MARK KENNY [MODERATOR]: Thank you Senator Wong, thats certainly set the frame for this budget process that youre about to go into. I wonder, before we go to questions from other journalists here, if I could just ask you a question about that. Youve said that Tony Abbott has a $70 billion task, a hole to fill in before he gets to square one. Can you just set out the size of the task that you have ahead of you in terms of getting to that very thin surplus thats been forecast?
WONG: I think weve got a pretty good track record at making the decisions to find the savings to offset new spending and also to offset some of the revenue downgrades weve had. Youll recall in the mid-year review we published last year, we saw a significant downgrade to revenue between the budget and the mid-year review. And we made additional savings decisions in order to reflect those. Obviously were going through the budget process this year. Theres always been pressures, you always have to find savings, you always have to keep reprioritising, and well keep doing that.
KENNY: But is it the case, for example, that you say that Joe Hockey cant get anywhere near the sort of cuts he needs just by public service cuts. Is that the case for the Government as well?
WONG: The difference between Joe Hockey and I is weve actually already made decisions to fund policies, and theyre laid out in the budget papers. The problem for Joe and for Tony Abbott is that they havent done that. The problem for them is that they simply have not done the work when it comes to costings, and they havent done the work when it comes to savings measures. Thats why theyre in the position they are.
KENNY: Thanks very much. The first question is from Jessica Wright.
JESSICA WRIGHT: Thanks, Minister. Jess Wright from the National Times. Youve, for the last three days, been quite vocal about the apparent split in Opposition ranks over the timing of a surplus under a Coalition government. Today, your colleague Senator Doug Cameron has come out and repeated his call for Labor to move away from a fetish for surplus, and that Labor would be best protecting jobs rather than its surplus. Is this a similar style split in Labor ranks over their commitment to a surplus?
WONG: I dont think Dougs views on this are unknown to people. Hes put them before. But I think, very clearly, the Prime Minister at her recent speech set out the logic, the economic logic, behind the Governments fiscal discipline. And that is, when youve got an economy growing at trend, it is appropriate for us to repair the damage that was done in the global financial crisis, and make the decisions that do bring the budget back to surplus. Were very clear about the reason for that. We believe that is about good economic management, it is about ensuring that we run a strong economy, it is about ensuring confidence.
We see, as I said in my speech, every day what occurs when markets dont regard governments commitments to fiscal discipline as having a base, as having merit. Were very conscious of that. But this Government has always put the priority on jobs. We have, under us, over 700,000 jobs created. We ensured through the Global Financial Crisis, as I said, 200,000 Australians stayed in work. So lets remember, when Tony Abbott and Joe Hockey are critical of the Governments response to the Global Financial Crisis, they should be asked whether they think its really acceptable for a government to allow that many people to go into the unemployment queues.
KENNY: Alex Hart.
ALEX HART: Senator Wong, Alex Hart from the Seven Network. If I can ask something a little away from day-to-day politics and perhaps a bit more bigger picture. Youve been a Minister for some time now in Kevin Rudd and now Julia Gillards governments. Have you considered a switch to the Lower House? And if not, why not?
WONG: No. (laughs)
HART: Why not?
WONG: I was very privileged to be preselected as a Senator. And when I stood for Parliament, when I first stood for politics, I thought, wouldnt it be great one day if I could be a Minister in a Labor government, and maybe that will happen. And Ive been extraordinarily privileged to be given the responsibilities in government that I have. And this is everything that I wanted to do, is the job that Im doing now, and the job of being a Cabinet Minister.
KENNY: The next question is from Colin Brinsden.
COLIN BRINSDEN: Senator, Colin Brinsden, AAP. Well if youd seen the tweets on Q&A the other night there was a lot of support for you to go further. Anyway, were you surprised
WONG: (laughs) Im not sure its you know. Its a particular audience, isnt it, Q&A? My family watch it, so (laughs)
BRINSDEN: And theyve got a lot of tweet accounts then.
