JOURNALIST: The Minister for Finance and Deregulation, South Australian Senator Penny Wong, joins me now. Thanks for your time Minister.
WONG: Good to be with you.
JOURNALIST: Theres still a very mixed reaction to whether or not we need a levy. Why did the Government come to the decision that we did?
WONG: Lets remember that the package the Prime Minister announced today is two thirds funded through government spending cuts and one third funded through the levy. So two thirds of the funding has been through pretty difficult spending cuts that the Prime Minister has announced.
The reality is we do face an immense national challenge in rebuilding Queensland and other flood affected areas. Theres been an enormous amount of damage. We have to rebuild the infrastructure. We have to pay for that. We estimate the costs of that to be around $5.6 billion. Obviously thats an estimate at this stage. So the responsible thing to do was to put together a good package, a package that balanced spending plus a levy. Thats what weve done. Two thirds of it funded through government spending cuts.
JOURNALIST: Why rule out completely this early the return to a surplus? Its something thats been debated for some time. But why was that decision made?
WONG: Look as Julia said at the Press Club today, we dont think thats the right thing for the country. Its obviously an easy thing for people to suggest. Its a softer option.
But the reality is, weve got an economy thats growing strongly. Weve got very low unemployment. Weve got a strong pipeline of investment. And in those circumstances, we know that the economy is likely to continue to be near capacity as we head into 2012-13. Thats exactly the right time for the government to be ensuring that it reduces its footprint in the economy, and thats what you do by bringing the budget back to surplus.
JOURNALIST: Many have wondered what would the impact on charities be for people who feel that their money has been taken as part of a levy, so therefore may be less inclined to donate.
WONG: I understand that perspective, and what Id say to South Australians is this. The money that the Government is funding through spending cuts and the levy goes to rebuilding critical infrastructure roads and rails and bridges. The money youre donating to the Queensland Premiers Fund or other charities is money that goes directly to people who have been flood affected. They are different pools of money.
And I just say this, weve worked very hard to keep this levy modest. Its certainly smaller than a number of the levies that John Howard initiated. And if youre on $60,000 a year, youll be paying less than a dollar a week for a year. So we have worked hard to ensure this is a modest contribution.
JOURNALIST: Now some of the spending cuts youve looked at include the capping of funding for things like the Renewable Energy Bonus Scheme, for solar hot water rebates and the Solar Homes and Communities Plan. Can you explain what impact that might have on people who were perhaps looking at those things?
WONG: The Solar Homes and Communities Plan is a scheme thats been closed so we are winding it down. But obviously with all of these programs weve had to make a judgment about what is the best way for taxpayers money to be spent. Our view is that the most efficient way to ensure we move to cleaner energy, cleaner energy sources, is to put a price on carbon. And the Prime Minister has made clear that that is what we intend to do.
JOURNALIST: So that program was being wound down anyway?
WONG: One of the programs you mentioned is being wound down. I think the other, which is the Renewable Energy Bonus Scheme, we dont anticipate demand to be as high as was previously assessed. But all in all there are quite a number of spending cuts. I know that many of them wont be popular. But these are the sorts of hard decisions the Government needs to make when we are confronted with this challenge of rebuilding Queensland and other areas.
JOURNALIST: You say hard decisions but youre also not proceeding with the Green Start program, and you mentioned one program has already been wound down. Is this perhaps if you were cynical - you could say, well youre just lumping these in to make it look like youre making significant spending cuts.
WONG: I dont think $2.8 billion worth of spending cuts is a small amount. There are some difficult decisions in that. We also have tried to be very disciplined as weve gone through this process to look at different programs. Every program has, you know, some arguments for it. The judgment you have to make in government is whether this is the best use of that money and the judgment weve made is we do have to find the $5.6 billion to rebuild Queensland and we had to make a very substantial contribution through reduction in spending programs.
JOURNALIST: Just back to the levy. Middle Australia will be paying this levy. But several exemptions can you just go through what they are?
WONG: Sure. If you earn up to $50,000 a year, youre not going to have to pay the levy. If you earn between $50,000 and $100,000 youll pay about half a per cent only on the dollars over $50,000. And if you earn over $100,000 youll pay a 1 per cent levy on the dollars you earn over $100,000 and half a per cent on the dollars between $50,000 and $100,000.
So to put it in a nutshell, if you are on $60,000 a year you pay less than a dollar a week. If youre on $100,000 a year you pay less than $5 a week. If youre below $50,000 you dont have to contribute.
JOURNALIST: And an absolute guarantee that this is just a one-off?
WONG: The Prime Minister has made clear this is a one-off, temporary levy for one year to fund the rebuilding of Queensland.
JOURNALIST: Minister thanks for your time.
WONG: Good to speak with you.
ENDS