CURTIS: Penny Wong, welcome to Capital Hill.
WONG: Good to be with you.
CURTIS: Last year, the Treasurer started his Budget speech with the words: the four years of surpluses I announce tonight. Thats not the way hell be able to open his Budget speech next Tuesday, is it?
WONG: Well, certainly the economic circumstances have changed, but our approach hasnt. Well do the right thing for jobs and growth in the Budget just as we have in every Budget and just as we did during the Global Financial Crisis.
And those decisions have stood Australia in good stead as a consequence, were an economy thats 13 per cent larger than when the Government was elected, weve got over 950,000 more jobs and weve got contained inflation and low interest rates.
CURTIS: But he went on to say that the surpluses were a powerful endorsement of the strength of the economy, the success of policies, and that we walk tall as a nation confidently living within its means. Is he going to say the deficits announced are a sign of weakness in the economy, the failure of policies and that the nation is not living within its means?
WONG: Theres nothing weak about an economy that continues to grow jobs. Theres nothing weak about an economy that is 13 per cent larger than it was before the Global Financial Crisis, nor an economy where youre seeing the sort of economic figures that were seeing at the moment but
CURTIS: Then why were surpluses a sign of strength last year?
WONG: ... but what I would say is that the economic circumstances have changed. And lets go through that. Because this is not just about glib slogans, although I know the Opposition would like it to be.
This is about a very serious set of economic considerations the Government has to take into account, and the challenge of a very high dollar combined with the terms of trade declining so the prices of what Australia sells to the rest of the world are coming off ... the combination of those two factors is not only unusual in itself but the effect its having on the economy is considerable.
Thats why youll see, and youll continue to see, the sort of reduction in forecast revenue that weve been describing. Now, responsible governments have to deal with that and we will deal with it.
CURTIS: But those things were known last year. The Treasurer in his Budget speech mentioned the sustained high dollar and talked about it ripping billions away from the revenue base ...
WONG: Lets understand, though, that this is not just about one economic fact. Its about a combination of economic facts and what effect that combination is having on the economy.
So, economic orthodoxy would tell you that when Australias terms of trade fall, the currency would fall. Well, so far that hasnt occurred. Economic orthodoxy would also tell you that when interest rates fall that you would also see the currency fall and so far, in general terms, that hasnt occurred.
We also know that the consequence of those economic facts where the dollar is, where the terms of trade are is having a very strong effect on company profits and profits are really being squeezed and it is that fact which is resulting in much lower revenue to government.
CURTIS: Well, given in the last few Budgets youve had revenue write downs, have you taken the forecast for revenue for this years Budget and lopped a few billion off, just to be on the safe side?
WONG: Look, Im sure that on Budget night you can talk to us about what youll see in the Budget
CURTIS: But it would be prudent to err on the low side wouldnt it?
WONG: Certainly this is a Budget that is responsible. It is about jobs and growth. And it is about a stronger, smarter and fairer Australia. Thats the approach the Government will take.
CURTIS: Ministers have been saying that the Budget will chart a credible path back to surplus. Given last years Budget pathway seems more of a yellow brick road, will any pathway to surplus you chart have credibility?
WONG: Well, I guess thats something that the public will debate, but I can say very confidently to you that that is precisely what we have been focused on and we have focused on making some very difficult decisions to ensure that we have that pathway. And the reason is that its the right thing for the country, the right thing for the economy.
I would say this too: the difference between the Government and the Coalition is that we will tell Australians on Tuesday what our choices are. What are the choices, the responsible savings some of which will be unpopular that we are making in order to make wise the investments for the future and in order to continue to ensure a strong Budget position.
What will Joe Hockey do? Well, he and Tony Abbott will continue to hide their true plans from Australians. Even just this week weve seen Joe Hockey saying you know, were going to end the age of entitlement, but were actually not going to tell you how were going to do it or what were going to cut until after the next election. You know what that is? Thats hiding your plans, thats what that is.
CURTIS: Youve announced some of your plans this week. Youve cut a planned increase in Family Tax Benefit Part A, youve delayed a second round of carbon related tax cuts. Will you be spreading the pain beyond those areas? Will business take a hit?
WONG: I think youre asking me whats in the Budget, Lyndal.
CURTIS: in broad terms.
WONG: In broad terms, but youre still asking me.
CURTIS: Because the Prime Minister talked about spreading the burden ...
