BEVAN: Welcome to Weekend Breakfast, Minister.
WONG: Good to be with you.
BEVAN: How much has this Government hooked itself on a political promise with a Budget surplus and political expediency is overruling economic commonsense?
WONG: Not at all. The surplus is good economic policy. The surplus is precisely what you should be doing at a time where you see an economy with the sort of massive pipeline of investment that we have, some $450 billion worth of projects, plus relatively low unemployment. And a surplus does a couple of things; one, it continues to give the Reserve Bank room to move and I think everybody knows how welcome the most interest rate cuts were, and of course it is a buffer, a surplus is a buffer in uncertain global circumstances. And we do see, regrettably, that the global economy is not as strong as we would hope.
BEVAN: Well, in selling the surplus and the idea of a surplus, you wrote in an opinion piece for Fairfax yesterday that a surplus positions the nation well and sends a strong message of confidence to investors both domestically and overseas. Yet, so many households, Minister, don't feel confident that they're doing well. They feel as though they are struggling. So, this push for a surplus has missed the mark with so many Australians, hasn't it?
WONG: I'm not sure I would agree with you. I think Australians do expect governments to run sensible fiscal policy, to run the Budget well. And I'm very pleased you read my opinion piece. The point I'm making of course is that a surplus is about positioning us for the future. It is true that people are saving more and people are, therefore, spending less. People are more cautious and they're spending less and saving more, but that's not necessarily a bad thing. And, really, the Government's approach reflects the sort of savings behaviour we see amongst households.
BEVAN: The Shadow Treasurer just earlier on Insiders, Joe Hockey, pointed out this process is confused. On the one hand you and other members of the Government are talking about a tough Budget and yet a couple of days out, here are sweeteners such as the school kids bonus. And there was a fellow in the Sydney Morning Herald yesterday, a father, talking about ... that all this spin, he's so sick of the political spin. He doesn't know and can't read whether this is a good Budget for him or not. So, there is confusion in the electorate ...
WONG: Budgets are about priorities and they're about making sure you find the room to spend on your priorities and you make difficult decisions to find that room. Education is a priority of this Government. It is a priority of Prime Minister Gillard. And that's because education is about opportunity, its about making sure that you give the best opportunities to the next generation of Australians, it is economic and social policy.
So we make no apologies for the fact we're making difficult decisions but we're prioritising investment in education, and that's what the school kids bonus is about. It is about recognising that theres a cost to have kids in school and helping is a good thing.
Can I respond to Joe Hockey, you mentioned him and played him before I came on. Joe Hockey accusing Government of being confused? Joe Hockey, is talking about economic credibility? Who doesn't believe when it comes to the economy and the Budget that Joe Hockey is confused and lacks any credibility? This is a bloke who is still talking about providing audited accounts. This is a phrase he used at the last election when the firm that he used to so-call do the audit was subsequently found to have engaged in professional misconduct. It is an extraordinary position from the Shadow Treasurer.
BEVAN: Minister, while we're quoting Joe Hockey, he also raised doubts about whether Julia Gillard and Wayne Swan will be there next year to see through and implement all of what will be a announced on Tuesday. The Sunday Telegraph has a story today saying the front bench has hit the panic button, with Ministers reportedly warning that the carbon tax in particular is killing Government. Has the panic button been hit and just how hard?
WONG: No. I make two points in response to that question. The first in terms of delivering a surplus, the person who could potentially wreck the surplus is Tony Abbott. And if Joe Hockey and Tony Abbott fail to back in the savings measures that the Government puts up on Tuesday in the Budget, they will be seen as doing nothing other than seeking to wreck the surplus. In terms of the Government, I can tell you this: I'm focused on the Budget, the Government's focused on delivering the Budget. It's been a difficult Budget to put together but its a Budget where you'll see Labor priorities being put to the fore. Priorities about opportunity, about education, and about fairness.
BEVAN: Peter Anderson from the Australian Chamber of Commerce and Industry said to take pressure off households and businesses the most obvious step for the government to take in this Budget is not to go ahead with the carbon tax. He argues that it will also restore the Governments fortunes. For both those reasons, shelving the carbon tax has got to be tempting, isn't it?
WONG: You're talking to somebody who spent quite a number of years arguing very strongly for a price on carbon. And the reason is it is the right thing to do. It is a hard policy to explain. It is a hard policy to implement. But its a policy that is about this generation doing something to improve the opportunities for the next generation. It is about moving Australia to becoming a less polluting economy. I see it very simply do we really think that in the decades to come we will stay as competitive as we want to be if we remain the most highly polluting advanced economy in the world? I don't think so. There's no doubt it is a difficult policy, but I think it is an important reform for future.
BEVAN: How much will this Budget support weaker parts of the economy as the gap grows between the mining sector and other key sectors?
WONG: That's a good question and really what lies behind that question is what are the right policy settings for the patchwork economy? And it comes back to my first answer in relation to the surplus. We believe the right policy settings at the moment given that you have the sort of investment boom that we've seen, the unemployment rate where it is, but at the same time a high dollar which is obviously weighing on some parts of the economy the best policy setting, fiscally, is to bring the budget back to surplus. That gives the Reserve Bank room to move in terms of interest rates, as they already have.
BEVAN: But, Minister, as not only households but businesses struggle, the RBA comes out with a forecast saying there is a softening going on in conditions for everywhere pretty much but mining. To sell the idea of a surplus when people are going why are we pushing on with this surplus, notwithstanding all you've said during this interview, it is such a hard sell. People are still going to go I don't get it.
WONG: Maybe I haven't explained it to you well enough, but I'd have to say most people I speak to outside of Parliament House and the Press Gallery understand the basic principle. That Government should step in when the economy is weak and, when the economy is tracking back to trend, the Government should step back. We don't want to add to price pressures and we want to give the Reserve Bank room too move.
It is a simple proposition. We know that we are an economy that's doing far better than most other economies around the world. Were on track to return to trend growth and the surplus is a right thing to do for Australian households. That's what we have in mind here. What is the best set of policy settings for Australian households? That's a surplus and that's making room for the sorts of policies that you see today, such as the school kids bonus.
BEVAN: Minister, as the Budget looms, just a couple of days away, how much is the ongoing Peter Slipper saga going to undermine any fiscal message you want to sell on Tuesday night anyway?
WONG: Obviously there's always an interest in the media on different things, but I'm the Minister for Finance in this country and, working with the Treasurer, my job is it is to put together a good Budget, a Budget that does what's important in terms of bringing back to surplus, but also prioritising those things which are important for the nation's future
BEVAN: As you say you're trying to put out that message about the Budget. How confronting and how frustrating is for you, though, that this saga is going to be in there in the House on Tuesday night as you try and sell this fiscal message?
WONG: Again, I'd say to you, I know which is more important in the long-term interests of the nation, which is the Budget and that's what I'm focused on. You ask if I'm frustrated? I've been in politics 10 years now which is pretty surprising, but there have been many frustrating times. You just learn that you've got to get on with it and focus on the important things and the important thing is the Budget and doing the right thing for working Australians, the right thing for Australian households. That means a surplus and it means making the sort of decisions weve made.
BEVAN: Does that mean you're frustrated in these circumstances?
WONG: (laughs) I don't know that this is about how I'm feeling. It is about what I'm doing. What we're doing is putting together the Budget and that will be handed down on Tuesday. Unlike the Opposition, it will be a Budget that demonstrates quite clearly where we're taking the hard savings decisions and where we're prioritising expenditure.
BEVAN: Finance Minister, Penny Wong, thanks so much for your time this morning.
WONG: Good to speak with you.
ENDS