JOURNALIST: Penny Wong, the resources boom looks like a real boom but the Treasurer, the Government generally, sees it as a bit of a phoney boom.
WONG: Look, its a real boom but it is a boom that is different from mining boom Mark I in that you wont see the same very high increase in revenues to government as you saw in the previous mining boom. Thats for a range of reasons. One of them a very significant one is that we have a two speed economy. We have less profitability in the non-mining sector of the economy than we had in the previous boom. That obviously is going to affect revenues to government.
JOURNALIST: The Treasurer has in fact pointed out that over the past decade, the mining sector has accounted for around 20 per cent of corporate profits but paid only 10 per cent of company tax revenues in this context. Is the resources sector not pulling its weight?
WONG: I think that reflects the capital intensity of the mining sector, the nature of the investment thats required in the mining sector. The point that the Treasurer quite rightly is making is that historically high levels of profit in the mining sector havent resulted in the same sort of lift in company tax revenue because it is very capital intensive. There are a lot of deductions associated with the level of investment.
JOURNALIST: So are Australians generally just spectators at this resources boom?
WONG: The resources boom provides enormous opportunity for Australians, for all of us. It does increase national incomes and it massively increases investment. These are good things. But they are also challenges that we have to manage. They come at a time when we know that there are other parts of our economy which have some softness about them.
We know consumers, for example, are saving more. Now thats a good thing because the fact that Australians, we werent saving as much as we were spending we were spending much more than we were saving was obviously unsustainable. So its a good thing that that has shifted. But obviously thats going to have an impact on various parts of our economy, particularly retail.
We also know that we have a high dollar. If you think about where the dollar was during the first mining boom mining boom Mark I it was on average about 78 cents. Look where the dollar is now. Thats obviously going to have an impact on the economy.
So we do have a lot of different forces in our economy at the moment. These are all things the Government has to look at as we put the Budget together to work through how we best manage this boom for the benefit of all Australians.
JOURNALIST: But is there something out of whack here if, as you say, theres a surge in the national income, a surge in national investment, and the benefits are not flowing to all Australians?
WONG: Obviously the fact that we have such substantial growth in the mining sector is something we do have to manage. The Government is thinking through this very clearly in terms of the budget and in terms of the policy it wants to put in place for example, the minerals tax.
But more broadly, this is a very substantial shift in our economy and we have to put in place the policies that help benefit Australians as that shift occurs.
JOURNALIST: Are the figures that the Treasurers putting forward in fact a strong argument for increasing the level of the mining tax?
WONG: Look, the Government has made its position on the minerals tax, the mining tax, very clear and will be holding to that position.
JOURNALIST: The Opposition says this is a real boom, the rivers of gold are running again, its just that you Labor cant manage it.
WONG: Well the Opposition, if they were in government, would be delivering a deficit in every year of the forward estimates on the basis of the costings they put forward. Thats what my counterpart, Mr Robb, would be delivering. A budget deficit in every year of the forward estimates because they had a $10.6 billion black hole in their election costings and theyve simply added to it in all of their decisions to date.
So the Opposition really is not in a position to lecture anyone about fiscal responsibility until they get their own house in order.
JOURNALIST: Penny Wong, thank you very much.
WONG: Good to speak with you.
ENDS

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