JOURNALIST: Senator good morning to you.
WONG: Good morning.
JOURNALIST: Can we clear a couple of things up that listeners have expressed concern about this morning. Is this just for Queensland or does it include parts of Victoria and northern New South Wales and even areas like the Gascoyne area in Western Australia?
WONG: Look its true that the majority is for Queensland because thats where well see the largest amount of infrastructure rebuild. The Commonwealth under the arrangements we have with the states has to also contribute to rebuilding in other areas of Australia such as Victoria and New South Wales.
And what weve said is we anticipate the non-Queensland cost to be in the order of $1 billion and this package will contribute to funding reconstruction in those areas as well. The majority is for Queensland.
JOURNALIST: No, no, thats fair enough. As long as the other areas arent being forgotten. I think thats what people were concerned about. Where do you get the estimate of $5.6 billion from? Does anyone really know yet how much the damage bill will be?
WONG: Well look, thats a very good question and Ive been asked this question for quite a long time, how much will it cost. And Ive said look, its taking a while to get the full price tag. These are the best estimates we have at the moment.
Under the agreement between the Commonwealth and the states, we pay a certain proportion of the infrastructure rebuild. For example, we pay about three quarters thats 75 per cent of public infrastructure. It will be paying for that to be rebuilt in Queensland. So weve worked with Queensland in particular to get estimates on what the impact on the Commonwealth budget is likely to be. And that is the amount that we have to date.
As the Prime Minister said, its obviously an estimate. But the risks, as she said, are probably on the upside rather than the downside.
JOURNALIST: Now I dont think theres anyone alive, Senator, who doesnt want to see these people get help. And you know, people have shown that with extraordinarily generous donations and communities have got together and we saw a league game at Paramatta Stadium last night where 20,000 people went and they raised a minimum of $380,000 odd. People want to see these people looked after. But why is there a need for this tax in the first place? Why couldnt the Government have come up with the money in other ways?
WONG: Well first can I say in terms of your comments about Australians generosity. It has been fantastic. And all across the country people have made donations, have done events where they have provided money to give to Queensland. Im going to one tonight here in Adelaide. So thats really important.
But the fact is this is a very costly natural disaster. Its certainly more significant in terms of economic costs, leave aside the dreadful human cost which weve all watched on television or lived through if youre from Queensland or another other flood-affected area.
But the economic cost is very significant, much more than the Victorian bushfires. Probably more than Cyclone Tracy. So we have determined that the best thing to do was ensure we put together a responsible package. Two thirds of it is funded through spending cuts. Only one third is funded through a modest levy. And as youve been going through with your listeners, around 60 per cent of taxpayers will in fact pay less than $1 a week.
JOURNALIST: But I think its the point of it though. A lot of people are saying, hang on, weve given money that we couldnt afford in the first place. We did it without any reservations. Now we are going to be whacked again. Its not fair.
WONG: Now lets just keep in mind a couple of things. First, the money that people have donated goes to emergency flood relief. The levy and the spending cuts will go to rebuilding the infrastructure that has been destroyed. Thats the first point. They are for different parts of the response.
The second point I make is this. Lets remember the size of this levy. If youre on $60,000 youre paying less than $1 a week. If youre on $100,000, youre paying less than $5 a week. So these are modest contributions to what I think, as you said, everybody understands has been a dreadful natural disaster. And we need to rebuild a state that is not only an important part of our nation but an important part of our economy.
JOURNALIST: And I dont think anybody would disagree with that. But I think a lot of people disagree with whether there is a need for this tax or not when you consider and I ran through earlier this morning the taxes that are going to be coming in: a 70 per cent increase in alcopops tax in 2008 to raise $3.1 billion over four years, 25 per cent increase in the tobacco excise announced out of the budget last year to raise $5 billion, luxury car tax increases $555 million, cuts to superannuation concessional contribution caps $2.75 billion, a crackdown on employee share schemes net $200 million, and it goes on and on and on. $24 billion worth of new taxes over the next four years on top of the billions already being raked in. You get to the foreign aid and again, people are happy, I think, that Australia is a nation that gives. But you look at $4.34 billion according to the federal budget in May spent last year. And you wonder how when you get down to $1.8 billion why we the taxpayer need to be hit with a tax?