WONG: Well, we are a Labor Government and we approach our savings task as well as our spending decisions with a view to fairness. That is why if you look at some of our priorities we dont think ordinary wage earners should be subsidising millionaires for their private health insurance. We dont think that its the right thing to tax low income workers more on their super. Both of those things are things the Coalition do believe that millionaires should have their private health insurance subsidised and they believe that low income earners should be taxed more on their super.
CURTIS: Can voters expect more of the uncomfortable decisions?
WONG: Voters can expect responsible decisions and wise investments for the future, and a Government that is completely focused on ensuring jobs and growth.
CURTIS: You talked about being a Labor Government the level of the Newstart payment has been raised again today. How is it that a Labor Government hasnt seen fit to address the level of payment, so low that it even concerns big business, and the decision you have taken on Newstart is to move all single parents parents with children onto that lower payment.
WONG: I would make the point that the Government has provided support for low income families and low income Australians in many ways. The increase to the tax free threshold is a very important one because that enables more people to keep more of every dollar they earn thats critical for participation. Weve also invested more in childcare and weve invested more in the sorts of supports people need to get into the workplace.
I understand peoples view about Newstart and I understand the concern thats there. As a Labor Government we do have to weigh up a whole range of worthy causes, a whole range of worthy decisions against each other
CURTIS: But isnt that some of the most vulnerable in society?
WONG: As I said, I understand the concerns people have raised. I would say we also have to look at how do we fund things like DisabilityCare and how do we make sure we continue to fund childcare and health, how do we make sure that we keep investing and grow that investment in our schools. These are all important things, not just for now but for the future.
CURTIS: I wanted to ask you a question that seems to be one of the fundamental problems and the media probably takes a fair share of the blame that Governments these days think they have to be certain about things that are uncertain, including economic forecasts. Should you try and be less certain, to educate the public that there is things like forecasts and that the surpluses or deficits which you project on the back of those forecasts are not certain, are not written in stone?
WONG: and that economic circumstances change. Yes, youre right. I think it is unfortunate at times in our system that black and white answers are the only way you can explain things. And when it comes to the economy you have to make judgements, as the Government has, and some of those have demonstrable been extremely successful. But you also have to make judgements about where you think the economy will go and demonstrably theres been a change on that front because of whats happening globally and whats happening to the dollar and the terms of trade as you and I have discussed.
CURTIS: But its also in the language the Governments used in things that have not been prompted by media questions. In an opening statement the Treasurer, in a press conference ... the Treasurer guaranteed the increase in the Family Tax Benefit Part A would be delivered. It now wont be. There was a Labor pamphlet released, including in Wayne Swans electorate, saying the Budget was back in surplus, on time, as promised. Now, particularly on the surplus question that was a forecast, it hadnt actually been delivered, had it?
WONG: Well, Lyndal, we can sort of traverse the history of this, but we have had to make a decision which involves a substantial degree of political pain because it is the right decision for the country. You might say, well, X shouldnt have been said or Y shouldnt have been done, but ultimately weve seen a very substantial hit to revenues which wasnt predicted. Weve certainly seen the dollar and the terms of trade behave in a particular way thats had a very significant downward effect on profits so corporations profits are being squeezed.
The Government has to do in those circumstances whats right for the economy, whats right for jobs and growth, even if it is something that might be a bit politically difficult and thats what well do.
CURTIS: This is your third Budget as Finance Minister. What do you know now that you didnt know before your first Budget?
WONG: (laughs) Oh, this is too short an interview to run through that list. But one of the great things about these jobs is you get the privilege of working with some very able people with enormous experience and great expertise and you learn a lot from them. And you also have to deal with different circumstances and make decisions about them its a great privilege to be a part of.
CURTIS: Have you taken the traditional Finance Ministers role and been the person who says No?
WONG: I guess youd have to ask my colleagues that. I suspect theyd probably say yes, but Id probably leave it to them. My view is it is about saying No, but its also about choosing between things and often you have to say no to things you might not want to say no to, but because you know there are other things which are actually more important and you have to find the space to fund those.
CURTIS: Youll go to an election within months of handing down this Budget. Will it have a long life?
WONG: Well, thats in the hands of the Australian people. My view about this is that this is a Budget that is about the long term. Its a Budget that says we have to make difficult choices now, responsible decisions, but we have to invest wisely for the future.
The future for Australia is one of change: whats happening in terms of the resources sector, whats happening in terms of the Asian Century and Australias place in that. So, the question really at this point is what are the things we need to do as a nation? What are the investments we need to make to ensure ongoing prosperity in the future and a strong sustainable safety net for our children? And thats what this Budget is about.
CURTIS: Penny Wong, thank very much for your time.
WONG: Good to speak with you.
ENDS