SALAMAT: Thank you for coming on. And just tell us, what do you make of these market moves?
WONG: Its very good to be with you. I think the market obviously is pretty volatile internationally, isnt it? Weve seen a lot of volatility in terms of where the global markets are moving, and thats been reflected in some of the data that you just spoke about.
Obviously concerns about Europe, concerns about US, and particularly the US growth figures, has impacted upon sentiment and impacted upon the markets. Were seeing more volatility than we would like.
SALAMAT: Yeah, and all of this against, if we look at it locally for you, the Australian dollar which is, even though it has declined to just above parity against its US cousin, still seen record unprecedented levels for it. How is that playing out when it comes to the Aussie economy?
WONG: Good question Rishaad. Obviously the currency is a floating currency and people can have their own views about why the $A is where it is but what I would say is this. Notwithstanding the volatility we are seeing globally, we do have an economy with very strong fundamentals, we have very low debt, our public finances are in very good position. We obviously are hooked into the right part of the world, weve got low unemployment, so there are very strong fundamentals here.
There is no doubt that the high dollar has had an impact on our domestic economy. It is a good thing in some ways because it lessens some of the income shock from the high terms of trade, but there is no doubt for those sectors of the economy who are exporting, for example manufactured goods, there are firms in Australia who are finding the high dollar a very significant challenge.
SALAMAT: How is it playing out when it comes to tourism as well which is a big money spinner for you guys?
WONG: That is obviously a sector that has been impacted. We have got a lot of Australians going overseas because obviously we get a bit more for our money overseas, but it has had an impact on inbound tourism as you would expect, so that sector is finding it much tougher than previously.
SALAMAT: Australians going overseas, who knew? Lets just talk a little bit about how also your government surplus targets are. Now tell us, you want to get a surplus - the budget back to surplus by 2013. Are you confident you can do that?
WONG: Rishaad, its very important to understand the context in which this fiscal consolidation strategy was entered into. And I think the decision by the Government to make very clear to the markets - as well as to the Australian people - when we went into deficit in order to stimulate the economy to show the path out of deficit was a very good one.
We thought it was very important to be really clear that how we were intending to exit deficit and to consolidate our finances after growth returned to trend, and thats what we are going to be delivering on. We have laid out a fiscal consolidation plan. We plan to return the budget back to surplus next year. There is no doubt obviously that has become a harder task as a result of the volatility you and I have been discussing.
SALAMAT: How does the carbon tax play into all that?
WONG: We as a Government take the same view that the previous Prime Minister Mr Howard did, that a price on carbon is the cheapest way, the most cost-effective way, for Australia to reduce its emissions. Lets remember, both parties here in Australia, the Opposition and the Government, do have the same target by 2020. And the Governments policy is to put in place a price on carbon through a tax which then becomes an emissions trading scheme with a floating price. Because that is, we believe, the most economically sensible policy.
SALAMAT: Yeah, but is it the right one to be doing when we do see, with the consumer confidence report that we had about 24 hours ago showing world pessimism was actually coming in to the average bloke on the street, is it the right time to be instituting such a thing like that? Because at the end of the day, the cost will be passed down to the consumer, surely?
WONG: And we have a very extensive assistance package, including a very important tax package, which will lift the tax-free threshold, so it will have a very positive participation effect on the economy, which is obviously an important policy objective.
But in terms of sentiment, obviously in Australia, were part of the global economy, and notwithstanding our strong fundamentals, were going to be impacted upon in terms of consumer sentiment by some of the uncertainty internationally.
But in terms of the carbon price, I think whats important here is for Government to provide certainty, and thats what we want to do. Weve gone through a very lengthy process in this country arguing about the right policy design and the Government is proposing to provide this certainty when it comes to pricing carbon which I think is important.
SALAMAT: Lets just talk a little bit about the Reserve Bank. Of course it is independent but you must have a view about the way interest rates are at the moment. And are you happy about where they are currently or do you think they perhaps should be moving to the down side now?
WONG: Rishaad Im sure youd like me to comment, but you know we do have a very clear view about the independence of the Reserve Bank, and what Id refer you to is their most recent statement of monetary policy, which spoke about a great many things, but also spoke about the medium term outlook for Australia and the strong outlook as a result of where we are in the world and the economies that were hooked into in our region, which are, as you know, growing.
SALAMAT: Alright well as were [inaudible] topic of the Reserve Bank, Im just going to talk about a story which has been coming out in recent days concerning these bribery allegations that bank note making subsidiaries there. Now, is it the case that there are some stories there at the moment that this should have been disclosed earlier? Are you going to be looking into this in more detail?
WONG: First, the Reserve Bank has made some public statements about this issue, so I think thats been important. But I would say, these are matters which are the subject of our judicial system, Im sorry more correctly are being investigated through the AFP investigation, so I dont think its appropriate for me to comment at this stage on those investigations.
SALAMAT: Penny Wong last question, what worries you the most when you look at the economy and look at your brief?
WONG: (laughs) Im a Finance Minister, and you know, you worry about a great many things, and particularly how you try to find the money to do the things the Governments want to do. But really, theres very few other advanced economies youd want to be Finance Minister of rather than Australia, so I feel very lucky to hold the position I hold, because we do have an economy with, by comparison, very low levels of public debt and certainly low levels of unemployment, a very strong pipeline of investment. So, you know, those are very strong fundamentals.
SALAMAT: So nothing to keep you up at night at all, then?
WONG: Well as I said to you Rishaad, you know I suspect Finance Ministers always have things you need to worry about, and certainly I think all of us are concerned about some of the volatility were seeing but what we do know here in Australia is that we have very sound fundamentals, very strong fundamentals, and we are very well placed compared to most other advanced economies to ride this out.
SALAMAT: Penny Wong, thank you so much for your time.
ENDS