WONG: Weve got a package which is funded two thirds by spending cuts. So we are very aware that you have to make sure the Commonwealth budget bears some of the responsibility through expenditure restraint, through making sure we look at the programs weve got and being disciplined about that. Thats why the majority of this package is through spending cuts.
A third is a levy, a one-year levy at a modest rate to do what is needed to do in Queensland. And I again say this is a one-off event. There are many natural disasters where the Commonwealth doesnt impose a levy, where we fund it by rearranging budget priorities. The Victorian bushfires is one of them.
JOURNALIST: Which gets me to the point Senator. I dont mean to interrupt but a national disaster fund, to me makes so much sense that when this flood levy is paid off in 12 months and the damage is hopefully paid off in 12 months, what happens when we have a similar event in three years time? Weve got to start again. Why dont we have a national disaster fund?
WONG: Well how would it be funded, I suppose, is the first question. The thing that we have said is that this is a temporary levy, this is a one-off for this event.
JOURNALIST: Are you guaranteeing it will be lifted after 12 months?
WONG: The Prime Minister has made clear this is a 12 month levy. Thats why weve announced the spending cuts as well, because we want to make sure this is a temporary levy and it is also fair in terms of how we have constructed it so people on lower incomes dont have to pay or pay a much smaller amount.
In terms of natural disasters, again I would say, remember that a lot of natural disasters have been funded through the Commonwealth budget without the need for an additional levy. We are talking here about a one-off event that will be very, very costly. I think if people just remember what we saw on television, Im talking people who live in Sydney, who werent in Queensland, and we saw what was happening in terms of the damage. I think it makes sense to people that it is going to be very costly to rebuild.
JOURNALIST: And no one doubts that for a second. Thats not the argument against it. But in the space of a few days, really, youve managed to find $2.8 billion to save in spending. Why cant you take a few extra days and find an extra $1.8 billion?
WONG: I think this is a very substantial set of expenditure. I mean this is a $5.6 billion package. Its right that it should be funded in the majority by spending cuts. But obviously there are still a lot of pressures on the budget. As you know, health spending continues to increase. Weve got an ageing population. Weve got pressures like that. We have to manage all of these priorities. What we tried to prioritise here is making sure the majority of the package for Queensland and other parts of Australia was funded through spending cuts. And we tried to make sure this levy was as fair as possible and as modest as possible and that low-income Australians would not have to pay it.
JOURNALIST: You are too, Senator, asking Australians to trust the Government to spend this money wisely when your track record is not all that good when it comes to these schemes like the insulation batts and all sorts of other schemes and the misspending on the BER and so on. I mean, youve got to stand up and prove to Australians you can spend this money wisely.
WONG: I think there are a lot of things that people are looking to this Government to deliver on this year. Making sure that rebuilding Queensland proceeds is one of them. Anna Bligh has set up a reconstruction authority in Queensland. The Commonwealth has a couple of representatives on it. Thats headed by Major General Slater who you might recall was the commander in
JOURNALIST: Hes outstanding.
WONG: He is. And that was a conscious decision by Anna Bligh and Julia Gillard that he be made available for this purpose. Obviously well also have a natural partnerships agreement. So thats a transparent agreement between the state and the Commonwealth about how this money will be spent.
JOURNALIST: How do you get the Independents and Greens on side? Because obviously youre going to need them to get this through Parliament in early February.
WONG: Have you got any tips Andrew?
JOURNALIST: Well theyre all talking about a national disaster fund, an ongoing one, rather than a one-off levy. And it seems to be something that the Government doesnt want a bar of.
WONG: Well we certainly dont want to be in a position where we are extending anything because weve made clear this is a one-off levy. Look we are a minority government. We have to negotiate everything through both houses of Parliament. And well do what Julia has done previously, which is to sit down and talk with them. We believe weve put together a very sensible package to deal with very, very difficult circumstances. And we want the opportunity to take them through the decisions we made and why we think theyre the right ones.
People often will say its very easy to look for money elsewhere. I certainly see Tony Abbotts asserting that. Ill wait to see whether or not he does better than during the election campaign where he left a $10.6 billion black hole in his election costings.
JOURNALIST: Alright Senator Penny Wong, thanks for your time.
WONG: Good to be with you.
ENDS