SLOAN: Even when shes cooking shes thinking about the Budget. Penny Wong, a very good morning to you.
WONG: Good morning, Id forgotten about that (laughs).
SLOAN: (laughs) We all noticed. Your Treasurer calls this Budget Labor to the bootstraps. But using the boot analogy, is this a putting the boot into Canberra Budget?
WONG: Not at all. We have, in a very tight Budget, made some important investments into Canberra. National Capital Authority increased funding for Australias key cultural institutions. And you might recall we previously announced an investment in infrastructure in terms of the Majura Parkway. So theyre very important. But Im not resiling from the fact there are some difficult decisions in this Budget for the Australian public service. We
SLOAN: 1500 of those jobs will come from Canberra.
WONG: And I have been very clear, unlike Joe Hockey who simply does like to put the boot in to public servants, we respect the work the public service does. Regrettably we have had to find savings across the budget. They are not the only area where there have been savings, but there are savings in terms of expenditure within the public service.
SLOAN: Is this the best way to go? Could you have not rethought the efficiency dividend, which is described as a blunt instrument? Which isnt the best way to manage and get service delivery out of the public service?
WONG: A few points about that. I think the efficiency dividend does require agencies to look for efficiencies. But we do recognise you also have to look for savings elsewhere. Weve done that. We also have made sure, for example, that we have given supplementary funding to the Department of Human Services, because we understand the call centres and the frontline services do require some further support.
SLOAN: Centrelink staff are reportedly getting death threats.
WONG: I understand theres a lot of pressure on the front line, which is why youve seen a couple of hundred million more in this Budget, a Budget where theres some $34 billion worth of savings weve still made the decision to make that investment.
Can I just say though, we have very good representation about the importance of not only the public service but a whole range of issues for the ACT from members like Kate Lundy, Gai Brodtmann, Andrew Leigh, and also Mike Kelly. Weve seen some of the results from that.
What weve seen on the other side is Joe Hockey simply saying: Im going to sack 12,000 people and theres a lot of fat. Now, if you want a debate about the public service, lets have it on facts and lets recognise that the Government has already found a lot of efficiencies. And 12,000 people just being turfed out, which is what Joe Hockeys suggesting, doesnt look very sensible.
SLOAN: But youve named those local members for a reason, political reasons. But the reality is youre going to cut 1,500 public servants. And youre also, in terms of the GST carve-up, the ACT budget is going to be $34.5 million worse off. The Chief Minister Katy Gallagher was clearly quite surprised this morning. She was talking to our Breakfast presenter Ross Solly, saying its going to be a very tough couple of years. And they may have to revise their surplus strategy. This is in an election year for them as well.
WONG: A few things Id say. First, the reason I name those Canberra or ACT Members and Senators is because they talk to me a lot. And the question that probably should be put to Senator Humphries is, does he talk to Joe Hockey a lot, and if he does, why is it that Joe Hockey continues to say what he says to your electorate, to your listeners?
In terms of the GST, that is a function of the same issue this Federal Government has been battling, which is that revenues are not tracking where you would think for a given level of economic activity. Weve seen $150 billion taken out of federal revenues as a result of the washout of the global financial crisis. Unfortunately we also see that in terms of the GST take for the states. But lets recall we are making significant investments into the ACT.
SLOAN: Just on local politics, ACT Opposition Leader Zed Seselja and as you know its an election year here in October hes described your Budget as a disastrous Budget, a betrayal to Canberrans and it will push them to breaking point through huge job losses and cost of living pressures.
WONG: So what does he say about Joe Hockeys 12,000 and the amount of fat in the public service?
SLOAN: That Im sure will come (laughs).
WONG: (laughs) Alright. We wont hold our breaths for
SLOAN: Were talking about your Budget now
WONG: (laughs) Thats fair enough
SLOAN: youre in Government now.
WONG: and Im very happy to defend what weve done. I am not somebody who says that we should simply put the boot in. I think what I have said is, we have to be disciplined. We expect the public sector to make a contribution. We understand that is hard. We dont pretend that that is easy. And we also have made space in the budget for the investments in the ACT that Ive spoken about.
SLOAN: Penny Wong, Stephen Bartos was on the program earlier, hes a specialist in public service governance. And he was actually giving a tick as a good example to public service cuts in terms of Treasury and Finance, and says this will demand very high level management including managers saying to Ministers you cant have so many ministerials, weve got services to deliver. So that goes directly to you, doesnt it?
WONG: I dont think theres magic puddings when it comes to savings. Im always interested in the way people throw around numbers saying you can get a surplus this big, you can make this many savings. I know how you get savings, you sit around the Cabinet table in the ERC and you go through a pretty exhaustive process of working out which is the best way to achieve savings.
Weve done it; $100 billion worth of savings over four budgets, another eleven and a bit billion in the mid-year outlook and then $34 billion in this budget. It is a difficult process, and theyre not without consequences. Theres never a saving that can be taken that has no consequences, youve just got to make a decision about it.
SLOAN: One of those consequences; youve scrapped the company tax rate. But this also affects small business.