WONG: Well I have a large family (laughs)
BRINSDEN: Were you surprised or concerned that the Reserve Bank left the cash rate unchanged yesterday? Because all it seems to have done is put a further floor under the currency and the problems thats causing business. And of course theres a lot of talk now that the retail banks are not passing on, but actually are hiking rates independently?
WONG: Obviously rates are a matter for the independent Reserve Bank. And theyve set out in their decision their thinking there. Obviously theyre trying to balance some of the same things the Government has been very conscious of, which is global uncertainty, but also an economy that continues to show a significant amount of strength. I think their statement speaks for themselves.
In terms of the high dollar, yes, that is causing a lot of difficulty for different firms and different industries and sectors in Australia. Were very conscious of that. I think that is why the sorts of investments that I spoke about in skills and education, but also particularly the minerals tax, which is about trying to leverage some of the benefit of the boom to reduce the company tax rate and to give tax breaks to small businesses, is very sensible policy. I think we do have to recall, as the Prime Minister said in her speech last week, we have a high dollar in large part because of the perceived strength of our economy. And it is imposing very significant change over a short period of time on the Australian economy. So the question is, what are the policies that political parties and governments can put in place to help manage that transition. And what Ive tried to do today is outline some of those.
KENNY: Can I just follow up on that. Doesnt yesterdays decision though, really prove that the Government doesnt have that lever of monetary policy available to it? All the Ministers who speak frequently say the Reserve Bank of course is independent. Yes, it is independent. We saw that independence yesterday. And yet banks themselves are flagging that they might in fact put rates up on their own. Now theyre seeing obviously a risk profile in the international community that they think would justify that. So theres a disconnect there between what the retail banks might be saying and what the Reserves saying. And all the while the Government doesnt really have a way of controlling that.
WONG: I think independence of the Reserve Bank is one of the strengths of our economic institution. So, lets say that first. Second, in terms of monetary policy, I think the Bank itself, as well as other commentators and institutions like the IMF have made it clear, we do have room to move if and when required. And in fact we know we had two rate cuts last year. We also know that inflation is contained. Were seeing inflation pretty much in the centre of the target band. So that is a good thing for families, and its a good thing for the economy. In terms of the debate on banks, what Id say is this: first, this is a decision for individual banks, but in making that decision I would hope they would think very carefully about their customers, and the views of the broader community. Because obviously theyre big businesses, they operate within a community. And there are expectations that Australians do have about how they operate.
KENNY: David Uren.
DAVID UREN: David Uren from The Australian. Senator Wong, BHP this morning reported a fall in its profits, citing weaker commodity prices. Alcoa also cited weaker commodity prices for a decision to review its Australian operations this morning. Yesterday, Reserve Bank Governor Glenn Stevens referred to declining terms of trade. Is weaker commodity prices representing a risk to the budget?
WONG: We have a set of assumptions, as you know David, and I think weve spoken about this before, in the budget which Treasury do, and they have the terms of trade assumptions set out there. And I cant recall by precisely how much, but it is, over the forward estimate period they do level off from the levels that we saw in 2010-11 and 2011-12. So, I think the best way to think about this is to think about what is it that we have to do as a country to ensure that our fortune and our prosperity is secured beyond the mining boom and beyond the period for which Australia gets very high prices for its resources. And I think the Mining Tax is a very important part of that. It is about leveraging that, and recognising you have to use the benefits of the boom now to invest for the future.
It is quite extraordinary if you think of the priorities of the Opposition, that they would actually say to Australians our first priority as Government, or it might be second, I cant work out whether the Mining Tax or Carbon Tax is worse from their perspective, our first priority is actually the profits of wealthy miners. Its not reducing the company tax rate. Its not reducing the tax rates on small business. Its not more superannuation for working Australians, particularly low income Australians. Its not the infrastructure that we know is needed in those areas of the economy which are growing very fast.
KENNY: The next question is from Laura Tingle.
