JOURNALIST: Thanks for joining us today.
WONG: Good to be with you.
JOURNALIST: The Government seems to be having a difficult time at the moment selling its message, staying on message, having everyone singing the same message. Are you surprised by a sense of crisis at the moment?
WONG: Look, politics is always tough. But we are very focused on the things we have to do for the future of the country. They include making sure this Budget responds to the challenges that the nation faces the very strong mining boom, which is a good thing. But we have to use the benefits of that boom wisely. So we are very focused on things like that, things like the carbon price. These are reforms which are about the future good of the community and the economy.
JOURNALIST: The Governments developing a pattern at the moment of increasing taxes and at the same time spending more money. Taxes seem to be introduced ad hoc. Weve had the flood levy, the climate change tax. We might get away with it now with the mining boom that you talk about and a strong economy, but how sustainable is all this into the future?
WONG: Well Sally, I dont agree with the way in which youve asked that question and this is why. First, lets talk about the floods. These were the most costly natural disasters Australia has seen. We funded the cost of the rebuild with a package two-thirds of which was funded through savings measures. That is, programs we cut; expenditure out of the Commonwealth we cut. And about a third was funded through a levy which was focused on higher income earners. So that is why we took that approach.
But look, we are very focused on where we are today, but also where we want to be in a number of years time. We have got a very strong economy, but its not strong everywhere. We saw yesterday very good unemployment figures, 4.9 per cent a very low unemployment rate. We know that over 750,000 jobs have been created since we came to government. But we also know that we have a patchwork economy. We are focused on dealing with those challenges.
JOURNALIST: Youve talked about this patchwork economy where some sectors are stronger than others, consumers are cautious and the record high dollar. But you know, policy is also sometimes a bit of a patchwork as well. I mean the flood levy, for instance, was introduced and got a lot of community support at a time of a crisis and so on. And yet, you have the budget surplus and an absolute insistence on keeping that budget in surplus.
It seems to me that that target is artificial. Its imposed by the Government at a particular time but doesnt take into account major events at home and abroad like the floods in Brisbane, like whats happening with the Australian dollar overseas which change the situation. Why does the Government remain so inflexible on the budget surplus?
WONG: Because a surplus is the responsible thing to do.
JOURNALIST: Why?
WONG: Because when youve got an economy that whatever softness we see now for the reasons you outlined like the high dollar and the cautious consumer. When we have an economy which has an unemployment rate of 4.9 per cent, and we know we are going to see a very substantial continued increase in investment in our economy.
Lets just take these figures. Mining sector investment last year was around $35 billion. In the current year its around $55 billion. The current estimates next year are for $75 billion. Now that puts a lot of additional income into the Australian economy. Now when we know that the economy is likely to continue to be growing, and we know theres going to be that kind of investment, it is prudent for the Government to pull back. So the Governments not chasing the same products, goods and services; the same things that the private sector is chasing. Because we know what happens then. That can lead to increases in prices and thats not good for Australian families.
JOURNALIST: I think theres a lot of expert opinion we know about. But also people who keep an eye on these things that wonder and worry whether its just a way to avoid that awful Opposition cry in an election campaign of you said youd keep the budget in surplus.
WONG: This is about responsible economic management. Its also about trying to take a long term perspective. It is always easy to put off hard decisions. Its always easy to say, oh, we wont bring the budget back to surplus because its too hard.
The question is what is the right thing to do? The right thing to do is to bring the budget back to surplus for the reasons I outlined. That is, where you have got a stronger economy, where youve got a private sector that is doing more, it is only sensible that the Government steps back. Its the flipside of what we had to do during the Global Financial Crisis when you had the private sector pulling back, you need to Government to step in. This is the other side of the equation.
But there is a long term issue here too. And that is, it is sensible to run surpluses. It is a way of ensuring that if things dont go as we hoped, dont go according to plan in the years down the track, that the Government has the capacity to do what we did during the Global Financial Crisis which was to step in to support Australian jobs.
JOURNALIST: Penny Wong, youre the Minister for Finance and Deregulation. But of course, youre the former Minister for Climate Change. I want to ask you about the carbon tax. The Government we know is looking at different ways to compensate pensioners for the introduction of the carbon tax, which of course, sort of crosses over both of these portfolios of yours. There are several models that have been looked at about how to compensate pensioners specifically. Can you explain what youre looking at, what models and tell us which one you favour?
WONG: First, its important to understand how a carbon price works. Its a price or a tax paid by large polluting companies, so those say thousand or so companies in Australia who put a lot of pollution into the atmosphere. Then obviously because they can pass some of those price impacts on, you use the money that they have had to pay through this to assist families, to assist Australians, in dealing with those price impacts. That way you get an incentive for businesses to invest in cleaner energy and cleaner ways of doing things.
I mean, put very simply, as long as polluting is free, then well continue to do a lot of it. If you start to charge for pollution, then you give business an incentive to do things cleaner.
JOURNALIST: And we know that pensioners are particularly vulnerable of course because theyll be paying this tax but not necessarily getting compensated like others.
WONG: And its true when you see any price impact, people on fixed incomes obviously have less capacity to deal with it. So what weve said about assistance is that we will spend every cent of the revenue we obtain through this by giving back through assistance to Australians or by investing in cleaner energy and helping the economy transition to a clean energy future.
