LESTER: Penny Wong, welcome to Breaking Politics.
WONG: Good to be with you.
LESTER: Can you tell us just how badly have government revenues been hit and what numbers will we see in the Budget to this effect?
WONG: Well, were seeing very substantial hits to revenue from what we anticipated, and for this financial year, from Budget to Budget, were looking at around $17 billion in write down. That is the government getting $17 billion less in revenue than was anticipated this time last year.
LESTER: What are the major hits to revenue? Whats done most damage in that area?
WONG: Its a combination of two factors: it is the high dollar and also the terms of trade coming off, so the prices of the things that Australia sells to the rest of the world are less. The combination of those two factors and competitiveness in the domestic economy has meant that business is getting less profit. And when business makes less profit, government gets less revenue. And youve seen very significant write downs in revenue across the forward estimates.
LESTER: Which changes the number for the coming financial year but it changes it also across the forward estimates in the Budget the Financial Review says by $60 to $80 billion across those four financial years. Are they right?
WONG: Well, Im not in a position to confirm those figures. Theyll be clear on Budget night. What I would say to you though is, weve said for some time, the circumstances which were driving the lowering of revenue from what was anticipated and less revenue for a given amount of economic growth, thats what were seeing, those circumstances we dont anticipate ending in the very short term. So, obviously youre likely to see an effect across the forwards. What I can say to you is that in the current financial year were looking at around $17 billion Budget to Budget.
LESTER: Youre already making changes to try to compensate for that loss of income. What are you doing to the Family Tax Benefit? Tell us.
WONG: Weve had to make a difficult but responsible decision to not proceed with the boost to the Family Tax Benefits that was due to start later this year. Obviously, a decision we would have preferred not to have made, but a decision that is driven by the need to act responsibly in the face of falling revenue.
LESTER: Ok, so who loses what as a result of this cutback?
WONG: Well, actually no one loses anything as a result of this decision from what theyre currently receiving. What we are saying is that the boost that was anticipated, that we had scheduled to come in in the second half of this year, wont be proceeded with. So, the Government has made a decision not to go ahead with that. I would make the point that the Government has made a great investment in families as a priority, hence the SchoolKids Bonus. Hence things like the increase in the tax free threshold thats obviously a very important thing, particularly to single income-earners.
LESTER: That cutback or that not proceeding with the change to Family Tax Benefit A might have been worth $500, $600 a year to some families?
WONG: Maximum benefit was between $300 and $600 depending on the number of children, so obviously we would have preferred to have proceeded with it. But you have to make responsible decisions and, unlike the Opposition, we will be upfront about that.
We saw Joe Hockey yesterday declaring the end of the age of entitlement, saying the age of universal entitlement is over. Does that mean he wants to cut Medicare? What does he intend to cut? The difference between the Government and the Opposition is we will be upfront about the responsible decisions we have to make. The Opposition wants to coast to the election and not tell Australians about what they would cut to the bone. I think thats dishonest.
LESTER: Keeping cuts under wraps probably is, but at least saying that theres a need to cut back on middle class entitlement, or the age of entitlement, is honest. Do you agree with it to an extent? That theres a need to trim back on government handouts?
WONG: Well, you have to make responsible decisions so you can invest wisely for the future. And we are making responsible savings decisions. We want to invest in things like DisabilityCare, things like the investment in our schools, to lift all our schools and make sure none of our children and the country are left behind as the result of a schooling system which isnt as good as it should be. Thats what the Government is doing.
The Opposition ... they have a very strange set of priorities. Apparently making sure millionaires are subsidised by taxpayers for their private health insurance is more important than anything. Apparently making sure millionaires get a very generous paid parental leave scheme is the most important thing. But its alright to say to low income earners: were going to increase your taxes, which is Tony Abbotts policy.
LESTER: Just on the question of millionaires, while were there, both, well, two of our major newspapers this morning have led with or run the suggestion that some of our wealthiest pay virtually no tax at all. How do you feel about the fact that the highest earners seem to be paying some of the lowest tax?
WONG: Look, I havent seen the detail of those articles. But I think, generally, Australians would agree we should all pay our fair share and we should all contribute and thats the approach the Government takes.
LESTER: Do you think there might be a need for changes to the way we tax some of our biggest earners?
WONG: Im not going to engage in speculation about that. I think the general principle that Australians expect is that we all pay our fair share of tax, we all contribute to the investments in schools and hospitals, in our infrastructure and in our Defence Force that benefit us all.
LESTER: Last night Twiggy Forrest Andrew Forrest, from Fortescue Metals said the Government must not change the mining tax. Is he going to be disappointed on Budget Day, Minister?
WONG: I think weve made our position on the mining tax very clear. And what I would say about the mining tax is that there are some out there who are suggesting that all of the challenges to the federal budget would be fixed if we altered the mining tax. And I would make clear the point that if you look at the scale of revenue write down Ive confirmed today, of $17 billion for 2012/13, you can see that that is not driven by the mining tax. It is about all profit-based taxes being hit.
LESTER: Penny Wong, thank you for your time.
WONG: Good to be with you.
ENDS