UHLMANN: The Finance Minister is Penny Wong and she joins me now from Adelaide. Welcome.
WONG: Good to be with you, Chris.
UHLMANN: Will the Government deliver a surplus or a deficit this financial year?
WONG: Well as the Treasurer's made clear today, given the write down again in revenue in the monthly financial statements that I released today, we're unlikely to deliver a surplus in 2012-13. We've been upfront about that today, we've been very clear about that and we've made this decision to be clear that as to the state of revenue because we have to put jobs and growth first and we want to continue the responsible economic management that's seen Australia weather the GFC with a relatively low unemployment rate and continued jobs creation.
UHLMANN: But Minister, until today, the measure of responsible economic management was whether or not you delivered this budget surplus and this was your measure. Nobody else made you live up to this and you've broken it and by that measure, are you not is your economic management now not in tatters?
WONG: I disagree. The key to this decision today is responsible economic management. The key to this decision today is jobs and growth. And I think it's important to remember how we've got to this place. Since mid-2009 this Government has offset every cent of new spending decision every cent.
We've taken savings to ensure we could make those spending decisions. We've also been confronted by substantial revenue downgrades. Some $160 billion over five years. I mean, just as an example, in the 2012-13 year alone, if you look back at the 2010 Budget when we said we would be coming back to surplus in this year, the revenue downgrade in this year alone is $20 billion. Now, we have continued to make savings to offset that, but with the release today of this new data, what we've said to the Australian people is we're seeing further revenue downgrade. We don't believe it's responsible for us to continue to make cuts to offset this revenue downgrade if that is bad for jobs and bad for growth. And that is why the Treasurer's made the announcement he has today.
UHLMANN: But isn't this in the end a question of trust that lies at the heart of this government? Can you be trusted on anything that you say in future when it comes to economic management?
WONG: What we can be absolutely trusted on is we will be always
UHLMANN: On what evidence, minister?
WONG: ... the party that puts growth and jobs first. And the evidence is the way we have managed the economy in the face of the worst global downturn since the Great Depression. And this is a nation
UHLMANN: And in the face of all that and with all the numbers that you just quoted with all the numbers that you just quoted you kept saying in the face of all the economic evidence that was rolled out by market analysts, in the face of lot of media criticism that the surplus wouldn't get there, you kept saying as late as last week that you would.
WONG: And the data that has been released in the October monthly financial statements show a downgrade even worse than we anticipated in the mid-year review where, as you might recall, we also were more conservative than previously in our estimates. And you reference what people have been saying today and it is the case that we've had quite a diverse group from the Business Council to market economists to ACOSS come out and welcome or recognise the merit of the Government's decision today.
Now, I'm not suggesting... I'm not suggesting, Chris I mean, the questions you asked about the politics of this, you should be asking them and I understand that's the way some people approach this. Our job as the Government to is make the decisions based on the best advice, the best data that we think are best to secure Australian jobs into the future and that's what we're doing.
UHLMANN: You say this is the right economic thing to do, but that's what the argument was against you last time. People were saying to you that this was a political surplus, that you were doing this for political reasons, that you set this up two years ago in order to reach that surplus in an election year. It was always about politics and not about economics, wasn't it?
WONG: Well, I don't agree. I don't agree and I've just laid out for you what has changed in terms of what has happened to revenue. I mean, we are in a rather unusual set of circumstances where we have a continuing high dollar at the same time as we have falling commodity prices and a very sharp decline in the terms of trade. Now both of those things are interacting and both of those things are playing into the economic data. They're certainly having an effect on profitability and therefore our revenue and they're having an effect on nominal GDP and you see that in the figures ...
UHLMANN: Certainly.
WONG: ... and that certainly wasn't what was being project a couple of years ago.
UHLMANN: And those things that you mentioned have all been evident for some time now. When Joel Fitzgibbon raised this last week, someone from your own party, the Prime Minister said she didn't jump at figments of the imagination but dealt with facts. Isn't it a fact that last week when the Prime Minister said that, she knew that Joel Fitzgibbon was right?
WONG: The facts are that we are dealing with the facts, and the facts are the monthly financial statements that show the year to date figures in October which show $3.9 billion write down in revenue in the months of the financial year to date, which is substantially worse than we anticipated in the mid-year review. The Government has to deal with these facts and we have to deal with these economic circumstances and we'll always seek to make the right economic decisions. I mean, I think it's interesting we've seen some commentary from the Opposition, the other side I want to make it very clear: we are not loosening the purse strings as a result of what has been said today. We are not loosening the purse strings. What we are doing is saying on the revenue side of the budget is that we don't believe it's sensible for us to continue to cut to a hole in revenue if that's bad for jobs and growth.
UHLMANN: But on that argument, minister, the Treasurer said today that he was concerned that to continue to cut in the face of this would risk jobs. You're facing a $45 billion turnaround in the space of one year. Why aren't the economic settings, the fiscal settings that you've got now wrong for the environment? Surely by the argument that you're making today, you do have to loosen the purse strings.
WONG: Well look, there's a few hypotheticals I think in that. I think the Treasurer made the very important point today is that looking at the revenue side of the budget, what we're saying is we're going to allow the automatic stabilisers on that side of the budget to work. We are not going to continue to cut to offset a hole in revenue where we don't think that's the right thing to do for the economy. And I think that's the sensible economic decision.
UHLMANN: But haven't you already endangered jobs?
WONG: I accept, Chris, that it's... there will be people who criticise this for politics, but what we've got to do as the Government is do what's right for jobs.
UHLMANN: But you've done what's right for politics all the way along. This is entirely what this was intended to ...
WONG: I don't agree with you. No, I don't agree with you.
UHLMANN: How is it that people can't be... Minister, how is it that people can't be cynical about this and again about the timing, that five days before Christmas you announce this when you have made this pledge over not the course of the last year but over the course of the last several years.
WONG: Well, Chris, let's not get... there's no conspiracy here. These are the October monthly statements. They are always or almost always released in December. I released them today and as a consequence of their public release we are being upfront with the Australian people about our judgment as to what this means. Now, I understand that you want to be critical from a political perspective. I think in terms of the economic judgement of the Government, as I've said, if you look at the diverse range of response to this, I think there are many respected commentators and economists who recognise the merit in the Government's decision.
UHLMANN: Penny Wong, we'll have to leave it there. Thank you.
WONG: Good to speak with you.
ENDS