ABC Radio National Breakfast with Fran Kelly - 19/03/2012

19 March 2012

KELLY: Minister, welcome back to Breakfast.
WONG: Good morning, good to be with you again, Fran.
KELLY: Penny Wong, this skills package that the Prime Ministers putting on the table, what is on offer to the states, and what does the Commonwealth want in return?
WONG: The Prime Minister will be announcing the full details of this package, money weve provisioned for. But whats important about it is this: we understand that the Australian economy is going through a lot of change. Its a time of change, but also of opportunity. And to enable Australians to help manage that change, and also to enable more Australians to get opportunities as the economy changes, weve got to improve access to skills.
Weve got to get more people into training. But, as importantly, weve got to give them the skills employers need. So this will be a significant announcement, an announcement that is about the future, an announcement that is about opportunity for all Australians.
KELLY: I understand that the Prime Minister will be talking about an extra $1.75 billion on the table for the states if they agree to reach certain benchmarks, and to certain realignments. Is this new money, or, as youve said, its money youve provided for? Was this is this the money announced in the last budget?
WONG: Certainly we provisioned for this announcement in our forward estimates. And this is money that is well spent, because this is money about the future.
KELLY: Yes, but is it money we knew about before? Is it money that the Prime Minister has told us was coming?
WONG: I dont think you would have seen before the full details of how it would be allocated, nor what reform elements are associated with it. But Ill leave that for the Prime Minister to discuss. Certainly, we did provision for this in the last budget, and the reason we did as youll recall it was the centrepiece of the budget was skills and participation, and vocational training. Getting more people into training is a high priority for the Government.
KELLY: So in terms of the reform elements, what do the states need to do? How do you want it to change, in terms of our TAFE and trade system?
WONG: Oh, look Fran, I will leave that for the Prime Minister, if you dont mind. Shes obviously making that announcement later today. But weve been pretty clear that just putting more money into places isnt the only thing thats important here. We do need to make sure training is as aligned as we can make it to what industry needs. Because the best way to get someone a job is to make sure theyve got the skills employers need, and the training system needs to reflect that.
KELLY: Minister, the Mining Tax looks as though it will pass through the Senate tonight. The Prime Minister has advised the Greens of some additional transparency measures. The Government will publish monthly updates of the revenue raised, and you will also release revised revenue estimates by the end of January 2013. Why is that necessary?
WONG: This is a transparency measure. Obviously this is something that the Greens felt was important. The Governments very happy to ensure there is proper transparency; we think its extremely important to get this tax through the Senate. This is all about ensuring that we have the profits of wealthy miners shared, providing a reasonable share to the Australian people, and utilising that to spread the benefits of the boom.
KELLY: Is it a concession that the Treasury estimates might not be accurate, due, in part, to weakening commodity prices are slow in China? Could it mean that that $10.6 billion over three years might not be realised?
WONG: I think theres a lot of hypotheticals in that. I think its a transparency measure, and thats a good thing. I think the more interesting proposition at the moment is where the Coalition is, if I may say Fran. Its a new breed of Liberal Party under Tony Abbott, a high-taxing, high-spending Liberal Party that is actually going to attempt to stop a company tax cut. Its a pretty extraordinary proposition from the party of Menzies and Howard.
KELLY: Its also going to stop a tax on mining. Last week when we spoke on the program
WONG: Oh, Fran
KELLY: you wouldnt say whether the state royalties would need to be reimbursed under the legislation, or would come out of the $10.6 billion raised by the tax. Now, thats not hypothetical anymore, we understand it will. Doesnt that mean youve got no control over the states capacity to hijack your tax?
WONG: The legislation does provide as I said, I think, in the last interview the legislation does provide for how royalties will be treated. The Treasurers also indicated the date on which we are crediting royalties for. Thereafter, what weve said is we will be reducing how much states get under the infrastructure fund
KELLY: By the same amount as the royalties?
WONG: Well be reducing it. Weve also written to the GST Review to ask them to consider how this should be best dealt with. But, we factored in royalties as at the date the Treasurer indicated, where those royalties are clear and transparent and where theyre able to be calculated.
KELLY: Does that mean youre banking on being able to withhold from the states, the equivalent amount of any royalty rises in the future, that youll be able to bank that $10 billion?
WONG: What weve said is well reduce the amount of infrastructure funding the states get. Theres a lot of detail that people want to get into, but theres a fundamental proposition here, which I think is the key issue before the Parliament today. And that is, whether or not you think that miners who are highly profitable should provide a fair share of those profits to the Australian people.
The Labor Party thinks they should. We want to provide Australians with more super and small business with lower taxes. Tony Abbott says miners should have higher profits. Thats the difference between the Labor Party, and the Opposition.
