SMYTH: Before coming to air earlier this afternoon, I was able to catch up with the Federal Finance Minister, Penny Wong, whose job it is to help try to find some of those savings.
WONG: Weve announced the savings to ensure that we run a fiscally responsible budget. But the reason we wanted to bring forward the floating price is for two reasons. One is, to ease the cost of living pressure on Australian families. It means that people will have a little bit off their electricity, a little bit off their gas bill than they otherwise would have. And the second thing is you want to reduce emissions at the lowest cost to the Australian economy and to Australian business and thats what this will do.
SMYTH: Given that the price of carbon is going to be coming down so much, why not adjust the Household Assistance Package to reflect that? Couldnt you simply argue that families dont need as much help now, or is that simply too risky with the election just weeks away?
WONG: There were two principles when we approached the savings task. The overriding principle was obviously that we had to find sufficient savings to offset how much it will cost the budget and weve done that; more than done that.
But the two things we did want to protect were the investment in renewable energy and, of course, household assistance. And the reason is very simple: we think pensioners and people on lower incomes, families on low and middle incomes, do deserve some certainty around the levels of assistance from the Government, and thats why weve retained them. And weve reduced the carbon price through moving to a floating price, which will obviously be of benefit to Australian households.
SMYTH: Given that the price of carbon is going to be significantly lower from July of next year, how effective will this really be in reducing carbon emissions? I saw one commentator say this was more about saving Labor at the election rather than saving the environment.
WONG: Well, I think it misunderstands the environmental outcome for an emissions trading scheme which, as you might recall, we went to the 2007 election arguing exactly for this policy, as did John Howard. What you do when you put an emissions trading scheme in place is to set a legal limit on the amount of pollution Australian firms can emit. Thats the environmental objective and the benefit of a floating price that the market sets is that youre harnessing the ingenuity and creativity of Australian business to reduce their pollution at the lowest cost to them and therefore to the Australian economy.
SMYTH: Some of the cost savings that have been earmarked today include environmental programs which the Greens leader Christine Milne suggests is a strange way to try and protect the environment. Whats your reaction to that?
WONG: I mean Christine Milne is the person who voted with Tony Abbott against a carbon price the first time round and I think, really, Australia has not been benefited by that very poor decision. Id make the point we have not touched investment into renewable energy. We remain committed to the Renewable Energy Target and we remain committed to a price of carbon set through an emissions trading scheme.
The reality is there have to be savings made. Unlike the Greens, we do believe in making sure you run a sound budget and thats why weve put out these savings measures today.
SMYTH: So are these things, the Clean Technology program; the Carbon Capture and Storage program, a waste of money?
WONG: What we are reflecting is two things. One is, when you have a lower carbon price you obviously have to assist industry less, because industry get the benefit of a carbon price thats significantly lower than anticipated. In terms of other savings, look, as the Finance Minister I know that nothings ever popular when you say you want to make a saving, but thats what you have to do. You want to make sure you run the budget well, and that gives the Reserve Bank room to move at a time where our economy is changing as we transition to beyond the mining boom.
SMYTH: My guest on Drive this afternoon is the Federal Finance Minister Penny Wong, in the wake of the Governments announcement today that Australia will be moving to a floating emissions trading scheme a year earlier than planned, and the impact that thats going to have on the budget. Minister, given that legislation needs to pass the Parliament for this change to take effect and the power that the Greens hold in the Senate how is this likely to play out over the next six months?
WONG: Theres a lot more advocacy out there in the Australian community that will have to occur. I think that the Greens really did the wrong thing by the environment when they voted with Tony Abbott against a carbon price a few years ago. I think this is a much more sensible policy, its in fact a policy that at one time Tony Abbott supported. I remember him a few years ago saying that if you want to tackle climate change you have to put in place an emissions trading scheme. Now he says things like, climate change is, and I use his words, absolute crap. The interesting thing about Tony is when he has to think for himself he often puts his foot in it. And he often tells people what hes actually thinking and hes clearly really a member of the flat earth society.
SMYTH: Speaking of the Opposition Leader, hes effectively mocked the Prime Ministers claim today that hes terminated the carbon tax, saying that Kevin Rudds really just brought forward changes already outlined by Julia Gillard. Saying hes the exaggerator, not the terminator. What do you make of that?
WONG: Tony Abbott talking about exaggeration is pretty amusing, isnt it? I mean, this is the bloke who told South Australians Whyalla would be wiped off the map. So, I think if anybody has brought exaggeration to Australian politics in these last few years, its been Tony Abbott with his extraordinary negativity and exaggerated claims about the impact of a price on carbon, which he used to support, on the Australian economy.
SMYTH: A couple of the big ticket items that youre targeting in terms of making these budget savings include changes to the fringe benefits tax on cars. Can you explain that to us and how many people are likely to be affected by it?
WONG: The first point Id make is people like tradespeople, others who are in their car for work as part of their job, day-in-day-out, are not affected by this. The people this does affect are people who salary sacrifice for motor vehicles and who use their car for work for less than the current statutory fraction, which is around 20 per cent of private use. So people who use their cars under those sorts of arrangements where, really, the majority of the use is for private use not business use, will obviously not be able to claim the tax benefit that theyre currently claiming.
SMYTH: And thats about 300,000 people, isnt it?
WONG: Its about 320,000 people, we anticipate, wont take up salary packaging to use a motor vehicle as a result of this policy. Really, its about making sure that the tax concession is better targeted at people to use their vehicles for work.
SMYTH: What can you tell us about the jobs youre targeting within the senior public service?
WONG: There are two savings measures associated with the public service as part of this announcement. One is were paying a bit less on software than we thought wed have to, because weve moved to a whole-of-government procurement model for computer software, so thats a good thing. The second is weve had a lot of growth in the Senior Executive Service and the Executive Levels of the public service. Were targeting a reduction in the expenditure in those areas and we anticipate that departments will be able to meet that. It is, for example, less than the rate of natural attrition in those sectors, which have had a very large growth over the last few years, so thats another efficiency.
SMYTH: Tony Abbott for a long time has been making a great deal of mileage out of the carbon tax. Many have seen this move by the Prime Minister today as effectively neutralising that debate. Whens the election going to be?
WONG: Well, that is ultimately a decision for the Prime Minister. I mean, this is no different to any other parliamentary term. Ultimately the Prime Minister has the constitutional capacity to visit the Governor-General and advise that an election should be called, and thats obviously the Prime Ministers prerogative.
SMYTH: Is it worth putting $5 on 31 August?
WONG: I dont bet much these days, so I dont know that I can give you advice on that.
SMYTH: Penny Wong, thanks for joining us on Drive.
ENDS