WONG: What the Treasurer and I have released today is the Final Budget Outcome for the 2009-10 year. And what that shows is a deficit of around $54.8 billion. Thats in fact about a $2.3 billion improvement since the Budget.
But whats striking about this figure is how much its driven by a reduction in the amount of revenue to Government almost $50 billion less in revenue to Government from taxation, and other receipts than had previously been projected earlier. So this demonstrates really the full impact of the Global Financial Crisis. This was the year in which the economy did slow, a year in which we know what happened to the global economy. It reminds us why the Government had to act in the way it did and put stimulus into the economy to save jobs.
JOURNALIST: And at the time too, the Government was saying there was going to be a collapse over five years of $210 billion in revenue. In turns out now that that has halved, and that was a big part of the argument in putting so much stimulus into the economy. Did the Government overreact?
WONG: Absolutely not. We know that Australian Government finances are in very sound shape. We know that compared to the rest of the world our figures, in terms of both the deficit and our net debt position, are much stronger than equivalent or comparable advanced economies.
What we had to do was to respond to a situation, which as you would recall, was very serious. Look at what happened in the rest of the world. Look at the unemployment rates in many other parts of the world. The Government acted in a timely manner, putting in place a stimulus that was temporary and targeted, and it had the effect of ensuring the economy kept ticking over and we supported jobs.
JOURNALIST: Im just wondering though, with the education spending as weve got it at the moment, theres about $6.7 billion that has been committed out of the $16.2 billion budget that was set up at the time. Theres still a lot of money in the system. Why dont you start dragging some of that back?
WONG: The stimulus is being wound down, the stimulus is winding down. It peaked in 2009, and it is winding down. In fact Treasury said that winding down of the stimulus is probably subtracting about 1 per cent from our growth figures. So we are winding back the stimulus...
JOURNALIST: But money will be spent in this financial year and the next financial year.
WONG: We are winding back the stimulus. The point is that it was necessary to support jobs then and also to support business confidence. And lets remember, thats a large part of why the Government spends and invests in the economy. Its to support employment now but also to support business confidence for the longer term.
JOURNALIST: But revenue is taking off now, unemployment is coming down now. Arent you concerned that that will put inflationary pressure, having that much money still to come?
WONG: Which is why we have to deliver and adhere to the fiscal strategy weve outlined. What you raise is precisely why this Government, unlike the Opposition, offset all its spending during the election campaign. Its precisely why this Government has made clear the need for fiscal discipline. Its precisely why this Government has said we will ensure that we restrain spending. We will spend less. In years where there is an above-growth trend in the economy, we will spend less than John Howard and Peter Costello did on average in the last five years they were in Government.
JOURNALIST: Youve got a 2 per cent expenditure cap.
WONG: Thats right.
JOURNALIST: Dont you think that doing that across all-of-Government punishes the efficient and the inefficient? Its not exactly a targeted scheme.
WONG: The spending rules are across Government how we achieve them will be decisions within Government. Obviously, I will need to work with my colleagues, the ERC will need to work through its processes. And we will have to work with the Parliament to deliver it. But as I have made clear, as the Treasurer has made clear, we are negotiating. We will negotiate on many things through this Parliament. We are a minority Government. We will have to negotiate to deliver our commitments. But the one thing we are not going to be able to negotiate on is the return to surplus.
JOURNALIST: Will the independents be able to keep coming back to the well? If they get more ideas does that mean that you have to expend more money, youre not going to just have to say no to the ministers, youre going to have to say no to the independents as well, arent you?
WONG: Chris, can I say on that, I think the independents demonstrated a fair degree of responsibility in how they approached the task of determining who they would support. I mean its because of the wisdom of the independents that there was a light shone on the black hole in Mr Abbotts costings. So they have demonstrated a very responsible approach. We will obviously work with them because our view is this: the Australian people
expect a return to surplus. They expect the Government to deliver that return to surplus. They expect us to work with the Parliament to deliver that. And all of us will be accountable for our support of sound economic management.
JOURNALIST: What about some of the things that are yet to be quantified? For example, you have looked obviously in your last portfolio at water. It was one of your big areas. Now youve said that when the Murray Darling Basin Authority comes out with whatever it is, its plan for the Murray Darling Basin, that you will do whatever they say. What if that means billions more in water buybacks?
WONG: Remember Chris and obviously this is now a matter for someone else, Tony Burke, who Im sure will do an extremely good job in that portfolio but remember, there was already a substantial amount of money provisioned both for infrastructure and for water purchase within that portfolio. We have been rolling that out.
If youre referring to the announcement during the election, what the Prime Minister made clear is that in order to bridge the gap between how much water we are currently using and how much water we will be able to use when the Plan comes out, she said well continue to purchase. If all of the investments we are making not just in the forward estimates but beyond in terms of infrastructure, water savings and efficiencies, in terms of purchasing water for the rivers if that is not sufficient, in the years ahead we will purchase the remainder. We will do it sensibly and we will do it carefully.
JOURNALIST: Now looking at the bottom lines, the underlying cash deficit now for 2009-10 was $54.8 billion. Slightly better than expected, but still a big deficit. At the moment we have $42.3 billion in debt. Although you are going to try and wind that back, those are still big numbers historically speaking.
WONG: I would also refer you to whats happening in the rest of the world. Look at where net debt is in the United States, the United Kingdom. Look at where the budget balances are in many advanced economies. Australias economy and Australias Government finances are in very, very good shape by international standards. Our economy is growing and we are projected and this comes back to your previous question we are projected to deliver the fastest fiscal consolidation at least since the 1960s. To do that we are going to have to apply discipline to spending and we intend to do that.
JOURNALIST: And it will be over a long time too. Thats the other thing: having a 2 per cent cap for a couple of years is one thing. Having it over a number of years is something that is going to be very hard to achieve.
WONG: Well the projections are to return to surplus, as you know, in 2012-13. Thats the fiscal consolidation task. And were intent on doing that.
JOURNALIST: Are you enjoying this job Penny Wong?
WONG: I am. I am learning a lot. And its a great privilege and honour to be doing something that really puts you at the centre of a lot of decision making and prioritisation of the Governments agenda.