Swan moves to calm Australian markets

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Swan moves to calm Australian markets

Federal Treasurer Wayne Swan has moved to calm nerves in Australia after markets around the world lost ground amid fears of a further economic global downturn.

Mr Swan says while Australia isn’t immune from world events the country is better placed than most.

‘‘Of course Australia is not immune from events in the rest of the world but the good news is our fundamentals are strong,’’ the treasurer said in a statement to AAP.

‘‘We’ve got low unemployment, strong public finances with very low debt and a huge pipeline of mining investment.’’

The treasurer said Australia was located ‘‘in the right part of the world at the right time’’.

‘‘The prospects for our region remain much stronger as the weight of global activity continues to shift from West to East,’’ he said.

Australian financial markets are expected to take a big hit on Friday following Wall Street and Europe into losses.

Investors fled Wall Street overnight in the worst stock-market selloff since the middle of the financial crisis in early 2009 in what turned into a fully-fledged correction.

Mr Swan said the past week’s volatility in international financial markets underscored continuing concerns about sovereign debt levels in Europe and the weakness of the US economic recovery.

‘‘Europe has still got a hard road ahead to deal with excessive debt levels,’’ the treasurer said.

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‘‘And while we’ve seen important first steps taken in the United States they are still facing a long and painful adjustment to get their budget back on a sustainable medium-term footing.’’

Opposition Treasury spokesman Joe Hockey said the government should use money raised from the mining tax to pay down debt.

And he said if he was treasurer he would not be increasing tax burdens on Australians through the carbon, mining and flood taxes.

‘‘Australia has a good long term future but from my own perspective, I’d be reducing government expenditure, I’d be paying down debt as quickly as possible,’’ he told ABC Radio on Friday.

He said that more than $150 billion of the government’s debt was held by offshore investors who could dump their investment quickly in a financial crisis.

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‘‘Australia is a massive importer of money and just as the financial crisis hit our banks last time, there is the capacity for similar events to hit us again,’’ he said.

AAP

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