WONG: A couple of things about the company tax rate. The first is, that it was not going to pass the Parliament, because Tony Abbott was going to vote with the Australian Greens to knock it off. So we had to
SLOAN: But the Greens were going to support the small business
WONG: But lets recall that we dont want to have a differentiated company tax rate indefinitely. So, what weve done is offered relief for small business through the Instant Asset Write Off; thats a tax break on assets up front, up to a certain amount. Weve also in this Budget, and this is very important, is introduced something called loss carryback. I wont go through all the detail of that, but its basically
WONG: We spoke to Peter Strong about it yesterday.
WONG: Its basically a flexibility measure, saying were going to give you a bit more flexibility to manage your cashflow by enabling you to carry back your losses. That will give you the capacity to make some of the investment decisions that we know businesses need to.
Were open to working with the business community to deliver a company tax cut. Weve identified a number of savings through what we call the Business Tax Working Group. Theyve identified a number of savings. There was speculation about them in the media. We didnt take those savings because we want to leave them for this process of consultation and make sure we can get a company tax cut that is not only funded, but can pass the Parliament.
SLOAN: But small businesses have just got to cop it?
WONG: No, small businesses can do two things. First, they can ensure that they have a look at the Instant Asset Write Off and the Loss Carry Back provisions. Ninety percent of the Loss Carry Back is anticipated to assist small business. And they can get involved in getting support in the Parliament for a company tax cut. Remember, we would have voted for it, Tony Abbott was going to vote against it.
SLOAN: The promised surplus and seemingly youre locked into this politically, many economists saying its not a good strategy youre sticking with it? Your predicted surplus is $1.5 billion
WONG: A few economists are saying the opposite too, Alex (laughs) ...
SLOAN: (laughs) Well, we wont argue on the economists, but many are saying its kind of a nuts strategy. And youre sticking with the surplus even though your own forecasts this year were completely out. A $22 billion deficit went to a $44 billion deficit. So why should we have confidence your forecast of the surplus is on track?
WONG: Id invite you to consider the savings weve taken to protect the surplus and the bottom line going forward. That is what weve done. Remember, in just one year, the difference in revenues for this surplus year was about $10 billion less between last Budget and this Budget. In other words, we started about $10 billion behind where we thought wed be this time last year.
Weve made the savings decisions to protect the surplus. And the reason we have is we think a surplus is the right thing to do in an economy thats coming back to trend growth. It gives the Reserve Bank room to move when it comes to interest rates, like it already has. And it is an important buffer given the uncertainty in the global economy.
SLOAN: And, Penny Wong, Im going to just throw to a question from Tony Peacock, who heads up the Cooperative Research Centre Association about R&D. But just the bottom line, can it be claimed that this is more about good politics than good management?
WONG: No, I dont agree. This is a Budget where weve been very cautious about savings. Were very conscious about where we take savings from. Weve not taken savings from research. Weve not taken savings from higher education institutions. Weve continued to almost double school funding. We have made substantial savings and weve invested them, including in low- and-middle income families. And I think that is a good set of values to bring to a Budget.
SLOAN: And, Ill just Im here with Tony Peacock and, Tony Peacock, your headline was Not a single cut in science.
PEACOCK: We were pleased with it, overall, for science. And, congratulations Minister, we were delighted that not a single science agency actually did take a cut.
WONG: I appreciate that. Its one of the few times the Finance Minister gets that sort of comment on a show (laughs). Thanks so much, I might frame this transcript for that question.
Look, when Joe Hockey gave his weve got to end the culture of entitlement speech where hed said weve got to go hard on pensioners, I said that you judge a Government also by where it chooses to make savings as well as where it chooses to spend. And we have consciously made decisions not to make savings in some of the areas we think are very important for the future productivity of the economy.
PEACOCK: And one of those things is, youve announced a new capital venture initiative and I just wanted to try and understand that.
WONG: Well, in terms of the detail of that I might have to try and direct you to the line Minister Im afraid. But what I can say is that its very important that we keep research and development going. Its very important that we continue to improve our scientific expertise because we know innovation is part of what will ensure this country stays competitive in the years to come.
SLOAN: And, Penny Wong, there was much criticism of John Howard for giving away money sweeteners. Arent you doing the same thing in the hope of turning around dire polls?
WONG: You know who were seeking to assist here? If youre a maximum rate family on Family Tax Benefit youre earning up to about $47 thousand a year, I think. So we are not talking high-income families. And of course then you get the base rate further up the income scale, depending on the number of children you have. But the assistance here is for people who are not in the mining boom fast lane. And in the context of a patchwork economy I think thats a sensible thing to do. Its the right thing to do.
SLOAN: But the 100,000 Australians that are going to be moved from those family payments to Newstart in a loss of $60 a week?
WONG: Im happy to talk about that. This is an area that is difficult and it is an area where you have to look at what is the best outcome for families. We have done a number of things to try and encourage more parents into work. And remember, this applies to parents, single parents, when their child turns 8. What weve done is weve brought those people into alignment with everybody else whos since entered the payments. So everybody on parenting payments now would be on the same requirements.
But we have substantially invested in more assistance. More assistance in childcare. We also have a training entitlement the Prime Ministers announced. And we made changes in last years Budget to make sure these parents keep more of every dollar they earn. Thats very important.
What we need to try and ensure is that people move into work. Because the best way to ensure we dont have joblessness, intergenerational joblessness, and that we dont have families in poverty, is to support parents back into work when they can.
SLOAN: Penny Wong, we thank you for your time today. Thanks so much.
WONG: No worries, nice to speak with you.
ENDS