LAURA TINGLE: Laura Tingle from the Financial Review, Senator. Youre a shareholder, Minister in the NBN, the National Broadband Network. I just wondered its a legacy policy for Labor to have the NBN in place and to significantly increase the broadband capacity for Australians. But I suppose my questions are, there arent a lot of households yet who are connected to it even after four years of your Government. Are you satisfied with the quality of the taxpayer spend on the NBN, and do you think, given the criticism of it, that there would be advantage to both the public and the Government in you releasing more information updating us on how that spend is proceeding?
WONG: A number of points there, Laura, and very happy to answer it. First, when we are talking about the NBN, I think it is extremely important that we remember why we are doing this and what the alternative is. Because the alternative a lot of times in politics, we dont have the counter factual on the policy but we actually do on the NBN because we remember the last ten years of telecommunications policy prior to the structural separation of Telstra. The reality is, we didnt have enough competition and we didnt have enough investment in the infrastructure. So it is very clear that government intervention was required, just as it was required to build the telephone network the copper network that no longer serves this nation well for the future. So thats why we are doing it. Because we know in this century, any proposition that we can simply live with the old copper network weve got is wrong. So thats the point about why taxpayers are doing it.
In terms of transparency, it is a very big project; it is a project where there is an enormous amount of scrutiny and rightly so. It is a project run as a Government Business Enterprise, as you correctly point out I am one of the shareholder ministers. There are the normal governance arrangements associated with GBEs. We released the corporate plan; it will be updated each year. And there is also a parliamentary committee which has oversight of the NBN from a parliamentary scrutiny perspective. And lets not forget there is also a Board in place, the sort of governance structure that GBEs generally do have. I think some of the people who are anxious to criticise the aspects of the NBN are fundamentally not dealing with the policy issue that its designed to redress.
I have to say I have noted with interest, my counterpart Mr Robbs desire now to get involved in the NBN debate. I am very happy to have that debate with him and I suspect it might be because he doesnt want to talk about their surplus position.
KENNY: Thank you very much, the next question is from Misha Schubert.
MISHA SCHUBERT: Misha Schubert from the Sunday Age. Minister, two questions if I may. The Government has re-introduced its legislation in the House to means test the private health insurance rebate and I think thats meant to have netted you $2.4 billion in savings over the forward estimates. Whats your fallback plan, budget wise, if you cant get that legislation through both houses? And secondly, theres been some growing confidence in the rhetoric of senior ministers, including the Prime Minister this morning, about how certain you seem to be about delivering a budget surplus next year. Why is there that growing sense of confidence? What do you know that we dont yet?
WONG: (laughs) Well if I did know something, do you think Id tell you right now?
KENNY: Come on, bring us into your confidence (laughter)
WONG: It was a bit like your first question, which was a bit like tell us what your budget numbers are first. Anyway
KENNY: Thats true.
WONG: I was more polite then and now Ive loosened up, I can say what I think (laughs). Can I first say on the private health insurance, budgets are about priorities. Thats what they are. Theres a finite amount of resources, public resources that governments gain from taxpayers both corporate and personal. And we have to allocate those revenues, those monies, in accordance with sensible priorities. Ive already said I think its a bit bizarre that Mr Abbotts priorities are wealthy mining profits over tax cuts for families. But this is another area. Why is the Government having to negotiate with the crossbenchers? Its because the Opposition are, unsurprisingly, again saying no. And they are saying no to a measure which essentially says to Australians we want to make private health insurance subsidies fairer.
We dont think as a Government it is fair for low-income Australians to be subsidising the health insurance of millionaires. Why is that a good use of public money? It is not. We would rather do better things with that and redirect that money to more important priorities. We intend to keep negotiating with the crossbenchers. This is an important reform and one were determined to get through the Parliament.
SCHUBERT: And if you cant get it through?
WONG: Im not countenancing that. Well continue to negotiate with the crossbenchers because this is a very important reform. And it is absolutely justified on public policy grounds.
Your second question was about determination. In terms of the surplus, weve laid out our clear commitments in the budget papers. That is the demonstration of the Governments commitment to return to surplus and Ive been Finance Minister since the election. Weve had a floods package which weve had to deal with. Weve obviously had two MYEFOs and the Budget. Weve had a lot of pressure on the budget, not just because of expenditure on floods and natural disasters, but also very substantial downgrades in revenue because of the global economy. And well continue to make hard decisions to ensure we do stay on track to return to surplus. Were determined to deliver it.
