JOURNALIST: Are we going to get a flood levy?
WONG: The Prime Minister last night made clear that this is a very costly disaster, and we all know that, dont we? We only have to look at the images on our television screens, or if youre a Queenslander, have lived through it to know that this is a very, very costly disaster. Theres been a dreadful human cost, but theres also a very substantial economic cost.
JOURNALIST: Now do we know how much it is? Theres been all sorts of suggestions in the media. Some are saying $10 billion, some are saying $20 billion. What is Treasury telling you?
WONG: Well it really still is too early to finalise what the price tag will be. We are still assessing the damage; the Queensland Government is still assessing the damage. What we do know is this: theres been a lot of infrastructure thats been damaged or destroyed whether its been roads or railways, ports, as well as peoples houses and of course schools.
We know there will be a very substantial rebuild cost. Now were going to have to work through how we fund that. And this is a time where Australians are really going to have to work together and stand with Queenslanders as they rebuild from this disaster.
JOURNALIST: I think theyre doing that. I mean, it looks as if corporate Australia and ordinary citizens are digging deep and thats fantastic.
WONG: Absolutely.
JOURNALIST: But thats not going to pay for the majority of what is going to be a complete infrastructure rebuild. And of course there are those people, and Ill get you to comment on this too. Because some insurance companies not all are being pretty nasty about this and saying a flood isnt a flood unless the water comes in through the roof. And so a lot of people who first of all thought they had flood insurancehavent,and then there are those that didnt have it anyway. What are we going to do for them?
WONG: Lets go to the first part of your question which is the very good point that Australians have been very generous. And its been heart warming to see how much people have been prepared to assist.
But we know that the bill is going to be much larger than that. It is, as you said, going to involve a very large infrastructure build. We know as the Federal Government that were going to have to work through this. We know that were going to have to make cuts to the federal budget to find the money to fund this.
JOURNALIST: Do we know where those cuts are going to be?
WONG: Were still working through those decisions Leon. And we will do that, and we will be upfront with the Australian people about that. Were going to work through those decisions; weve got to make cuts to help fund this massive infrastructure rebuild. And as the Prime Minister said, were looking at all options about how best to fund that.
JOURNALIST: Alright. Saul Eslake, who is a highly respected economist, has gone out very specifically in the media today and suggested that you should get rid of the cash for clunkers $500 million. He has suggested that you abolish the First Home Owner Grant. Because there were those that thought that the price of houses would be forced up by other economic measures. He says, well, thats easily fixed just get rid of the Home Owner Grant. Are you considering those options?
WONG: We are looking at all options and we are very clear the Prime Minister has made clear that there will be cut backs to fund this very costly natural disaster, to fund the rebuild that has to occur.
JOURNALIST: Without putting a figure on it, because I know you wont be able to do that or wont wish to at this point, although Id like you to. How much or what proportion of the rebuild cost will the levy be required to cover?
WONG: Well lets just talk about this levy issue. And the PM has been very upfront with Australians, saying, look we will find money in the federal budget. We are going to cut funding for certain things in order to find money for the Queensland rebuild. She said there may be a levy. And thats obviously one of the things were going to be looking at in the near term, working through these issues. Now, this is not new.
JOURNALIST: What isnt new?
WONG: The idea of a levy. And there are people out there, including Mr Abbott, who have already started to criticise the prospect of this. But lets just remember the Howard Government initiated some six levies in the time they were in government, when Mr Abbott was part of that government. And I think really if a levy was good enough to fund the buy back of guns, why wouldnt someone think that a levy is good enough to help the people of Queensland as they rebuild from this natural disaster?
JOURNALIST: Let me put this to you. The Prime Minister is of a mind that no matter by hook or crook if possible we get back to surplus within three years. Now if we do that, we are forcing ourselves to look at a levy because we are not prepared to spend money that we probably need to do and, can I make this point, and you as Finance Minister would understand this. Correct me if I am wrong here, but states and territories and governments who seek to balance the books do so in order that their credit rating be good. And part of the reason you want a good credit rating is that if you want to borrow money for some contingency you can easily get it at a favourable rate. I put to you the same argument that you just put about levies. Why wouldnt that be a contingency which you would consider to borrow?
WONG: Because the contingency is strong public finances. Thats what we have now and thats what we have had. Part of the reason why we have come through this Global Financial Crisis well is that we have strong public finances and also we came through saying we would come back to surplus in the timeframe of 2012-13.
This is about making sure we continue to have strong public finances. Its recognising that we are going to have a significant cost for our economy in the short term from the Queensland floods and this natural disaster. But we also know we have a strong economy. We have got good public finances. We have got low unemployment and we have a very, very large pipeline of investment. It is in our interests to make sure that by 2012-13 we come back to surplus as the Prime Minister has said we will. Because we recognise that you have to deal with the short term as well as the medium term.
JOURNALIST: Are you considering mothballing any part of the NBN investment? Given, I think Joe Hockey made a not unreasonable point, that you have got people in Queensland for example, who dont have any electricity, who dont even have a roof over their head but you are wiring them up for a service that in the very short term or medium term wont be able to get because they havent even got a home they can walk into. Is that a sound argument or is the NBN investment a no go zone for redirecting funds?
WONG: Well the first point is that we have to rebuild. The Government is absolutely committed to working with Queensland and Queenslanders to rebuild and making sure we that we provide the funds that enable that to happen. The PM has made that clear. When it comes to the NBN the reality is Mr Abbott and Mr Hockey and the Opposition have always opposed it.
JOURNALIST: Yes they have.
