UHLMANN: Finance Minister Penny Wong joins me now. Good evening.
WONG: Good evening. How are you?
UHLMANN: Finance Minister, will we end this year with a budget deficit of more than $41 billion?
WONG: Well as I've said and as the Treasurer has said, there's certainly some challenges in the short term, and we've seen a hit on revenue. We've been public about that, that we'll see a hit on revenue, about $3 billion in company tax and a billion in personal tax for this financial year. So we are battling those revenue hits on top of, obviously, the cyclones, the cyclone and the floods, but in terms of the actual figures you'll obviously have to wait until Budget night for those.
UHLMANN: Sure, but if you're losing revenue it follows that that budget deficit will either be larger or your cuts will have to be deeper.
WONG: Well we have to manage the short term challenges, some of which you have outlined, and they include those revenue challenges and of course the fact that there's still short term softness in the economy. The high dollar, the cautious consumer; people are obviously saving far more now. Those things are impacting in the short term and that's the experience of people out there.
But we also need to look to the long term; we have to look to the future. And we have to look to what we know will gather apace and that is investment, particularly in the mining sector. We've got to take that into account now.
UHLMANN: Is the Government cutting too hard, because you're trying to meet a political objective, not an economic one by coming back to surplus in two years' time?
WONG: Well, I don't believe it is only a political objective. It is an economic objective and a responsible one. I mean, broadly, we know that living within your means is a good thing. Sometimes you have to do what we had to do during the global financial crisis and ensure that we kept people off the dole queues. But we also know what's going to happen in the years to come. We have a very large wave of investment coming into this country. And it might be that people out there, if they're not connected with the mining sector, you know it doesn't, it might not have much reality yet for them, but we have to look at the whole economy. And we know that that investment wave is coming and a surplus in that context is the right thing to do.
UHLMANN: So the argument the Prime Minister made last week, which is when the private sector steps forward, the Government should step back. Well, how does the NBN fit into that mix?
WONG: Well, the argument is very simply this: where you know that the private sector is expanding, you know that it will employ more people, spend more money, use more resources, you don't want government competing for those same things and pushing up prices. And we don't want government adding to price pressures and that's what a surplus does.
UHLMANN: So if more spending means that there's likely to be wage inflation and price inflation, what does the NBN do? Just precisely that, doesn't it? It competes with the private sector.
WONG: The NBN is a very long term investment in infrastructure and increasing the capacity of Australians and of the Australian economy. An investment in enabling Australian business to do business differently and to open up opportunities. That is, expanding the capacity of the Australian economy and building the infrastructure of this century.
UHLMANN: Sure, but with unemployment under five per cent, the argument that you make now for less government spending and the argument the Prime Minister made last week, how does that fit with the NBN? Because obviously it will be chasing the same scarce resources which mean wage inflation and price inflation, doesn't it?
WONG: Well I don't think you scale back on a major infrastructure investment of the 21st century. What we do need to do is bring the budget back to surplus. And as you know, the NBN is funded through an equity investment and that's the way it is funded. But I think we've got to look at where we are going in the future. A surplus is about managing those pressures, price pressures which translate to cost of living pressures that I spoke about. The NBN is an investment in Australia's capacity today, tomorrow and in the years ahead. Just as the copper network was many, many decades ago.
UHLMANN: With the carbon tax, isn't it true that the more you spend on compensating households, the less you can spend on compensating businesses?
WONG: Well, the Minister for Climate Change has made clear that in excess of 50 per cent of the revenue will go to compensating, assisting Australian households. Of course, this is - and you and I, I think, had discussions when I was the Climate Change Minister this is one of the policy issues you've got to confront in this area. How do you best balance the assistance to industry and to households? And that's why Mr Combet's involved in that.
UHLMANN: But everyone can't get compensation, can they? And now there's another long list today.
WONG: Well, there always will be. I mean, this is a reform where you're always going to get people asking for something for their sector; that's understandable. But you know what our job is? Our job is to work out what is the best thing for the future. The best thing for the future is to act on climate change. We don't want to be in a position five, 10, 15 years' time when the rest of the world has acted and our economy has been left behind. And the policy question is how do you do that most sensibly.
UHLMANN: Is your Government losing the public debate on this, because it started several years ago with the public clearly behind it and now the public appears to be being lost?
WONG: Well, change is never easy and this is not an easy reform.
UHLMANN: But why if people were up for change them have you lost that argument over time?
WONG: Well, hang on, let's not rewrite history. Remember we went to the last election, the 2007 election promising action on climate change. So did John Howard. I worked very hard in the last Parliament to get bipartisan agreement to putting in place the carbon price. Why did that fall down? Because Tony Abbott rolled Malcolm Turnbull on the basis he didn't want to. So, so
UHLMANN: But the point is if the public believed that it was a good idea then
WONG: And we are now in but we are now in a situation where we've got a tough reform and we are faced with a man who is taking the approach of simply swinging a wrecking ball. That's the approach Tony Abbott's taking.
UHLMANN: Sure. But is it all his fault, or has the Government really failed to sell this, given that you started with the public behind you and now they're in your face?
WONG: Well, of course this is a tough reform. And of course we need to continue to talk with the Australian people about what we want to do and why we want to do it and to speak with them about the details. And that isn't easy when you've got Mr Abbott, who, daily, wants to continue to add to his scare campaign. And we know what his motivation is.
UHLMANN: Finally just briefly, Minister, when we see this Budget - and I know you won't tell us the figures - will the size of government actually recede? Will it become less a part of the economy than it is now?
WONG: Well that's the whole point of a surplus, isn't it? The whole point of a surplus is government pulling back, recognising that we don't want to be adding to price pressures, living within our means. And it's the responsible thing to do for the future.
UHLMANN: Penny Wong, thank you.
WONG: Good to be with you.
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