JOURNALIST: Penny Wong, welcome to News 24.
WONG: Good to be with you.
JOURNALIST: The Prime Minister has said that with the private sector charging forward, its time to take the hard decisions to pull back on spending. Is the aim to leave some room for the economy to grow in the medium term to long term without rising inflation and that paying to cut back on spending now?
WONG: Look, you have to cut back on spending now because you want to bring the budget back to surplus. You dont want to spend beyond your means and you have to be conscious of inflation.
So there are very strong economic reasons to bring the budget back to surplus and the Prime Minister went through those last night. And she also made this point: that if you are serious about making sure you can continue to fund in the future the things that we want, you have to be disciplined now. You cant put off hard decisions to another day when they might even become harder.
JOURNALIST: Is there a problem though do you have two competing problems though with consumers still not spending but saving, and the hit to revenue from the floods, the cyclone and the Japanese earthquake higher than expected? That in the short term growth will be slower but in the pick up from the recovery in both countries will drive growth faster in the longer term?
WONG: We are putting together a budget in difficult circumstances and there is no doubt that other circumstances have made it even more difficult. You mentioned Japan we know that is going to affect Australias export income. And thats on top of, of course, the impact on our growth from the floods and the cyclone which obviously disrupt economic activity for a period. Then theres obviously rebuilding costs as well. But we have to put a budget together not just for the short term but also the medium and long term as well.
And as you referenced in your question, we know from what the RBA is telling us, we know from the investment figures, that we are looking at a very strong outlook over the years to come. We have to prepare for that now.
And the way we best prepare for that now is to bring the budget back to surplus, to have discipline in our spending and to take the tough decisions that are needed.
JOURNALIST: With the cost of the disasters in Australia reported to come close to about $8 billion, combined with lower revenue from the earthquake, does that make the surplus harder to achieve because youre spending more and getting less? And does that also make the cap on spending harder to achieve?
WONG: As I said, we are putting together a budget in difficult circumstances and it has got more difficult. It is true that some of the things youve mentioned the floods, the need to rebuild, the impact on growth those things do make it more difficult.
But you cant put off these hard decisions particularly when we know those hard decisions are the right thing to do for the Australian community. This is a budget where we have to focus on where we want to be in a few years time and in 10 years time. We have to think about whats going to happen to our economy and we need to make tough decisions now so that we are in a good place as we continue to grow in the years ahead.
JOURNALIST: Are you getting firm estimates now of what the disaster costs are and what the hit to revenue and growth will be?
WONG: We have made public some of the estimates of those and obviously all of those figures will be outlined in the budget. Weve said, for example, that we anticipate the impact on exports from the disaster in Japan to be in the order of a couple of billion dollars around a quarter per cent of GDP this year in terms of growth. We do anticipate that coming back, and the same with the floods. We know that there will be a shorter term impact on growth in the current financial year but we know also that the fundamentals of the economy are strong, the outlook is very strong. And we have to prepare for that.
JOURNALIST: You really do have to make sure you hit your surplus target with this budget and the next one or else thats a big political problem for you, isnt it?
WONG: We have made a commitment about returning to surplus. The commitment is based on very sound economic reasoning; that when youve got an economy thats growing, you should come back to surplus.
I mean, lets remember how we got here. We went into deficit as a Government in order to support jobs through the Global Financial Crisis. Now that was the right thing to do. But now that we have growth returning to trend, we have an economy thats growing, we have unemployment at a very low rate by historical and world standards, the right thing to do is for the Government to return to surplus. And thats what we are focused on.
JOURNALIST: Youll also be looking at productivity, skills and workforce participation. Tony Abbott has announced some tough measures for welfare. The Prime Minister criticised those as being recycled. But she didnt criticise the content. Is that because youre looking at similar things?
WONG: We certainly criticised them for recycled and I criticised them for again not being costed. I mean this is extraordinary, isnt it? Weve got Mr Abbott and also Mr Robb, the shadow finance minister, lecturing everybody about fiscal responsibility but not applying it to themselves. Putting out policies which arent costed, which dont have costings associated with it.
The policy you just referred to Lyndal, Tony Abbott announced during the campaign. Some reports are that it is costed at $11 billion and he was going to pay for it through higher taxes and through lifting the age of eligibility for the age pension. He hasnt said whether or not hes going to do that on this occasion. He either has to do those sorts of things or the budget will take the impact.
JOURNALIST: Doesnt he though make the point just to help move people from welfare to work, to help people get skills, to help businesses take them are expensive in the short term even though there are savings in the long term?
WONG: Well you generally dont get good policy cheaply, do you? You dont get good policy for just by hoping for it. Youve got to actually make hard decisions and youve got to prioritise expenditure.
As a matter of principle, making sure that you look at what the economy is going to need. Look at what Australian business is going to need. Making sure we have the skills to do the jobs we do which are there. Making sure we help unemployed Australians get the skills they need to enter the workforce. These are all things about which the Prime Minister has spoken.
JOURNALIST: The Prime Minister also attacked the Greens last night in her speech. Bob Browns accused her of using insulting and divisive language and says that the comments may come back to bite her. Is there a risk that if you paint the Greens as extreme and uncaring, the natural question that arises is why are you dealing with them?
WONG: I think we should be very clear about what the Prime Minister was saying. She was making a point that we are a party of government. That means we look at the aspirations of Australians in many walks of life. We are not a party that simply only looks to win a particular seat or wins some seats in the Senate. Were a party of government. Thats a very different job and brings with it a very different set of values to a party like the Greens political party.
The Prime Minister also made I think an important point, which is we see an imperative around running a sound economy. And that is a much more central part of Labor values as a party of government than a minority party might have.
JOURNALIST: But Bob Brown has pointed out that he helped you deliver the stimulus spending which he says helped prop up the economy and helped keep peoples jobs. If you keep attacking him, do you risk losing the goodwill that helped get you those numbers in the Parliament?
WONG: Well I think politics is robust. Its full of robust debate. There are many things on which we may agree with other parties in the Parliament, other members of the Parliament. And there are things where we simply dont agree. And some of those things are on the public record and we wont walk away from the things we think are right from Australia just because someone in the Parliament may not agree with them.
JOURNALIST: Penny Wong, thank you very much for your time.
WONG:Good to be with you.
ENDS