KELLY: Minister, good morning.
WONG: Good morning, Fran.
KELLY: Minister, the Prime Minister has declared a Budget emergency. Now we have another round of media speculation about tax rises, special levies, cutbacks is that what you planned to unleash yesterday?
WONG: Well, what the Prime Minister did yesterday, and what the Government wants to do, is to have a mature and responsible conversation with the Australian people about the challenges the nation faces.
We do face the challenge of less revenue coming in for the level of growth in the economy than was anticipated by Treasury. And we also have to make wise choices about long-term investments, which are expensive, but are really so important for the future of the nation, and they are DisabilityCare and the investment in our schools.
Now, it's always easy to do what Tony Abbott does, which is just have a few glib lines and not tell people anything about the choices that have to be made. But we want a proper conversation with Australians about, if we want these things, what are the choices we have to make.
KELLY: Isn't part of the problem that you're having this proper conversation two weeks before the Budget, four months before the election, and suddenly the Prime Minister is saying, we need every reasonable option on the table to meet the needs of the times, even options previously taken off the table? Was that your advice as Finance Minister to the Prime Minister, that we need everything back on the table here? You're scrambling to manage this?
WONG: I think we need to understand what we're seeing at the moment we're seeing revenue substantially fall. If we were getting the same level of tax that John Howard and Peter Costello did we'd be over $23 billion more in this financial year than was previously anticipated.
The reality is, whether we like it or not, whether it's a time of our choosing, the nation has a challenge the Government has a challenge which is we're getting less money in tax, for the reasons the Prime Minister outlined, than was anticipated. Now, you've got a couple of choices with that...
KELLY: You tell us that as if this was a surprise. I mean, we knew last December at the very latest that there was going to need to be a deficit. We've known for some time now that the mining tax was not going to raise anything like the money forecast because it raised virtually nothing last year. We've known for a long time that the ETS was unlikely to raise the money because we've seen what's been happening in Europe. This is hardly a surprise.
WONG: I don't know if I'd agree with that. I mean, if you look at what's and I hate to talk too much in economic jargon but if you look at where nominal GDP is that is the growth in the value of what we produce, so prices plus volume usually that runs ahead of growth in real GDP. So, we produce more things and, generally, because prices increase, the value of that growth increases. Nominal GDP is running below real GDP. Do you know how many times that's happened in the last half-century over this sustained period? Never.
KELLY: But what Im saying is, why do you think thats a surprise?
WONG: It's never happened, Fran. So my point is we can all talk, as many people will, about whose fault this is or what should be done, but ultimately there's a choice the nation faces. Do we want to make the wise investments for the future even though the nation is not getting the sort of revenues that we saw in mining boom Mark 1? Or do we just want to stand still and say were not going to invest in the future, it's all too hard?
Now, I can tell you which side the Labor Government is on. We want to make wise investments in things like DisabilityCare because we think Australians with a disability permanent and severe disability deserve support. We want to make investments in our schools because too many Australian children are being left behind and the country is being left behind.
But if we're going to make those choices we have to be up front with the Australian people, even if it might be a difficult conversation to have. We have to be upfront with Australians about how you fund it.
KELLY: It's a quarter to 8 on Breakfast. Our guest this morning is Finance Minister, Penny Wong. Minister, if this was a calculated move, and obviously it was by the Prime Minister to explain this tough Budget decision, it certainly got overwhelmed immediately by negative speculation. Shadow Treasurer Joe Hockey produced a list of possibles, let's run through some. Income taxes, are they on the table?
WONG: Oh, look, this is what I'm talking about. This is the sort of debate that Joe Hockey wants to get into a bit more hysteria...
KELLY: But this is the sort of debate you guys invited...
WONG: No, the debate we need as a nation, regardless of who you think is right, is, if you want DisabilityCare, if you want Australians with severe and permanent disabilities looked after, how are you going to fund it? Because it's no good Tony Abbott saying this is a great idea, we love this, but not telling Australians the decisions he would make about how to fund it.
KELLY: With respect, Minister, with the way you have raised this, what is inevitable is exactly what we saw with the superannuation just last month which was there was a scare campaign because the Government indicated it was going to have to make changes there for the Budget position. Now, in the end, that was clear and the scare campaign was put to bed. But unless you rule out some of these things, this scare campaign will run because people are nervous. They're nervous they might be getting death duties. Are they?
WONG: Look, that is not a reasonable option; the Prime Minister has made clear we're looking at reasonable options. What I'd say to your listeners and to you is this: do we want to have a proper conversation about the choices the nation faces or do we just want to get into a fear campaign that will take the nation nowhere? That's really the choice.
KELLY: I want to have a proper conversation right here and I'm wondering whether one of the reasonable choices the Prime Minister is thinking about is the mining tax which has failed to raise anywhere near the forecast revenue. And there's many people adding to that number Professor Ross Garnaut, who told a Senate inquiry yesterday that the current MRRT design is deeply flawed. The Greens have been calling on the Government the way to fix it and raise more revenue is obvious. Is that a reasonable option on the table?