KENNY: Just before we go to my colleague Peter Martin. Do you wish that the task that you had was just a little bit smaller? That there was perhaps just a little bit less spent in stimulus money a couple of years ago?
WONG: No, you know what I wish? I think sometimes back to when Costello was Treasurer and I think how much he had between each budget and mid-year update, he found that more money came in because of where tax revenues were. That would be a slightly easier position to be in, to actually have more revenue than you anticipate than less revenue you anticipate every time. But thats what weve been handed. Obviously, the global economy is in a pretty difficult place and we have to keep managing.
KENNY: Peter Martin.
PETER MARTIN: Peter Martin, the Sydney Morning Herald. Minister Wong, there was one budget where Peter Costello didnt do that. He promised a surplus and he delivered a deficit. And youll remember no one thought particularly badly of him for it.
WONG: And your question is?
(laughter)
MARTIN: This is your first time at the Press Club, the third financial statement youve delivered. In two of them, theres been big cuts to the public service through the efficiency dividend. The last one the biggest of all. Youve said it would be difficult for Tony Abbott to make his savings that way. Is there room to cut the public service again?
WONG: We have made very substantial inroads into the expenditure in terms of the public service, and Im very conscious thats going to be tough for departments to deliver. It is a very substantial efficiency dividend that we are putting in place. I am under no illusions about how challenging that will be. We do think in a tough budget environment that we have to ask departments and the public service more generally to cut its cloth to reflect that tough budget environment and thats what weve done.
My point was this whenever Joe gets under pressure about his $70 billion black hole, which I think he might be walking away from now what he does instead of telling people what hell do about it, is he just talks in general terms about the public service. My point is that the quantum of savings that he has to find is not going to be found through increased efficiency dividends. Is not going to be found through sacking more people. Were talking, as I said, whats paid for Medicare over four years. Were talking two years of not paying the age pension. These are very big numbers. So he might airily dismiss the size of the task. But I think its starting to dawn on them that its a problem.
MARTIN: My question is, is there room for another cut in the public service?
WONG: I think youre asking me about any future decisions. But I think I made very clear at the MYEFO that we made the right decision in terms of the additional efficiency dividend for the 2012-13 year.
KENNY: I believe the next question is from David Speers.
DAVID SPEERS: Thanks Mark, David Speers from Sky News. Two questions if I can sneak them in. First one, sorry to be pedantic about the return to budget surplus, but the PM did say this morning the Government will get the budget back into surplus next financial year. Is that now the commitment, the guarantee, call it what you will, is that confirmed? Its not just a determination or a plan, its a commitment? And secondly, can I take you back to the claims earlier this week about the PM being a victim of sexism. Youve copped a bit of this as well yourself. What do you think is Julia Gillard a victim of sexism? And how specifically has that manifested itself?
WONG: I dont want get into any word games. We are determined to bring the budget back to surplus. And our commitment to that is demonstrated in the budget papers. So you know, when the Opposition try to point the finger here, theres a very clear difference. Here are our budget figures and our mid-year update and the decisions weve made to ensure that the numbers add up so that there is a surplus by 2012-13. And what you have from the Opposition is a walking away from their surplus commitment. Thats what you have.
On the issue of sexism. Ive known the Prime Minister, I think nearly 20 years. And I dont think ever in that time have I seen her do a poor me. She is not that sort of person and she isnt doing it now. I think we are all judged by what we achieve and what we do. And thats the way she approaches her job and certainly the way I approach mine. Of course, as you know, if someone has a go at me, Ill have a go back, and thats the nature of politics. I do hope that we see more and more women coming into Parliament and more and more women in positions of senior leadership.
KENNY: Our next question is from Laurie Wilson.
