CURTIS: Penny Wong, welcome to News 24.
WONG: Good to be here.
CURTIS: Senator, the Reserve Bank statement, it notes that there is potential for significant fiscal consolidation over the next couple of years. But its also pretty clear that it thinks inflation will go up. Are higher interest rates simply the price you have to pay for a stronger economy?
WONG: Obviously interest rates are a matter for the independent Reserve Bank but the Government is very conscious of inflationary pressures. Thats what happens when you get this sort of wave of investment in our economy and thats why our budget focuses both on ensuring we come back to surplus, get back in the black - which is about not compounding those risks - but also that we invest in more capacity. And thats what the workforce participation and skills aspects of the budget are about. Lets expand the capacity of the economy.
CURTIS: But that will take some time wont it to get people into those jobs and the ahead of that, theres the potential for extra pressure on wages as the mining industry sucks up more jobs. And other companies might find they have to pay their workers more simply to keep them. That will add to inflationary pressures which feed into interest rates wont it?
WONG: As I said, when youve got a wave of investment the size that Australia is experiencing, theres obviously going to be price pressures. Theres going to be the economy pushing up against capacity, and thats why weve got to do what were doing. Its why coming back to surplus is so important. And the Reserve Bank noted that. It noted that the fiscal consolidation thats going to be occurring.
Were delivering a very fast Budget turnaround. Were going, I think its 3.8 per cent of GDP over two years. That is a very fast turnaround and its the right thing to do. To not compound these price pressures.
CURTIS: Is there little else that the Government can do if you bring your budget back to surplus. Theres really nothing else you can do to try and mitigate any pressure coming from wage rises to keep households saving?
WONG: You can do what the Government is doing which is to try and expand the capacity of the economy by increasing the skills of your labour force so they have the relevant skills for employers and getting more people into work. You can do that.
But the most important thing that we can do and that the parliament can do is bring the budget back to surplus. And this is where other parties in the Parliament, this is where the Opposition really have some responsibility as well. Weve put forward a Budget that brings the budget back to surplus. Its now a matter for Mr Abbott and Mr Hockey to show that they will support that and if they dont support any of the Governments measures, to put forward their own savings. So far, they havent done so.
CURTIS: But the Opposition says it wants to see your legislation before it decides which way its going to vote. Isnt that a reasonable prospect?
WONG: That is yet another cop out from an Opposition whose record when it comes to the economy is extremely poor. Remember Mr Abbott, Mr Hockey, Mr Robb - $11 billion black hole in their election costings.
Mr Hockey last week, or the week before, boasting that he would bring the budget to surplus earlier. Since then, not a single savings measure. Not a single savings measure and apparently, not happy with a range of the Governments savings. Well if youre not happy with the Governments measures, youve got to put up your own. Either that, or youre going to wreck the surplus. It would be economically irresponsible for the Opposition to wreck the surplus, so its incumbent upon Mr Hockey tomorrow when he addresses the National Press Club, as the shadow Treasurer, to say how he would bring the budget back to surplus.
CURTIS: But isnt that an unrealistic ask from Opposition? Ive gone back through a few budget replies over the last few years. Kevin Rudd in 2007 outlined more spending than saving, Mark Latham in 2004 had no new funding details and promised a tax plan closer to that election. Kim Beazley in 1999 was critical of the budget. He made a pitch to middle Australia in 2006 with no spending cuts. And Simon Crean delivered a budget reply in 2003 that wasnt fully funded. Arent you asking of the Opposition more than you were prepared to deliver in Opposition?
WONG: Well I dont accept all of the examples youve just put to me because I can also recall being in Opposition and having to make sure any new spending was offset or that we could fund it.
The point is here; If Mr Abbott wants to back the Governments budget, so be it, thats good. Wed like him to. If he doesnt then its incumbent on him to show how else he would bring the budget back to surplus. I mean that is the key economic test for parties of government in this timeframe: how do you bring a budget back to surplus when the economy is experiencing the sort of price pressures to which youve referred. Weve shown how we want to do it. Tony Abbott should either back that or show how he would do it.
CURTIS: Before the budget was delivered, Julia Gillard told the caucus that it was an opportunity to broaden the Governments agenda. But were back talking about carbon tax and asylum seekers. Are you putting too much faith in a budget to deliver you the bounce you need?
WONG: We want to talk about all the things which are important to the countrys future. And I think the point the Prime Minister is making is a very sound point, which is the countrys future is about many things and one of the things that is central to our future is the economy. And weve put forward our plans to ensure this economy continues to grow strongly and sustainably and that we bring the budget back to surplus. Thats a very important issue for now and for the future.
CURTIS: One of the plans we havent seen yet is the carbon tax, is what the carbon price will be and how is it going to rise. Is the political problem for you that unlike the GST, which had a fixed rate which hasnt changed, the carbon price will increase over time and Tony Abbott can warn that whatever carbon price is set come July, that will go up.
WONG: Isnt the political problem here that Tony Abbott just wants to be relentlessly negative when it comes to action on climate change? And that makes a tough reform even tougher. We know that. Its very easy for Tony Abbott to run around the country saying no, stirring up fear, and making all sorts of accusations which are false. But we know this is the right thing to do for the economy.
If we think four, ten years from now, Im sure Australians would want an economy which produces less pollution. Thats why we want to price carbon and were going to go through this process methodically and carefully. Of course we know that Tony Abbott will continue his campaign. But were going to continue to advocate for this reform and well put out the details when they have been finalised as is appropriate.
CURTIS: Youre putting a lot of store the Governments putting a lot of store in its household compensation measures to get people on board. As the carbon price rises should the household compensation rise as well?
WONG: These are all details that Greg is working on together with other Ministers and also through the Multi Party Committee. And these are all details which will be addressed in due course. But obviously the Governments made clear the priority we attach to assisting households.
CURTIS: Penny Wong, thank you very much for your time.
WONG: Good to speak with you.
ENDS