ABC AM with Sonya Feldhoff - 09/11/2010

09 November 2010

JOURNALST: Minister for Finance, Penny Wong, joins me now. Thanks for your time Minister.
WONG: Good afternoon Sonya.
JOURNALST: How significant is the impact of the dollar on the forecast?
WONG: The dollar being at the level that its at has delivered a big hit to Government revenues. Some nearly $10 billion over the four years has been taken out of the budget revenue figures as a result of the higher dollar. But the good news is that despite that, we are still on track to come back to surplus. We are still on track, despite the fact that weve taken this $10 billion hit, to bring the budget back to surplus by 2012-13.
JOURNALST: If the dollar continues to rise, as some economists predict, does that mean those figures get blown out even further and that that surplus is under threat?
WONG: We will deliver the surplus by doing what weve been doing, which is to adhere to some very strict rules weve set ourselves. Rules which include making sure we do offset new spending that is, weve got to save a dollar to spend a dollar. Rules that ensure that we limit any what we call real growth in expenditure to 2 per cent. So thats a cap on how much new expenditure you can put in place. And were determined to bring the budget back to surplus as we committed to the Australian people.
JOURNALST: Those conditions sometimes are a little bit out of your control though. If the dollar does rise, doesnt that seem to throw out those figures again?
WONG: Well, Sonya, I think our determination is demonstrated by the Mid-Year Economic and Fiscal Outlook, or the update that weve just released. As I said, a $10 billion hit on revenue, a reduction of $10 billion in terms of how much money the Government gets from taxation and other receipts. But still we will be delivering a surplus. It is slightly smaller, but still a surplus, by 2012-13 as we committed to.
JOURNALST: Along with the Australian dollar many people watch interest rates and we know that they continue to rise. The Liberals Joe Hockey says this environment is one that will encourage those interest rates to rise even further. What do you say to that?
WONG: What Id say to people is this: we understand that cost of living pressures, including through rising interest rates, are hitting people. Thats why weve been determined to deliver not only tax cuts in the last term but cost of living assistance through our election commitments, like increases to the Education Tax Refund to help families with the costs of educating a child.
But what we have to do first is do first what were doing which is bring the budget back to surplus. Second, we have to also invest in the capacity of our economy. So we have to try and ensure that we build those parts of our economy, those aspects which enable us to produce more, so we can grow our economy sustainably.
And thats why the Government wants to continue investing in infrastructure. Thats why we have our mining tax regime, which will put money into regional infrastructure, which will deliver a tax cut to companies. This is all about building a stronger, broader, more competitive economy.
JOURNALIST: Another claim by the Opposition is that many of the budget measures arent funded and that this is highlighted in this. Whats your response to that?
WONG: Its a pity that Joe continues not to read his documents carefully. We saw this in the election campaign where the election costings of the Opposition simply didnt add up and wouldve delivered a $10.6 billion black hole to the budget.
Weve made very clear we have provisioned for our election commitments. The document we released today reflects that. Weve outlined the election commitments which will have a start date in this financial year. And as the Treasurer made clear, we have also provisioned for the remainder of our election commitments.
JOURNALIST: Minister, thank you for your time today.
WONG: Good to speak with you Sonya.