WONG: The Greens always haven't seen a tax that they don't want to lift, unfortunately, across the board, but that's a different discussion. Look, what I'd say to you is this: we remain a lower taxing Government than John Howard and Peter Costello. And, if we and if I was Finance Minister and the Federal Budget were getting the same level of revenue as a share of the economy that Peter Costello got in his last year as Treasurer, then we'd have over $20 billion more this year to spend on important things for the nation.
We want to have a conversation about reasonable options. But most importantly we want to be very upfront with Australians and say we want to make these wise investments. But we cannot make them as a nation unless we're prepared to make certain choices.
KELLY: Talking to Finance Minister, Penny Wong. Minister, is a reasonable option seems to be the one everyone's talking about today a new levy to pay for the National Disability Insurance Scheme? It's been ruled out before but as the PM told us some things previously ruled out are now back on the table. In your view, as Finance Minister, is a levy to help pay for the NDIS a good idea?
WONG: Well, look, we're considering a number of funding options and what I would say is obviously a levy is something stakeholders have been calling for and have been calling for in the last 24 hours.
Whatever option you look at, you have to look at what will give security to people with a disability. What will ensure we have a strong scheme, not just for a couple of years but for the decades ahead. And what is a fair approach in terms of making sure, as the Prime Minister said, we all fairly contribute.
So, we're looking at options across the board on a range of fronts. I'd acknowledge that a levy is something that stakeholders have raised.
KELLY: A lot of people always thought a levy was a good idea. Was the Government mistaken to rule it out originally?
WONG: Oh, I'm not here to sort of have the discussion about what might or might not have been said and, you know, the historical analysis. I'm the Finance Minister, I've got to put a budget together with the Treasurer and, more importantly, the Labor Government has to say to Australians what our choices would be and that really puts us in a very different frame, I think, to Tony Abbott. He won't tell Australians what he would cut to fund the things he's promising.
KELLY: Well, you're not telling us either at the moment.
WONG: But I will. I accept that you can ask me questions but there will be a budget and these numbers will be very clear in the Budget and I'm very happy to come on your program to have a discussion about them, Fran. I doubt that Joe Hockey will ever respond to such an invitation ahead of the election.
KELLY: I'm not sure that you will respond to this one either, but we know the NDIS will cost the federal Budget at least $8 billion a year. How many percentage points would we need to add to something like the Medicare levy to raise that?
WONG: I think you're inviting a lot of speculation and a lot of detail on what might or might not be considered. But, I would say this: when we're looking at spending and DisabilityCare, when we're looking at spending on schools, as the Prime Minister said earlier this year so she has been talking about this for some time a long-term structural spend needs a long-term structural save and she has been upfront about that from the beginning of the year.
KELLY: The Government says that expected revenues are down, you said that again this morning. You've got about 7.6 per cent, I think that you might have been expecting 12 per cent which means you've collected $340 billion not $352 billion forecast in October. But you are receiving more revenue, just not as much as you expected. Does that mean Tony Abbott is right when he says you don't have a revenue problem, you've got a spending problem?
WONG: Spending actually to date in the most recent monthly financial statements that I released is about in line or slightly under what we anticipated. I mean, that's a line and the reality is I don't think there is any economist out there who anticipated that what is happening in the economy would occur for as long as it is. That is, that revenues would be so depressed for so long compared to where the economy is growing.
The reality is we're not seeing the revenues that we saw in the first part of the mining boom. We're also seeing, because of the high dollar, because of the terms of trade that is the prices of things we sell to the rest of the world we're seeing much lower growth in profits. And it is the profit-based taxes, particularly company tax and so forth, which are being hit.
KELLY: Minister, some would say, and I think most people's immediate reaction would be that this is a disaster for a Government just four months out from an election, having to be talking about raising taxes. But perhaps you and someone in your position might see it as an opportunity. You said this Government wants to make the wise choices, the wise investments, your Government is already very unpopular. Is this an opportunity for this Government to be brave with this Budget, to go for broke, to address the long-standing structural problems and leave a legacy that will go long beyond this Government because the polls suggest youre not going to go much longer than four months perhaps?
WONG: Thats not whats at front of mind for me or for any other Minister in the Government. What's front of mind for us is how do we make sure we can put in place Labor reforms which are good for the nation. And, if you want to put in place Labor reforms which are good for the nation, such as DisabilityCare, then you have you work out how youre going to fund them long-term.
It's also a question of whether we agree as a country that someone who wants to be the Prime Minister Tony Abbott can simply get away with glib lines and not telling people what's happening. Whatever criticism he makes of what's happening to revenue, these are the numbers Treasury has provided. This is the economic reality that we all have to deal with the Government and the alternative government. We will deal with it.
KELLY: Penny Wong, thank you very much for joining us on Breakfast.
WONG: Good to speak with you.
ENDS
ABC Radio National Breakfast with Fran Kelly - 01/05/2013
01 May 2013