LAURIE WILSON: Thanks Mark, Laurie Wilson. You criticise the Opposition for attacking, undermining business confidence. But, in terms of some of the things that have been raised in passing, by yourself and in questions today, things like global uncertainty, weaker commodity prices, declining terms of trade, the Australian dollar, arent they all really far more significant factors in undermining business confidence? And if theyre not, doesnt that simply say that the Oppositions message is cutting through far more effectively than the Governments?
WONG: I dont think it is a good thing to lie, and mislead the Australian people, and to trash the Australian economy. And I think there is a place for robust political debate. I dont think anyone would suggest Im not up for that. But when you have senior Opposition members comparing Australia to Greece, we really are getting into a ridiculous place. A ridiculous place. When you have the person who would like my job saying that the Government is responsible for the high dollar, we really are in a ridiculous place.
So, I am very happy to have a discussion about some of the global economic risks. And we are very alive to them, we have been upfront with people about those risks, and we deal with the effect of global volatility in our budget, and in our budget figures. But lets have a sensible debate.
Lets have a sensible debate, and if people are going to throw punches about surpluses and deficits and debt, theyd better start fronting up with the numbers. Because I think 2012, given where we are, and I tried to lay that out in the speech, I think this is a very important time in terms of decisions we make now for the future. I think all of us should be accountable, and all of us should be prepared to say what we would do, and how we would fund it. And all we get, and all Australians get, from people who would like to be in government, is more negativity, more sound bites, and a complete absence of any economic credibility.
KENNY: Ken Randall.
KEN RANDALL: Minister, Ken Randall from Media Monitors. Id like to put this proposition to you that from the day he became party leader, Tony Abbotts been painting a picture of this Government, and the previous one, as being just profligate spenders; completely ignored the fact of the stimulus spending on the Global Financial Crisis. And it seems to have stuck with a lot of people in the media. Hes denigrated the schools improvement program all elements, in fact, of the stimulus spending program and yet it hasnt been rebutted until virtually this week. You and the Prime Minister have now taken a much more forward approach whats taken so long to get the message through?
WONG: Im not sure that we havent rebutted it. You people might not have reported it. But we have rebutted it (laughs)
Certainly the negativity has been very effective for him, politically. But it doesnt do much for the country. And I think its always been interesting when it comes to schools, you get Tony in the Parliament talking about the BER and how dreadful it was yet youd have Opposition members rocking up to the BER openings in their electorate and shaking hands with everybody. Irony, I suspect.
I think this is a year in which the colour and movement will be replaced by a little more focus on substance. And it should be. It should be. Because we do have some pretty significant choices as a nation in this time. And political parties, and political leaders in particular, should be held accountable to the Australian people for what their policies are. Its not enough just to run away with a couple of sound bites and believe thats sufficient in terms of what youre putting forward to the electorate.
KENNY: Can I just switch briefly to one of your previous responsibilities, that of water.
WONG: Hes from South Australia.
KENNY: Your friend and ally Jay Weatherill, the Premier of South Australia, has flagged a legal challenge to the Murray Darling Basin Authority draft plan thats currently being considered. He says, obviously, that it doesnt deliver enough water to South Australia. Plenty of people in South Australia would agree with him on that, including one or two of your Federal colleagues. Im wondering, as a South Australian Aenator, and a member of the Federal Cabinet, where do you stand on that? Is he right to be threatening a legal challenge?
WONG: The Premier should stand up for the interests of his State, thats his job.
KENNY: Thats what State Senators do as well, is it not?
(laughs)
WONG: (laughs) I think as Water Minister, my views about returning water to the Murray are very much on the public record, and oft-repeated. I think the most disturbing thing recently is the reported comments by Tony Abbott to his party room, where theres the instruction not to argue for a gigalitre more. And what hes clearly saying to the South Australians in the Liberal party room is dont argue for more water for downstream.
This is a very difficult policy area. I do think that South Australia, and the nation, will be best served if it can be resolved. I think the fighting between States has not served the River well, the Basin well. That was always the view I put when I held this portfolio. In terms of what the Premier is doing, we are in a process of consultation on the plan. And he is doing what he should do, which is to press for the best outcome that he thinks is appropriate.
KENNY: Thank you very much. Jessica Wright.
