SALES: Senator Wong, given the budget situation, are Australians going to have to lower their expectations about what they can expect from future governments?
WONG: Well, certainly we have to deal with the reality of the economic circumstances the country faces, and let's remember what they are. We've got a very high dollar. The prices we're getting for the things we sell to the rest of the world, known as the terms of trade, have come off and that has substantially affected government revenues because businesses are making less profits. And when business makes less profits, less money goes to government. So, those are the economic circumstances the nation faces, and the Government faces, as we put this budget together.
SALES: I'll come to the high dollar in a second... when we're talking about clawing back deficits of this size, though, are we going to have to have a look at the sort of non-essential services that government provides to Australians? So, for example, the full range of things that Medicare would cover?
WONG: I think the way to approach this is the way the Government is approaching it, which is to make responsible savings decisions in order to fund wise investments for the future. And to recognise the economic reality, which is that whilst we have an economy that's growing, the amount of money that's coming to government for the reasons you and I have already touched upon is substantially less than was anticipated. The example I give is, for this budget year, just two years ago, we were predicting $20 billion more coming in than is, and even since the mid-year review in October we're about $7.5 billion less for this financial year than we anticipated. So, this is an economic fact we all have to deal with.
SALES: You talk about making savings, but the reality is that, so far, the structural adjustments that the Gillard Government has made to the budget have been redirected towards other spending...
WONG: Well, I think if you look... For example, the last Budget and the last MYEFO we have a net save position. That is, our savings were more than our spending by I think $10.5 and $17 billion. So, I don't think that's correct. And remember, what Treasury demonstrated in the last Budget is that if you look at the range of savings decisions that we've made the cumulative effect of them is that the net debt position of the country by the end of the decade, in 2021, is about $250 billion better. And that includes savings which were controversial and opposed things like the changes to the private health insurance rebate and the baby bonus, which, as you know, is opposed by the Opposition.
SALES: But isn't it the case that, however you spin it, the reality is that this Government has spent billions of dollars in anticipation of revenue that has not, and will not, materialise?
WONG: I don't accept your construction as spin. This is an economic fact. The economic fact is we face very unusual economic circumstances. We don't have the sort of rivers of gold that we saw in the Howard and Costello years where, if you want to look at spending patterns, don't take it from me, take it from the IMF, who has said that the Howard Government was in fact the high spending government, not this government.
What we are dealing with is a revenue situation where government's getting less money a high dollar, the global circumstances, what's happening to the prices of the things we're selling to the rest of the world. And we have to try and work through that and make responsible savings decisions to make investments the country needs. Like, I believe, the Labor Party believes, the country needs the investment in our schools. If we don't invest, Leigh, too many Australian children fall behind, and, as importantly, the country falls behind.
SALES: But you mentioned before about talking economic facts. If you want to talk economic fact, the fact is that your government is spending more money than you've got revenue coming in.
WONG: Well, I just told you that our net position in the Budget and MYEFO was actually a net save position and I think if you want to ask me that, you should ask me that on Budget night. We're not going to pretend to the Australian people that we don't have to make responsible savings decisions. We will make those decisions. But what we won't do is cut to the bone, cut the wrong things, which is the approach Tony Abbott would take.
SALES: You've mentioned the high Australian dollar. What can the Government do about the high Australian dollar?
WONG: Well, it's a very difficult proposition, isn't it? I mean, we've got a dollar which is remaining stubbornly high. Economic orthodoxy would suggest that if you see a decline in what we call the terms of trade so, the prices of what we're getting for the things we sell to the rest of the world you're likely to see the dollar declining, and it hasnt, and that's really hit a lot of businesses hard. The reality is, though, we have a floating exchange rate and it's very difficult for any government to shift what happens to that exchange rate. What you can do is make sure you put in place policies that recognise the hit on the economy. I would also say, of course: the Reserve Bank does take into account when it's setting monetary policy the effect of a high dollar on the rest of the economy.
SALES: Senator Wong, thank you very much for your time tonight.
WONG: Good to speak with you.
ENDS