MOORE: Senator, thank you very much for joining us.
WONG: Good to be with you
MOORE: Well we were warned on a daily basis that this budget was going to be tough. As we just heard - I know that you couldn't actually hear Warren Hogan, but you heard before him Saul Eslake; there are many who say that it's not a tough budget at all and it won't take pressure off interest rates.
WONG: Well, there are $22 billion worth of tough decisions in this budget.
MOORE: Offset by $19 billion in new spending.
WONG: Actually, the net save spend position is a net save of about $5 billion. That's the actual position.
MOORE: Over four years?
WONG: Over the forward estimates period. But I just make this point: we're also delivering spending restraint. I mean we, over this budget, will deliver on average real spending growth of about one per cent per year. You know the last time that was achieved? In the 1980s. Never achieved by Peter Costello. His last budgets we saw 3.6, 3.7 per cent real growth. This government's delivering real spending restraint, but we're also investing in jobs - creating jobs, training people for jobs and getting more people into jobs.
MOORE: What about, though, issues like means testing the childcare rebate, means testing private health insurance rebate, even things that were expected to be chopped like the school chaplaincy program, they've actually been extended, the cuts that you've got in Defence by the deferral of programs are not actually cuts that you've deliberately made; they're really more by circumstance, unintended project delays, if you like. Why so timid?
WONG: Well, I don't accept the construction. In fact some of the things you've just put to me are wrong. In Defence, we've actually said, the Minister has said 1000 less people than would otherwise have been employed -
MOORE: But it's $1.2 billion from project delays.
WONG: It's actually over $2 billion worth of savings and deferrals, and yes, we accept that some of that is deferrals, but there's also substantial savings. We're getting rid of, we're abolishing, phasing out the dependent spouse tax offset. That's been in the tax system since 1936 and the reason we're doing it - there's a sound policy reason, which is we want to get more people into work. You talked about the childcare rebate. This is a budget that's about participation, and that's what we want to make sure we're focused on: that there is a good policy reason behind the saves.
MOORE: To what extent though are you hamstrung by the politics of the day? Warren Hogan was just saying difficult political environment, hard to expect that you would tackle some of these issues. As we heard earlier as well from Tom Iggulden, it might be your first budget after the election, but you do lack, according to the polls, political capital.
WONG: Well, look, we have a very sound message and a very sound rationale for the savings measures we're going to put forward to the Parliament. And the real test, actually, of the politics is this: what will the Opposition do? It's very interesting. The shadow treasurer tonight, after setting up a test for his leader that they're going to come back to surplus a year early, has already opposed two saves - the fringe benefits tax change on cars and the tightening of the test for family tax benefits.
Now, the test for Mr Hockey as the alternative treasurer: if you're going to oppose a save, well, put another one up, because that's what it takes to bring the budget back to surplus. We've got our plans out there.
MOORE: We'll get to the Opposition in a minute, but I guess the other point is that one of the biggest cuts in this budget is in fact under the description "other". That's $1 billion this year. It rises to $1.6 billion the year after. $2.6 by 2014-2015. Every year, it's by far the biggest single saving outside of the flood levy. What's "other"?
WONG: Well, "other" includes a whole range of different savings measures across government. I mean, ...
MOORE: Nothing big enough to pull out?
WONG: Well, hang on. There are substantial savings measures. You and I have discussed some of them. Fringe benefits tax, dependent spouse tax offset, the Defence savings and the Family Tax Benefit saves, which we acknowledge will be difficult, but it's important to bring the budget back to surplus.
But in addition there are a whole range of other saves, obviously smaller in amount, but they do add up, that we've had the discipline to go through the federal budget to find.
MOORE: Talking about the surplus, you're on track for a surplus in 2012-13, but of course until tonight, the forecast for the deficit for this year was $41 billion. It's now $49 billion. For next year $12 billion. It's now $22 billion. You're aiming for a surplus of $3.5 billion, but as we've seen, there's a very big margin of error, isn't there?
WONG: Let's have a look at what's happened to revenue in these early years. We've had a very substantial write-down of revenue. On top of what occurred as a result of the GFC we've also seen revenue write-downs since the mid-year review of some $16-odd billion, and that accounts for all of the increase in the deficit in the 2010-11 year and about half of the increase in the 2011-12 year. Now those are very substantial revenue write-downs, but we expect, Treasury expects, just as the RBA expects, the economy, despite that sluggish start, to be straining at the seams in the year ahead. And that's why we've got to - in the years ahead. And that's why we've got to come back to surplus and get more people into work.
MOORE: Big reliance though, isn't it, on a big surge in growth and a big surge in tax revenues?
WONG: I don't accept that, Ali.
MOORE: You don't?
WONG: No, because if that were the case -
MOORE: $25 billion turnaround in 12 months.
WONG: Well, which is delivered through spending restraint. As I said, everyone keeps forgetting about this: 1 per cent on average over the budget period. The last time that sort of restraint was delivered is the 1980s.
MOORE: But that's not going to get you a $25 billion turnaround in 12 months.
WONG: No - well, the Budget figures laid out - and we've laid out our plans and we look forward to the Opposition explaining how they will get back to surplus - demonstrate how we do that.
MOORE: Just a final question: when you do finally have the details of the carbon tax and you put them into this budget and the budget projections, will they change anything? Will the carbon tax be revenue neutral?
WONG: Well, we broadly expect it to be budget neutral, and just as John Howard put it into a budget after he had the details of his GST, we'll make sure we put into our next update the full details of the final design of the carbon price.
MOORE: And "broadly" means how broadly for revenue neutral? Will it be revenue neutral or won't it be?
WONG: We have said broadly revenue neutral and certainly that's the approach we've been taking.
MOORE: Minister, many thanks for joining us.
WONG: Good to speak with you.
ENDS