CURTIS: Penny Wong, welcome to News 24.
WONG: Good to be with you again.
CURTIS: The Final Budget Outcome showed the underlying deficit smaller than forecast, but revenues falling because the economy is slowing. Thats quite a mixed picture isnt it? Your starting point for next years budget is lower, but you face the task of having less revenue to deal with.
WONG: Its certainly a challenging environment. And the broader context to this of course is the story of revenue downgrades since the global financial crisis. We know that we faced about $130 billion of revenue over a number of years has been written down, that is received less revenue, as a result of the global financial crisis.
And even in this year, the Final Budget Outcome that weve just handed down, we see about $40 billion less revenue than we thought we would have received a few years ago as a result of what happened to the economy. It is also true that weve seen even, since the budget, less revenue, some $2 billion, and that just demonstrates the challenging environment were in.
Having said that, the Government has a very clear fiscal strategy. Weve held to that. Thats what the Final Budget Outcome today demonstrates, as did the budget earlier this year.
CURTIS: The Opposition has been saying for quite some time that Labor will never deliver a budget surplus. How confident are you that you will hit the mark that you have set for yourselves?
WONG: What Id say to the Opposition is that Joe Hockey and Andrew Robb have never got their numbers right. Since this economic team has been in their jobs inside the Coalition, they have never got their numbers right. They had an $11 billion black hole in their election costings. That has blown out, on Andrew Robbs own admission, to $70 billion. So lets just be clear about who has credibility on this front.
We have a very clear, credible fiscal strategy. Were holding to that. Were allowing, as revenues recover, we are allowing that to flow through to the bottom line. We are restraining expenditure, and we will continue to do that.
CURTIS: But you also had a very slim forecast for a budget surplus in 2012-13. Youve now got the case where youve got slowing revenues coming in, and an economy that is also slowing. That makes it both a much tougher target to hit, and also raises some questions about whether you should hit it anyway at a time when the economy is slowing.
WONG: On the second point, as Ive said on a number of occasions, I think the sort of volatility were seeing on global markets demonstrates the importance of a clear and credible fiscal strategy. Thats why the Government is adhering to what is a very important, credible, clear fiscal strategy. But obviously, it does make it harder. There is no doubt that whilst we face the volatility on global markets from a position of relative strength, with very strong fundamentals, obviously it does make it harder, and we have seen today an outcome where we have lower revenues than we expected as at the time of the budget.
CURTIS: Where is the softness in revenue, and whats your feeling for whether that will be gathering pace over the next few months?
WONG: Im not going to make predictions about where revenues will go. What I would say is this, well continue to make the decisions that we have to make to ensure we adhere to our fiscal strategy. Thats what weve done in past budgets and thats what well continue to do.
CURTIS: You said in the press conference this morning that cash payments fell in real terms from taking the hard decisions. Spending was down, but wasnt it from underspending in areas, not spending as much as you thought, rather than the hard graft of cutting?
WONG: Theyre separate things arent they? There was spending restraint in this last budget, as is demonstrated by the fact that we took $22 billion worth of savings measures. Thats a very significant set of savings measures, on top of the $83 odd billion in previous budgets. But there was also an underspend, and both of those things have contributed to a reduction in expenditure. But if youre talking about spending restraint, lets remember, under our budget projections, spending continues to fall as a proportion of the economy. And that is what spending restraint is about.
CURTIS: But some of those underspends in the financial year that this report is about will be put off into the next financial year, wont it. That will make the task of coming back to surplus harder still?
WONG: What Id say to you is that as a Finance Minister I know that the task of finding savings is always ongoing, it is never finished. You always have to deal with new spending pressures, and you always have to make sure you prioritise expenditure to the things that are needed most and that are most important in the economy. And thats how we will approach future decisions.
CURTIS: Next week, youll be at the Tax Forum. But the Tax Forum wont be making any decisions about what the Government should do next. It wont be setting the Governments priorities. And its jumping off point is the Henry Tax Review, which is less than a year old and not fully responded to. What exactly is the point of the Forum?
WONG: I think its very important to continue to ensure we have the discussion about the priorities for tax reform. That we have the discussion about the implementation of different aspects of the Henry Review. It is the case that the Government has implemented some 32 of the recommendations. But we also have an environment at the moment which does require all of us Government, business leaders and community leaders to think through what are the reforms that we say are a priority now. Given whats happening in the world, given whats happening in our economy.
A very big change in our economy is underway. This is an important conversation, I think its one that should be had. And its also one that needs to recognise the importance of not just the budget surplus, but the ongoing budget position in the years ahead.
CURTIS: And finally Penny Wong, the Financial Review does a yearly list of what it calls its Power Index. The man dubbed the Finance Minister of the Year by a European magazine, Wayne Swan, doesnt make it into the Fin Reviews either the top ten covert or overt power lists. Is he more powerful abroad than he is at home?
WONG: Hes the Treasurer of the country, and hes also had a very significant influence internationally, advocating for things which are good for the global economy which are also good for Australia. And the Treasurer who is presiding over the fastest fiscal consolidation since the 1960s. So hes doing an outstanding job.
CURTIS: Penny Wong, thank you very much for your time.
WONG: Good to speak with you.
ENDS