JOURNALIST: Good morning to you Senator.
WONG: Good morning to you both, its good to be back.
JOURNALIST: Its nice to hear your dulcet tones on 891.
WONG: Dulcet tones (laughs)
JOURNALIST: Are we hearing the dulcet tones of tax rises, another tax increase before the next election?
WONG: Im happy to answer that question, but I wouldnt mind having a response to a couple of the things Jamie [Briggs] has just said. But on tax, weve made a commitment, well tax less than the Howard Government, and well stick to that commitment. If you look at the tax to GDP ratio, which is the best way of looking at the tax burden, they had a tax burden in excess of 23.7 per cent of GDP. Well stay under that.
JOURNALIST: But thats a bit of a fiddle. Isnt that a bit of a fiddle?
WONG: No
JOURNALIST: Because the bracket creep takes care of that, doesnt it? You can always say well tax less than the Howard Government, but
WONG: No, no. What Im saying is, if you look at the forward estimates for all of the budget years, and you calculate tax as a share of GDP, we stay below what the Howard Government was taxing Australians across the board. And just an example, if we were taking the same amount of tax as the Howard Government did when they left office, we would have a surplus that was some $23 billion higher this year. So that just gives you an example of what Im talking about. But if I can
JOURNALIST: Yes, fair enough, you want to respond on this question of the Baby Bonus, particularly.
WONG: Two issues, very quickly. In February of this year, Jamie Briggs wrote an article for the Financial Review where he railed against the Government supporting child care.
He said pensions, disability support, family tax benefits and child care support create a cycle of dependency for millions of Australians. So the question I have, and I think Australians would have: why are pensions, disability support and child support so bad, but the Baby Bonus so good that the Government cant reduce payments for second and subsequent children?
JOURNALIST: OK. Do you, though, have a bit of a problem with the middle class? And that is, here you are, youre cutting the Baby Bonus down to $3,000 from $5,000; welfare groups and others have said that the poor will suffer from that. Youre also looking at trimming the Health Insurance rebate after having only four months ago introduced a means test for the 30 per cent rebate.
WONG: There is no way to make popular budget savings measures, budget cuts. The reality is that none of these measures are popular. But theres a more important principle here, which is, when youve got an economy growing at trend, and low unemployment, and an investment boom that weve seen, you need to make sure you run a budget policy which gives the Reserve Bank room to move. And weve done that, and weve seen the benefit of that. Australians who have mortgages or businesses who have borrowings have obviously got the benefit of that. But there is a more important issue as well, and that is the sustainability of the budget going forward. I mean, I think youve got to make sure you fund health, not just today, but in ten years time.
JOURNALIST: Minister, youre having to make these changes because of a tough economy. The businesses youve hit with monthly tax payments are operating in that same economy. Why make a tough economy even tougher for companies?
WONG: I think its important to remember were not actually increasing the tax take from companies. The only party thats proposing that is the Liberal Party, who want to put a tax increase on companies to pay for their paid parental leave scheme. This is a timing change. Weve given a lot of notice because we want to work through the details of this with companies, and well do that. But it isnt an increase.
JOURNALIST: But Minister, the front page of the Financial Review, the business community believes it is being forced into an unnecessary, expensive and administratively complex change to help you get a budget surplus. So I ask you again, why make a tough economy even tougher for companies?
WONG: I think the economy we want is an economy where the Reserve Bank has room to move, and that is a good thing for companies as well as for families.
JOURNALIST: Do you say this will not be administratively complex and expensive for companies?
WONG: Id say two things. First, this is not contributing to the surplus. This change does not take effect until the next financial year. So thats the first point. The second point is, unlike the Liberal Party, were actually not proposing a tax increase for companies.
JOURNALIST: Doesnt this raise $8.3 billion over four years?
WONG: That is simply a reflection of a timing shift when you move from a quarterly payment to a monthly payment.
JOURNALIST: You must be getting more money.
WONG: No, were not getting any more money. Theres no increased tax take. Its just that a couple of months of one year would therefore be paid in a different year -
JOURNALIST: So its a fiddle?
WONG: No its not a fiddle.
JOURNALIST: Its a fiddle.
WONG: It is not a fiddle. Its reflecting
JOURNALIST: Well its not real money. Youre not raising any extra money; youre just pulling it from one financial year into another. Its a fiddle.
WONG: Can I respond to that? Youve said fiddle three times. I reckon its about my turn. What do you reckon?
JOURNALIST: OK. Well is it a fiddle?
WONG: No its not. Its making tax payments in line with the way in which GST is remitted. It is an approach that has been taken in a number of other advanced economies. And in terms of administrative complexity I think weve given a lot of notice. The first companies, and thats only the biggest companies, would start on 1 January 2014 and then wed do a tranche each year depending on how much turnover. And theres a lot of consultation which will occur.
JOURNALIST: Its $8.3 billion but its no extra money from companies.
WONG: Thats correct.
JOURNALIST: It just makes your books look better.
WONG: Its a reform about how people pay tax. I mean, how often do you pay tax?
JOURNALIST: Well every fortnight.
WONG: Correct. So, you know I think its not an unreasonable proposition to say we want to line it up with GST.
JOURNALIST: But its not pay as you earn is it for companies?
WONG: No thats true.
JOURNALIST: So its quite painless. You take the money out and I try and get some of it back at the end of the year by claiming my record library.
WONG: And Im sure youd work very hard on that (laughs)
JOURNALIST: (laughs) I do, I do. Legitimately.
WONG: Fair enough, fair enough.
JOURNALIST: Were talking to Penny Wong, South Australian Senator, Minister for Finance and Deregulation at five minutes to nine. Jane has called from Adelaide. Hello Jane.
CALLER 1: Good morning.
JOURNALIST: What are your thoughts?
CALLER 1: About the Baby Bonus. I think $5000 for the first baby, fine. And then after that, nothing. Why do people expect to have everything paid for life costs, living costs? Just having babies shouldnt be a burden on the public purse all the time.
JOURNALIST: Okay, Jane thank you for your call. Gunther has called 891 Breakfast, hello Gunther.
CALLER 2: Yeah, good morning. On the $700,000 stated savings, is that attributed in the first year? So therefore do we actually have a $700,000 saving over four years attributed in the first year?
JOURNALIST: Is that on the Baby Bonus, Gunther?
CALLER 2: On the Baby Bonus.
JOURNALIST: OK, just quickly Penny Wong answering those two questions I suppose, or two views.
WONG: Well Jane I think is suggesting we should go harder than we did, which is pretty unusual for a Finance Minister to get that question Id have to say. I think in our community we do want to help families with the costs of children and with the costs of education, because we understand thats very important for the future of our community. But you have to also make sure its sustainable which is what the Governments doing. In terms of the Baby Bonus the changes dont start until next year, so Im not sure if that was Gunthers question. But were not making these changes until 1 July next year.
JOURNALIST: Okay, well, Penny Wong thank you for talking to us.
WONG: Good to be with you again.
ENDS