GLOVER: Good afternoon.
WONG: Gday Richard. How are you?
GLOVER: Yeah, good. Big cuts to lots of things that matter to people, like the Baby Bonus.
WONG: I think people also want us to ensure we run a sound budget strategy, that we run a strong economy and that we give the Reserve Bank room to move when it comes to interest rate cuts. And obviously there have been some cuts in recent times which have ensured people are paying lower interest rates than they would otherwise be on their mortgages.
But, yes we have made some changes to the Baby Bonus. What weve said is that people still get the $5000 for their first child and if they have twins or a multiple birth, but for subsequent children we are reducing it to $3000, which I think reflects the sort of spending patterns of families.
GLOVER: Okay, the big picture though is that people are making these cost cuts really to allow the Government to hang on to a headline which is we achieve the surplus.
WONG: No, I dont agree with that. We want to make these changes because you want to have a family payment system into the future which is sustainable. And remember this is a Government that has provided things like Paid Parental Leave; that has included the SchoolKids Bonus in its Budget. We are providing assistance to families, but you also have to make decisions about making sure that the family payment system and the budget across the board is sustainable, not just for a few years but in the decades to come.
GLOVER: A lot of this is about the mining tax though just not bringing in the revenue that you expected. Lots of people said that to the Government early on; that the restructured tax wouldnt do what you thought it would do.
WONG: Actually its much more than the mining tax. We have seen a lot less tax to Government about $22 billion less tax paid to Government, or less revenue to Government, over the budget period. But thats across a number of different types of revenue. Mining and other resource rent taxes is one, but also so is company tax. And really what this reflects is whats happened in the global economy.
The global economy is a lot softer than it was six months ago. And weve also seen things like iron ore and coal the things we sell to the rest of the world the prices have come off a substantial amount since the Budget.
GLOVER: Nonetheless the Opposition says a well-handled local economy wouldnt be nosediving in the way this one is.
WONG: Its not. I mean, that is an example of the sort of wrecking ball language that the
GLOVER: Those words, to be fair, are mine and not theirs (laughs).
WONG: The economy is continuing to grow. We are projected by the International Monetary Fund to be the fastest growing advanced economy next year. Were still anticipating growth around trend, at three per cent. Obviously thats a little bit less than Budget, but its still substantially higher than most other advanced economies. So I think its important to get some perspective. Australia, like any other country, is affected by what happens in the global economy. And unfortunately the global economy is a bit softer than we all would want it to be.
GLOVER: Yet there are still plenty who say youll never achieve this surplus in the end anyway, that if you do achieve it itll be by smoke and mirrors.
WONG: Ive always taken the view thats whats important is not just for the 2012-13 year but the growing surpluses over time. Because what that says is that the Government has got its budget settings on a sustainable path. It means you make room in your budget for things like the pay equity case which we funded for low-paid workers. So I think the thing I look at as Finance Minister is not only the 2012-13 year but the budget surpluses growing over the next few years and thats what were focused on.
GLOVER: The Finance Minister Penny Wong is here, so is Michael from Roselands. Michael, good afternoon.
MICHAEL [CALLER]: Yeah, afternoon Richard. I just want to find out if you can ask the lady for us when is this going to start? Because my wife gives birth with twins, two twin girls coming the due date is on the 15^th of December.
GLOVER: So, whats that, five weeks or something?
MICHAEL [CALLER]: Yeah, so I just want to know, is this starting, like, from tomorrow morning, this cut? Or is it next financial year, or...?
GLOVER: Yeah, and are they your second kids, or your first?
MICHAEL [CALLER]: No, weve already got one boy already.
GLOVER: So these would be affected by the policy, Penny?
WONG: First, can I give Michael and his family my warmest congratulations. As you know, we had a baby last year, and I think anybody whos managing twins is really thats very impressive. I can imagine how hard it is.
GLOVER: (laughs)
WONG: He can rest easy. First, the changes dont come into place until 1 July next year. And second, were exempting all multiple births because I think anybody whos having twins or more probably deserves as much assistance as we can provide.
GLOVER: OK, the logic though is it that a second child does require slightly less money, because youve already got the change table and the pram
WONG: And the pram, and the cot
GLOVER: is that the theory?
WONG: That is the thinking behind this. But as I said, it is really also we do need ensure that these payments are sustainable.
GLOVER: OK, now, the New South Wales Treasurer Mike Baird says that this will affect the State budget to something like I think he says something like $900 million. He wants some sort of change to the GST policies.
WONG: Theres a lot of discussion about the GST, and as you know weve got a review underway. In fact, in this budget update, I think the states are receiving slightly more in GST than they previously would have anticipated.
There are some changes to funding in some areas as a result of the indexation changes; indexation has not been quite as high as we previously estimated. But I think on GST, the states are actually going to receive more than was previously anticipated.
GLOVER: OK, but you still say you can get to that surplus?
WONG: That is our forecast. I think that its been a very difficult budget update because revenues have been hit so hard. And youve seen that by some of the savings decisions the Government has had to make.
GLOVER: Does there become a point though when revenues sink so low that it becomes financially irresponsible to hang onto this idea of the surplus. And for the usual Keynesian logic, apart from anything else, and apart from usual issues of fairness and equity and keeping everyone healthy and happy, that you have to give up on this surplus? Does a point come when youd have to?
WONG: Richard, I think what a Labor Government should do, and what we are doing, is make sure we run the right budget policy, the right fiscal policy, for the economic circumstances. And we have got a track record of doing that.
As you said, if you look back, we stepped in at the time of the global financial crisis, which kept Australia out of recession and people in jobs. At the moment we have an economy growing at trend. So the budget settings of a surplus are the appropriate settings.
GLOVER: OK, well leave it there, but thank you very much for your time.
WONG: Good to speak with you again.
ENDS