JESSICA WRIGHT: Hello again. Well, its against Press Club rules to ask two questions, so Im going to ask two more and take it to three. This morning an Opposition MP, Stuart Roberts, said that rather than being the No-alition, the Opposition has supported 87% of Government legislation, and the issues that it is either blocking or opposing is simply an Opposition doing what it has to do and holding a Government to account. And the second, and Im sure Twitter wont like it, but we dont care. Whats it like being a mum? And, congratulations.
WONG: Was there a third?
KENNY: That was a comment.
WONG: (laughs) OK. Well, the Opposition can say all they like. I think Australians know that Tony Abbott is Mr No, Dr No. And thats the approach theyve taken. They havent really put forward any sensible positions when it comes to the key economic issues since hes been Leader.
Its lovely to be a mum, thank you. Shes wonderful.
KENNY: Peter Phillips.
PETER PHILLIPS: Minister, Peter Phillips from the Board of Directors of the National Press Club. Your speech mentioned that were embarking on the Asian Century, and in that context, Australia has embarked within it, as a part of the Asian Century. I know that, the best urgings of our moderator notwithstanding, youre not going to divulge anything about the forthcoming budget.
But, I wonder whether there might be any hope for us in this audience, and the broadcast audience, who would like to see greater attention to the teaching of Asian languages in Australia. Does the Prime Ministers vision for the new economy include a vision for enhancement of the teaching of Asian languages in Australia so we can better engage our role in the Asian Century?
WONG: Theres no doubt the Prime Ministers priority has been the focus on education and skills. And weve put a very significant investment into those areas, for the reasons Ive outlined. Asian languages are obviously an important aspect of the skills we do need, to encourage and improve in the Australian workforce as we move into and along this Asian Century. But its not the only one. It is very important, but there are many others.
And I think the Prime Ministers commissioning of the White Paper is a good opportunity for us to consider, across all areas of government, what the policy settings need to prioritise. Because, whether it comes to industry policy or education policy, as you rightly point out the importance of Asian languages as my father always told me as I was growing up there are a great many things we need to consider. It is a fundamental reshaping of the global economy. A fundamental reshaping of the global economy. And it will reshape our economy whether we like it or not. What we do have a choice about is how we respond to it, and how we position for it.
PHILLIPS: So was that a yes or a no as far as the budgets concerned?
WONG: Budget speculations started early, hasnt it.
KENNY: Well, you are the Finance Minister.
WONG: Thats true.
KENNY: Youre the one who knows.
WONG: (laughs) Obviously, budget decisions are budget decisions. I would just remind you again of the very significant investments $3 billion we invested in education and skills in the last budget, the largest single investment that we made. It was the centrepiece of the budget, and rightly so.
KENNY: Final question today, from Laura Tingle.
WONG: Oh dear.
TINGLE: (laughs) Dont be like that.
WONG: I never know whats coming next.
TINGLE: Im on the NBN today, the National Broadband Network. One question I had, the Prime Ministers announced today a $620 million investment in two satellites to provide high-speed broadband to outlying areas in Australia. The critics are out. I just wonder, why not use existing satellite capacity to deliver this service. Wouldnt it have been cheaper, and what was behind the decision?
WONG: Remember, this is a decision the NBN makes about the best way to deliver the policy that the Government has outlined. And theres the usual process of the Shareholder Ministers issuing their statement of expectations, the Board of NBN crunching the numbers, preparing their corporate plan. And we released, as you might recall, not only the corporate plan, but part of the assessment of it by an independent firm, in the interests of transparency.
Fundamentally, this comes down to do we want broadband to be delivered to all Australians, which obviously means a high level of cost and a different sort of infrastructure, or, do we only want to deliver it to people living in certain parts of Australia? Now, the Government made its views clear, and this is not new. This has been our policy for a number of years that we think this is an infrastructure that needs to be rolled out across Australia. That means you need different ways to deliver it, and satellite is the only option for Australians particularly in very remote and regional areas.
KENNY: Thank you very much, Senator Wong.
WONG: Thank you.
ENDS