JOURNALIST: We have the Finance Minister herself, Penny Wong joins us live from Sydney this morning. Minister Wong, its a pleasure to have you on the program.
WONG: Its great to be with you.
JOURNALIST: Now Penny, let me just first talk about the global headwinds. We just heard from the former US Federal Reserve Chairman Alan Greenspan, hes saying that it looks like Greece is close to certain default. Has Australia priced in any concerns coming from the Euro zone?
WONG: Obviously the global economic recovery is still patchy, and there remain uncertainties. Greece is amongst them. But we do see continued strong growth in our region, and we see an Australian economy which is robust. Obviously were very pleased at the jobs figures over the period weve been in Government. And we know theres some short-term softness, which has been primarily as a result of the natural disasters, but theres a very big investment boom that is in the pipeline, and the Governments very conscious of that.
JOURNALIST: Lets talk about Australias economy in particular. Australia is fighting back from contraction in the first quarter. Also, the economy lost a lot of jobs in the last two months, in fact the most for full-time jobs in more than two years. How is this going to affect the economic rebound, will there be an economic rebound?
WONG: We predicted in the Budget that we recently handed down that wed see a hit on growth in the first quarter, and thats what we saw. Its important to emphasise that that contraction was entirely due to the impact on output, particularly exports, of the natural disasters weve had.
We had very severe floods, which obviously had a significant impact, particularly on our coal sector, and also our agricultural sector. We had a cyclone that obviously also had an impact on our agricultural sector and other sectors such as tourism. And the effect of those natural disasters entirely explains the contraction in the quarter.
Wed anticipate a rebound, thats what we factored in. Thats what wed anticipate, because if you take a step back from the short term figures, the long term looks extremely good, some $430 billion worth of projects in the investment pipeline. And if you unpack the data of that first quarter, youll see business investment, dwelling investment, and even household consumption adding to the domestic figures.
JOURNALIST: Okay, well lets do the equation then, Penny, because if you add in the global growth concerns, you have a contraction in Australia because of flooding, and the cyclones and the loss of jobs. Does this at all impede and threaten the Labor Governments plan to return to budget surplus by the year 2013?
WONG: We remain committed to that, and as I said to you, in the Budget we did factor in a contraction in this first quarter. It is slightly larger than the Treasury indicated, but then youd anticipate a stronger rebound as the coal comes back online, as agriculture comes back online, as we rebuild from the floods and the cyclones.
We did anticipate a contraction, we anticipate a strong rebound, and again, we have to take a step back and look at whats coming. This is the largest investment pipeline our nations ever seen. We have a very strong set of figures when you look at investment coming down the track. Thats as a result, as you know, of whats happening to our terms of trade, whats happening in our region. And thats why the Government is intent on coming back to surplus.
JOURNALIST: Let me ask you, do you think you could find yourself, Wayne Swan, and the rest of the Labor Government, maybe tightening spending even more to try to get to that goal of producing a surplus by 2013?
WONG: You have to update your Budget, every time you update your Budget figures and you have to take into account whats happened both on the upside and the downside since you last did them. And well do that in the normal way. But there a very strong economic reason as you know Susan, for coming back to surplus. When youve got that kind of investment wave in your nation, you have to make space for it. You dont want to be adding to the price pressures which inevitably accompany that kind of investment. And so we think coming back to surplus is a very sensible economic policy and thats why were committed to it and thats why were on track to achieve it.
JOURNALIST: Well lets just talk about getting back into surplus and some policy measures. Controversially weve been talking about the mining tax because weve heard Fortescues CEO here before us who is vehemently against this mining levy. This will help your budget surplus, this will help your budget Penny, but do you think its fair for miners in Australia to face a 30 per cent mining levy?
WONG: Susan youre a very experienced journalist, Im sure thered be very few times youd get businesses who are advocating for taxation. You know thats not their job. What is the Governments job is this. We are selling to the world a non-renewable asset; that is our resources. And what we want to ensure is we have an income stream from that we can invest wisely. With the proceeds of the mining tax, the Government will be investing in national savings by increasing Australias superannuation, the superannuation of Australians. Well be increasing the capacity of the economy, by investing in infrastructure and well be dealing with the company tax rate by reducing company tax so that all businesses across Australia can become more competitive. Now that is a very good use of the sale of these assets to the rest of the world. Its about investing in our economy for the future. Making it more resilient, and increasing our capacity. Its a very important policy and one that I think people can see the sense of.
JOURNALIST: OK, well speaking of controversial policies, something near and dear to your heart. Youve been the former climate change minister of course in Australia. Lets talk about the carbon price, I guess is a program that is highly, shall we say, unpopular in Australia. Do you think this could possibly damage and destroy Gillards Government?
WONG: Look this is a tough reform. Its a reform that as you said, I had carriage of last term. We previously had bipartisanship on the need for a price on carbon. Now we dont. Unfortunately, this important public policy issue has become very deeply politicised in Australia.
But were committed to it and for a very good reason; its a very sensible economic reform. I think were going to see a period where this continues to be controversial. But when the Government does achieve passage of the carbon price through the Parliament, I think people will see that the sky doesnt fall in, that the wheels of life and the economy will continue to turn and I suspect it will become far less controversial. We are going to go through a period where theres going to be a lot of politics around this. But the Government will stay the course and I think life will return to normal.
JOURNALIST: I guess Penny, I guess Australians are pretty, I would say, disappointed that Julia Gillard has come back from her campaign promise. She promised no carbon tax plan during her leadership. But do you think in any case with the unpopularity of her Government, a lot of people are against this carbon tax, that she might waver on this decision?
WONG: I dont think were for wavering on this. Just because something is difficult doesnt mean its not right. The Labor Government has always made clear we want to put a price on carbon. Its true weve have to go down the fixed price route, rather than our preference which was for an emissions trading scheme. Weve had to go down the fixed price route, at least for a number of years because of the nature of our Parliament. But look, internationally this been an issue that people have been talking about for a long time. You may not recall this, but in 2007, the Coalition, the Liberal Party, the former Prime Minister John Howard went to the election promising a carbon price. I think its time we stopped talking about it and did it. And thats why the Governments intent on pressing forward.
JOURNALIST: OK Penny, one more question for you before I let you go. Lets talk about also the Reserve Bank of Australia and the salaries of the Governor himself, Glenn Stevens makes. He makes three times the amount of Julia Gillard as Prime Minister. Some are saying this needs to be changed, whats your view?
WONG: The Government doesnt set the salaries of offices such as those of the Reserve Bank or a range of other statutory organisations. I think thats as it should be. I dont think its appropriate for politicians to be setting these salaries. They should be set as they are by an independent body.
JOURNALIST: Minster Wong, thank you so much again for joining us.
ENDS