WONG: They opposed it before the election; theyve opposed it since the election. So its really not news that they are opposing it now.
JOURNALIST: The reason they are using, I understand what you are saying. But there has been a flood and there has been a disaster and Victoria also, in part of their regional areas, is also suffering the same sorts of consequences. We understand that. So youre telling us that NBN funding is not negotiable in terms of taking part or all of that money and using it for flood contingency.
WONG: It is important to remember what the NBN funding is. The NBN is funded as an investment. It is an investment on which taxpayers will get a return. Thats not the same as what we call recurrent funding. So its not money you can simply pull out like an investment. Its not money that you can simply pull out and apply to weekly or yearly expenditure of the Commonwealth. Thats a bit like when you buy a house and you sell it and you get a return on it.
So the NBN is funded through what we call equity investment. Taxpayers get a return. Separate to that is what we call recurrent expenditure. Thats the expenditure that every week, every month, every year that the Commonwealth has. What we have to do is fund the space in that expenditure and thats what we have committed to doing. I think what we are seeing here on the NBN is the same old argument from the Opposition opposing it.
JOURNALIST: If we should have a levy, how is it going to be implemented? Because there is a lot of ways you can charge a levy. You can charge it on your income tax; you can charge it on a bill, on a utility bill, you can charge it a number of ways. If you are going to have one, have you worked out how you will charge it?
WONG: What we have said is that there will be cut backs from the federal budget to help fund Queensland. There may be a levy. We are working through those decisions and those options bearing in mind this is always an issue about what the total cost will be and what sort of funding we think
JOURNALIST: Because you see you would know that many Australians, including flood victims, are doing it tough. They are finding it hard to find money for utility bills and other basic contingencies. I know if you are a flood victim, you are in an imperiously worse situation but you also understand the proportion here. That you can ask people for money but it is much easier to ask them for money if they can afford it.
WONG: Absolutely, and we are very conscious of that as we work our way through these decisions Leon. Thats why the Government has said there is a certainty we are going to be making cuts in the budget to find space for this rebuild.
JOURNALIST: Do you know how much you are looking for? Is there a particular target figure for cuts you are looking for?
WONG: I think the issue is we are still at the point where it is very difficult to estimate how much it is going to cost. We know its going to be a lot. We know the damage has been substantial. We know this is a costly disaster. We know that this is likely to be much more significant in terms of cost than, for example, Cyclone Tracy or the Victorian bushfires. But we are not at a point where I could say to you this is our estimate of the cost of the rebuild.
JOURNALIST: A lot of people are asking, how did we fund the reparation for Cyclone Tracy? And if we did it the way we did it then why dont we do that now?
WONG: I think the other thing to remember is that various things have been funded through various mechanisms. As I have said the Howard Government initiated six levies. Mr Abbott himself has previously suggested himself we put an extra tax on to fund paid parental leave. Barnaby Joyce has recently suggested along with Ron Boswell, both National Party senators, that we should have a levy in Queensland. This is an issue that people have different views on. I think the most important thing here is to try and work together, the Federal Government and the community to find the support and the resources for Queensland.
JOURNALIST: When will you know whether we are having a levy, and how much this is going to cost?
WONG: I think Julia has made very clear we are working our way through these decisions. We will be upfront with the Australian people about the choices that we make and why we are making those choices
JOURNALIST: Alright. Have you asked Treasury to do any modelling for you for this?
WONG: We are obviously working our way through decisions Leon and I cant go into some of the detail
JOURNALIST: Surely I am not asking you to tell us when it is and how much it is and how you will administer it, because you dont know yet. But surely you have some people like Treasury working on this to get some, because you arent going to know unless you get some information from them.
WONG: We are working our way through options. We are working our way through, with Queensland, assessing how much damage there is and how much is going to have to be funded publicly through government in order to rebuild Queensland. So we are working our way through those issues.
And can I just say one thing because there has been a lot of talk about the impact on the economy. Its true that this is going to a costly disaster. We have been upfront about that. But I think its important for us to remember we have a very strong economy. We have got strong growth, low unemployment, strong public finances and this is something. Our economy is resilient. We are going to see an effect from this but we can work our way through this just as we worked our way through the GFC.
JOURNALIST: Just for the record Finance Minister Penny Wong, have we actually had any cash donations from other countries for the Queensland flood victims? I know there have been public appeals and the public have given privately. But in terms of governments or nations, as anybody offered us any kind of cash aid?
WONG: Well I certainly know only from what I have seen publicly spoken about, that there have been a range of offers of assistance from other governments. I dont know the detail of those and to what extent, what sort of assistance was being offered. But I know there has been a very good range of offers from governments in our region as well as the United States for assistance to Australia. I dont have the details of those now but certainly I have got family overseas and my Dad in Malaysia rang me and was very concerned about it because it was getting a lot of media time there. So its been something I think a lot of people around the world are aware of.
JOURNALIST: When can you face the Australian people and say heres the deal? Have you got a timeline?
WONG: As soon as we have worked our way through these decisions. As soon as it is responsible to do so. Having said that Leon, I think all of us know people are wanting clarity around this. We are very aware of that and thats why we have been at work for some time. Both, in terms of the initial response where the focus has obviously been on getting stuff out to people quickly, trying to assist people to get back on their feet. But we are very aware that this is something that we need to keep our shoulder to the wheel on.
JOURNALIST: Alright, Penny thank you for joining us
WONG: Good to be with you.
JOURNALIST:The Finance Minister Penny Wong talking about the prospect of a flood levy.
-ends-