When it comes to pensioners or other fixed incomes, obviously we are a Labor Government. We gave the largest dollar increase in the pension that any government has given. We obviously understand the pressures that pensioners are under. And what weve said is that we will provide assistance, it will be fair and we will use every cent raised on that and other investments. Now the detail of it obviously hasnt been finalised as yet, but people can be assured these issues are very front of mind for the Government.
JOURNALIST: So youre not prepared to say whether you favour an increase in the annual top up amount or whether youd prefer an increase in the pension calculated as a percentage of average wages?
WONG: Sally, there are lots of different ways in which you can provide assistance and were working our way through those decisions. We want to come up with a package of assistance thats fair and sensible.
JOURNALIST: Will you rule out any raising of the age of the pension?
WONG: The Government made decisions about this previously, as you would know, and I think made clear at the time the timeline around those.
JOURNALIST: Alright, so that hasnt changed. Was there a debate? Is there a debate at the moment in Cabinet about this as you try and sort out the detail?
WONG: (laughs) Sally, you know I dont talk about what happens in Cabinet. But Id say to you the decisions on that were made previously and we put in place a timeline and thats all on the public record.
JOURNALIST: You really wont talk about it Penny Wong? Its a pity because Kevin Rudds gone on the record this week about scrapping the ETS and I mean, I think people would be particularly interested in your version of events. Its almost impossible to believe that as the Climate Change Minister at the time that Kevin Rudd was Prime Minister that you couldve been in favour of him scrapping your policy.
WONG: One of the things I decided when I went into Parliament was to observe the disciplines of the caucus and the disciplines of what was then the Shadow Cabinet when I went into Shadow Cabinet. And I observe those disciplines as a Cabinet minister now. I dont talk about the sorts of decisions that we make in Cabinet.
Obviously, this has been a very long running debate in Australia. Its a pity that we are in the position we are when you consider that John Howard went to the 2007 election promising a price on carbon. And now we have an Opposition opposed to it and wanting a policy that will cost $30 billion or more. Or if you believe the papers today, I think a price tag of $100 billion was one of the reports today.
JOURNALIST: Well I think a lot of people would think that the entire managing of climate change on both sides of the government has been just one really big missed opportunity where the sort of goodwill has been spent and lost and theres a lot of catching up to do. Back to Kevin
WONG: Sally, can I just respond to that. I think it is a tough reform and if you look back at some of the things we were saying previously, weve always said this is a very tough reform. Because when youre pricing something thats previously been free, obviously there are people who wont like it and who will oppose it. I had hoped and I think many of us had hoped we could have had a bipartisan position on this. We had one. Mr Abbott then took over the leadership of the Liberal Party and he doesnt believe we should do this.
What Id say to people who are disappointed about where weve been is look at what the Government is doing now. Were in a tough fight around what is a very tough reform against very trenchant and strong opposition from Mr Abbott. But the Prime Minister is doing what she should do, which is to continue to argue strongly for a reform which is all about the countrys future.
JOURNALIST: Kevin Rudd caused a big stir this week with his appearance on Q&A for apologising about the climate change policy backdown and confirming what everyone suspected about rifts in the Cabinet at the time. I think a lot of people enjoyed his openness. Its getting more and more rare. I wonder if you you know, youve been on Q&A several times. Tell us a bit about what its like as a politician to be on a live TV show like that. Obviously theres always the pressure of having to represent your portfolio, your government. Whats it like?
WONG: Look its a good question. I mean, its a very different format, isnt it? People often say they might not like it, but they say I enjoyed Q and A, I enjoyed the fact we got to see a bit more of you and all of this.
I think one of the challenges of modern politics is as you know is a lot of interviews are very short, perhaps not this one, but many others are very short or you might get one sentence or half a sentence being put on the television. So thats all people hear about the policy issue, about the topic or from you. So I guess one of the benefits but also one of the challenges of a longer format like Q&A is that you get asked a lot of questions on many different topics and you probably get asked more personal questions than you might in many interviews and many media appearances.
But its an interesting show and I think it brings a different dimension to politicians and to a range of things in the public debate.
JOURNALIST: Does it frustrate you in the current sort of era of political culture of being open and honest on subjects that 50 years ago you certainly would have been able to have a more independent opinion on? Is it frustrating when you have to wake up every morning and spin a line that really you might feel at best half-hearted about?
WONG: (laughs) Look, I think that politicians do say much more about what they think than sometimes people give them credit for. But, you know, thats life.
My view, I suppose, if the question is about being a member of a political party rather than an independent or a commentator is that you make a choice when you go into Parliament to join a party and to support its views. And you put very strongly your views inside the room and you also might put your views elsewhere. But ultimately, you are in Parliament because people voted for the Australian Labor Party with your name on that ticket. You need to remember that thats why people voted for you.
JOURNALIST: The Defence Minister Stephen Smith has had an interesting week on this point of being very upfront about his feelings with the young woman at the centre of the Defence Force scandal. What did you think of that and his response on which hes copped some criticism?
WONG: Id say this, that I think what Stephens expressing is this. We would ask of our Defence forces the same sorts of behaviour towards women as we would expect in the workplace or perhaps that we would want for our sisters or ones daughter or a friend. And those are the sorts of community standards we do expect from everybody. Obviously Im not close to the issue, Ive only seen whats in the media. But I think from that youd have to say the standards that we would generally hope would apply to everyone in our everyday lives as well as in our personal lives werent observed.
JOURNALIST: Penny Wong, Minister for Finance and Deregulation, we appreciate you joining us today to answer some of these questions.
WONG: No worries, been good to talk to you.
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