KELLY: In terms of the mining tax, it will finance that 1% cut in the company tax rate, for small and big business, thats the plan. The Greens will pass the tax cut for small business, but oppose it for medium to larger businesses, and because of the Opposition having the same position, that wont get through. What are you going to do about that?
WONG: Well, theres a way to go on that vote, and Fran I might have been on your program, I suspect after Budget, when we were talking about Tony Abbott vehemently opposing the changes to means-testing the Family Tax Benefits, something he then voted for through the Parliament. So, Ive been in the situation before where Ive had chest-beating from Tony Abbott and Joe Hockey, against what the Government is doing.
The ball is firmly in Mr Abbotts court, as I think I said last week. Hes got to decide, will he really vote with Bob Brown to kill a company tax cut? Is he seriously saying that the Liberal Party will line up with the Greens to deny Australian small business or the broader economy a tax cut? That higher profits for wealthy miners is actually a greater policy and political priority, a greater philosophical priority, for the Liberal Party.
KELLY: Well what are you doing about trying to get that agreement from the Opposition? All we can hear is the Government basically abusing the Coalition over their refusal to do this. Are you, as the Finance Minister, having private negotiations behind closed doors about this?
WONG: I dont know that Im abusing them, Fran, I think thats a little unfair.
KELLY: Criticising them, let me amend that. Criticising.
WONG: Im calling it as it is, because we have the Liberal Party lining up against tax cuts. Its pretty extraordinary, Ive never seen this before. If
KELLY: Are you positively trying to negotiate over this?
WONG: Ill say this publicly. If my counterpart Andrew Robb wants to pick up the phone and say to me, Penny, lets have a discussion that would allow us to pass the company tax cuts, let him do it. Let him do it. Because all weve had so far is no.
KELLY: Would you pick up the phone to Andrew Robb and say why dont we sit down and talk about this?
WONG: Well Ive just publicly on radio said, if he really wants to pass these company tax cuts, give us a call.
KELLY: Will you call him?
WONG: Oh, come on, Fran, seriously. Weve put our proposition into the Parliament. For months now, weve said this is the policy that were bringing forward .The Opposition have previously said theyre for tax cuts, now they say theyre going to vote against them. If they want to change their position on that, I think that will be welcomed by the Australian people. It certainly would be welcomed by small business.
KELLY: Its 19 to 8 on breakfast, our guest this morning is Finance Minister Penny Wong. Minister, yesterday you released a booklet detailing some costings of Coalition policies. And the conclusion you came up with, though its disputed by the Coalition, is a $9 billion deficit in 2013. But these numbers dont take into account savings the Coalition is promising to make or hinting at making if it wins the next election.
WONG: What are they going to do? Where are they?
KELLY: Well they dont even know the state of the budget yet.
WONG: Well they do.
KELLY: Well, therell be another budget coming out in May.
WONG: Fran, we have an Opposition who promises a budget surplus but is never shown how theyll get there. We have an Opposition who hides the true state of their books and says to people yes, I know were opposing all these revenue measures, I know were doing all that, but just trust us. And lets remember the history to this. This economic team has never got their policy costings right. They had an $11 billion black hole in the election, as found, not by me, but by Treasury and Finance.
They then have said, over and over again, well bring the budget back to surplus. Joe Hockeys said Ill do it earlier; Ill have a bigger surplus, oh actually now Im walking away from a surplus. Fiscal discipline is actually important. And what we have is an Opposition who, on their own numbers, has said weve got a $70 billion black hole that were going to have to find cuts to fill. But they wont tell people what they are
KELLY: Yes but its
WONG: and thats really what were talking about. They wont tell people what theyll do. And understand what $70 billion is: that is every Medicare payment for all Australians for 4 years. Thats the position theyve got themselves in.
KELLY: I understand that they havent done that. But in the meantime, while youve put out a booklet claiming a $9 billion black hole, arent you, in a sense, just making it up?
WONG: Absolutely not, and Id invite you to read it. Id invite you to read it. Because what weve done is our best estimate of what theyve said. Because they think they can get away with saying a range of things, opposing things but agreeing that theyre still going to spend.
They think they can get away without telling Australians where theyll find the $70 billion. Weve been very conservative in these costings. Have a look at it. And what Id invite the Opposition to do is this: if they say these are wrong, tell us whats wrong. Tell us, what are the savings that youre now going to make that you havent been upfront with the Australian people about? Because I dont think its fair to Australians to keep this secret.
KELLY: Penny Wong, thank you very much for joining us again on Breakfast.
WONG: Good to be with you.
KELLY: Penny Wong is the Federal Finance Minister and we did invite Shadow Treasurer Joe Hockey and the shadow Finance Minster Andrew Robb on the program to respond to the Governments claims of a $9 billion black hole in their costings but they were unavailable; they both declined.
ENDS