News

Swan warns Republicans against holding world to ransom

TREASURER Wayne Swan warned the threat posed by American Republicans could damage the world economy in his speech to a G'day USA function in New York City.

After speaking about Australia's national economic strength when so much of the world was smarting from economic crises, Mr Swan said a major threat to world financial security was the persistent battles between the Democrats led by President Barack Obama and "elements of Congress" keen to hold the US to ransom.

It comes just weeks after the US government dodged the "fiscal cliff" - a dire combination of scheduled tax hikes and spending cuts - that could have prompted another recession at the start of the year.

Now it was America's borrowing limit or "debt ceiling" the Treasurer said would be the next risk to international markets.

"Like many of you, I'm deeply concerned about the next flashpoint on the horizon, the looming US debt ceiling debate," Mr Swan said.

"We all remember only too well the chaos and confusion in the global economy last time the debt ceiling was used by some elements of Congress to hold the nation to ransom."

Quoting US economist Paul Krugman, Mr Swan said, "Threatening to hurt tens of millions of innocent victims unless you get your way, which is what the (Republican) strategy boils down to, shouldn't be treated as a legitimate political tactic".

In questioning afterward, the Treasury was quizzed on the health of the Mining Resources Rent Tax, with reporters asking when the success or failure of the policy would be revealed.

Mr Swan said it would be up to the Treasury and Australian Tax Office to release that information.

The Treasurer said he was not privy to those details because of confidentiality surrounding those who pay tax.

On the broader question of the Australian economy, Mr Swan said he was "cautiously optimistic" for Australia in 2013.

Topics:  economy, republicans, wayne swan



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