TONY EASTLEY: The high value of the Australian dollar is hitting farmers and exporters but it's also a blow to the Government. The Federal Treasurer Wayne Swan is warning that the Government won't collect as much as it had hoped for from its new Mining Resource Rent Tax. That's not the only impact. The soaring dollar will affect the Government's entire budget and possibly its promise to return it to surplus by 2012-13. The Finance Minister Penny Wong discussed the implications with AM's Sabra Lane.
PENNY WONG: Well obviously it's a matter of logic when you have a higher dollar and the dollar is significantly higher than it was when the forecasts were originally done.
That impacts on a range of things. It impacts on some of our industries very significantly, industries like tourism. But it also has an impact on Government revenue. That is a matter of logic. A higher dollar can mean lower profits for certain companies that are exporting and that can translate to lower revenue to Government.
SABRA LANE: So are we talking millions or billions?
WONG: Look as I said before, if the dollar is at parity obviously you are going to get a different set of figures that flow from that compared to when the dollar was at 85 cents. So this is a matter of logic.
LANE: And presumably that will mean tax receipts are lower across the board affecting everything in the Budget. How much of a hole should we expect will be blown in the Budget?
WONG: Sabra we remain committed to our very strict fiscal rules - far stricter than were applied under the Howard and Costello government in its last five years. And we remain committed to those rules and we'd anticipate that we will stay on track.
My point simply is that when you've got a dollar that is significantly higher than it was when forecasts were last done you'd anticipate that's going to have an effect on revenue.
LANE: The Government has promised to return the budget to surplus in 2012-13. Is that at risk?
WONG: We remain determined to deliver that surplus.
LANE: As a result you've said that revenues will be down. You are the one who has to find savings. You're having to find greater savings and slashing spending in other areas.
WONG: As I said we remain determined to bring the Budget back to surplus. We do have very strict rules, rules that limit the growth in real expenditure. That does require us to take a very disciplined approach to spending.
We also have made very clear we will offset what we spend, new spending. So we will make sure we save for what we deliver in new spending. These are very strict fiscal rules and as a result we remain committed to bringing the budget back to surplus.
LANE: Why did the Treasurer reveal this news while he was overseas? Is this part of a softening up of the public?
WONG: I think this is simply the Government being very clear that when you've got a dollar at the levels that we have currently you're going to see a whole range of different impacts.
Some of those are being felt in our industries - as I said tourism, manufacturing, those industries where a high dollar really is a significant challenge. But equally you are going to get, you are going to see an impact on government revenue.
LANE: On the banks Joe Hockey is going to introduce a private members bill in the next sitting of Parliament to give the ACCC powers to investigate the banks for price collusion over price signalling. Will the Government support this?
WONG: I think Joe had a press conference where he has talked about this. He has issued a pretty short press release picking up on something that Wayne Swan talked about some time ago and Graeme Samuel talked about some time ago.
And he wasn't able to answer even the most simple question about what constitutes collusion or what constitutes penalty because he doesn't have a bill yet.
We will do what Wayne Swan said we'll do. We will look at this area carefully, methodically. We will build on the reforms we have already put in place to enhance competition. And we will ensure we work with regulators and listen to advice in order to get the right outcome for the Australian people.
LANE: Why give the ACCC the power to investigate collusion? It's had this power for years to investigate the oil companies and it's never had a successful prosecution.
WONG: The history of various powers, the history of case law, these are the sorts of complex issues you do need to look at, consider carefully and get right. Unfortunately it doesn't appear that Mr Hockey has done that work.
The Government, as the Treasurer said, will do and is doing that work because we understand if you are going to change this sort of legislation, if you are going to change the framework within which banks operate you want to make sure you improve the outcomes for Australians.
EASTLEY: The Finance Minister Penny Wong speaking to Sabra Lane.
ENDS