the performance of the Australian economy. Because, that is the backdrop to different forms of investment and the economy is performing very well. We’ve got an economy growing at or above trend, contained inflation, low interest rates, strong public finances, and a very large pipeline of investments, half a trillion dollars of investment in resources in this country, a big tick of confidence in the Australian economy. And, if you look overseas there is really no other economy that you would rather be in.
Lelde Smits: Back to the S&P/ASX 200, does the government have any projections as to where you believe it will trade or end this year?
Penny Wong: I’d be a brave person to predict that. What I would say is that there is no doubt that the global financial crisis hit equities worldwide and certainly in Australia. But again, you have to come back to the economic fundamentals, where the economy is at. And, there is a lot of economic strength in Australia. And, I think you also have to look at where Australia is positioned in this the Asian century. Where, our proximity to Asia, our proximity to that growing market, really positions us very well for the years ahead.
Lelde Smits: In China, investors also seem to be concerned about a prolonged slowdown in the region, leading to the question, is the government concerned at all about an over-reliance on the resource sector here?
Penny Wong: Can I start first by saying I am more of an optimist on China than some people. I think that growth has moderated in China but it is still very strong growth. And, probably reflects the rebalancing of the Chinese economy that the Chinese officials have been saying they wanted. So, an economy that is driven a bit more by consumption and a bit less by investment than it has previously. So, that is a good thing in terms of the sustainability of growth.
But, I think it is important to recognise what China, what South Korea, what Vietnam, what Indonesia, what Malaysia, what they represent to Australia, is not just economies that seek our resources. They are also economies where we will see more and more people enter the middle class. More and more people wanting the goods and services that Australians want. And, that represents an enormous market opportunity for us.
The numbers are interesting. There is about 500 million people in the Asia Pacific region that you would say are middle class. That number will climb to about 1.2 billion by 2020. So, the challenge for Australia and for Australian firms is to tap into those markets. And, to say, what are the services, the goods that we want to sell to that very large and growing section of the Asian Pacific community who will increasingly have more disposable income.
Lelde Smits: Which do you believe are the sectors in these growing regions that will underpin growth?
Penny Wong: Good question, and obviously companies will work that out. But, one of the sectors I talk about as a practical example is tourism. So in 2011 some 64 million Chinese went overseas. It’s a very big number isn’t it. And, our share of that market was just about 0.8 per cent. By 2020 that number will be about 100 million. So, if you think about it if we can get a larger share, even if it’s a few basis points, a few percentage points, of what is a growing market, that would be an enormous boost to one of our important export industries, which is tourism.
Lelde Smits: And is the government doing anything to attract this investment into Australia?
Penny Wong: Look, we have a very clear view that foreign investment is good for this country. And, on tourism we have established a fund which is specifically about looking at marketing in the Asian region. So, there are lots of things that are being done. But, ultimately it is about the private sector. Ultimately it is about those firms which see this opportunity and say, look, I’ve gone some services that I reckon they’ll be demand for over the next years and I’m going to market them to this market.
Lelde Smits: Finally Penny, where do you believe is the safest place for Australians to put their money?
Penny Wong: I don’t think ministers should be telling people where to invest, do you, but I think we have a very strong economy here in Australia. And, I would encourage people to look for those companies that they believe are best positioned to take advantage of the Asian markets.
Lelde Smits: Absolutely, well thank you so much for your time today.
Penny Wong: Good to speak with you.