ABC News Radio with Marius Benson - 12/05/2011

12 May 2011

BENSON: Penny Wong, you are curbing middle class welfare as a result of this budget. The Opposition says youre engaged in class warfare?
WONG: Then the Opposition should explain a couple of things, why they voted previously for these measures and also what theyre going to do to make sure they dont blow the surplus. If Mr Abbott wants to knock off savings measures that the Government has put in place to ensure we come back to surplus, so that we dont put upward pressure on inflation because we know what that means, the cost of living for families, then he has to put forward his own savings options tonight.
BENSON: Well I suppose thats Tony Abbotts task tonight. But when people look at the budget that was brought down on Tuesday there were curbs placed on welfare payments, a ceiling placed on a threshold of $150,000. But Julia Gillard yesterday said that family payments will still increase under this budget, all fortnightly rates will still increase under Family Tax Benefits A and B. But it is the case that if youre on a $150,000 as a household, you will be worse off in terms of welfare payments?
WONG: We are strong supporters of the family payment system and the Prime Minister is right. Even in what is an austere budget we have ensured that we made the space, for example, to extend higher payments for parents with teenagers who are studying. And that announcement was made and funded.
Weve continued the indexation of peoples fortnightly payments. But what we have done for a period of time is to freeze the upper income limits so as families earn more, they move out of the eligibility. Now that very small proportion of families will be affected by this, and it is for a period of time because we do need to bring the budget back to surplus and we do need to ensure that our family payments system is sustainable. Not just for the next four years, but the next 40 years.
BENSON: A small proportion of families. Your estimate is 31,000 families will lose the Family Tax Benefit A in the first year of this freeze?
WONG: Thats correct. As a result of their incomes rising. When we have to make the sorts of difficult decisions this Labor Government had to make, we wanted to look very clearly at what was the fairest way to find the savings that were needed to bring the budget back to surplus so we dont compound cost of living pressures for all families.
BENSON: So thats 31,000 affected in the first year. Is the estimate of 70,000 over the two years of the freeze accurate?
WONG: Those figures have been put out there. Theyre broadly accurate estimates but obviously it depends on what peoples incomes are because you dont lose any aspect of your payment unless your income rises.
BENSON: So would households on $150,000 or more, just looking narrowly at the economic issue, be entitled to think Id be better off under Tony Abbott?
WONG: Id say to people in that situation would you be better off under a man who clearly has no idea about economics. Who clearly does not want to do the hard yards to bring the budget back to surplus. The only hard yards he wants to do is the attacking of the Government.
BENSON: Another economic issue in the news today is the Governments move to raise the debt ceiling. You were entitled under legislation to borrow up to $200 billion. You introduced legislation to increase that to $250 billion.
WONG: This is an inevitable consequence of the dramatic hit government revenues has taken as a result of the natural disasters and the hangover of the GFC. Weve been upfront about this. Its something we have flagged as being a possibility and it is an inevitable consequence of the billions of dollars that have been wiped off government revenues which has had an impact on the bottom line and those numbers are in the budget.
BENSON: So the Government will be going further into debt?
WONG: The Government has made clear we have higher deficits over this year and next year which has a consequence for financing as a result of the hit on revenues weve had. And these are the same numbers Tony Abbott has to manage when he responds to the budget tonight. These are the numbers that Treasury and Finance have given the Government. Theyre numbers that obviously we would have preferred not to have received but theyre the realities of Government and theyre the realities of the economic times in the short term. A hit on revenues in the early years but a very large mining boom gathering pace thats going to make cost of living pressures more likely. Thats why we have to come back to surplus and make some of the difficult decisions weve made.
BENSON: Penny Wong, thank you very much.
WONG: Good to speak with you.
ENDS