WONG: Thanks very much for coming. Im here today to make an announcement in relation to the federal budget and before I do that I just want to make some brief comments about the context in which we are putting this Budget together.
We know that there are some short term challenges in the Australian economy. We know that not all of the parts of the economy are in boom times. We know that we are seeing a much more cautious Australian consumer. People are saving more rather than they are spending. We know that we are seeing a high Australian dollar which is putting pressure on some sectors, particularly in the non-mining sectors. We also know that the floods and cyclone have come at an economic cost as well as a human cost.
But we also know what the long term outlook is. And the long term outlook is for a very strong pipeline of investment. A very big investment boom in the mining sector. Very large amounts of money being invested in that sector and we also know that that will put pressure on our economy. So with that in mind, the right thing is to ensure we come back to surplus. And thats why the Government is focused on bringing the budget back to surplus. Its about making sure that government doesnt add to price pressures, arising from the gathering pace of the investment boom.
And the Government is determined to lead the way by tightening our own belt first. So today, Im announcing an increase in the efficiency dividend across the Government. Building on our election announcement which increased the efficiency dividend to 1.25 per cent. The Government will increase the efficiency dividend across the Australian public service to 1.5 per cent for two years, starting in 2011-2012 before it drops back to 1.25 per cent. This is an additional and temporary increase to the efficiency dividend for 2 years, which will yield savings of around $465 million dollars through better day to day running of government.
The efficiency dividend is a mechanism to drive greater efficiencies in how government does its business. Thats what its intended to do. We know to date, weve seen government promoting smarter and more efficient ways to carry out its core business, utilising co-ordinated procurement, for example, in the ICT area and in other areas.
Im also releasing today a review of agency efficiency report. This was a report commissioned by my predecessor Lindsay Tanner and Im announcing that we are going to adopt the central recommendation of that Review, which is to apply the efficiency dividend at a portfolio level, rather than at an agency level. This will ensure there are additional flexibilities in the system and we have accepted this recommendation.
Before I go to questions, I want to make some comments about Abbotts mental health announcement today, particularly from the perspective of costings. Well, Mr Abbott cannot be the alternative Prime Minister, put forward policies, and not say how he is going to pay for them.
This is a credit card approach to public policy from Tony Abbott. A credit card approach to public policy from Tony Abbott. A man who has presided over a $10.6 billion black hole. Who if he were in government today would be delivering a deficit, a deficit in every year over the budget period. This is Tony Abbotts contribution to fiscal responsibility. A deficit were he in Government over every year of the budget period.
So the challenge for Tony Abbott who appears to be trying to suggest that he can take a credit card approach to public policy; announce policies and not say where hes going to get the money from. The challenge to him is this: as he goes into the Budget period, as the man who wants to be, who says he is the alternative Prime Minister. As he goes into the Budget period, Tony Abbott is going to have to tell Australians just where hes going to get the money from to fund the policies he says should be delivered. And until he does, he has no fiscal credibility whatsoever. Happy to take questions.
JOURNALIST: How has the Federal Government shown that its able to fund its own mental health initiatives?
WONG: Well, we will announce the Budget and all measures in the Budget will have their costings associated with them. And unlike Tony Abbott we will ensure that our costings are there for all Australia to see across all policy areas in government.
I have to say, of course, we have been very upfront with the Australian people. This is going to be a tough budget and it will be a budget that contains unpopular decisions. But getting back to surplus is the right thing to do. Its the right thing to do so that government doesnt add to price pressures that we know the investment boom will already risk.
JOURNALIST: How much will the Government dedicate to mental health in the Budget?
WONG: Well as I said already, all policies in the Budget will be costed and well be making clear whatever policies are put forward will be fully costed. Im obviously not making any budget announcements today other than the one Ive made.
JOURNALIST: The ABS has released producer prices. Any comments on how that will affect inflation?
WONG: Look, I havent seen all the detail of that release today but obviously one of the significant drivers behind the return to surplus is we know that we have an investment boom gathering pace. And whilst it might not feel like that to many people because many parts of the economy are not doing as well as some other parts we do have a patchwork economy. But one of the things we have to do is make sure government isnt adding to price pressures and we do that by coming back to surplus.
JOURNALIST: By increasing the efficiency dividend, does that not leave an impression that the Government is cash-strapped?
WONG: No, this should leave an impression that the Government is serious about returning to surplus, about driving efficiencies in the public service, and tightening our own belts.
JOURNALIST: How do you expect it to be greeted by the public sector? I imagine its going to send a ripple of paranoia through various departments.
WONG: Well Im not going to pre-empt what others may or may not say about it. But I would make this point. Mr Abbotts election policy was for a 2 per cent efficiency dividend and a freeze on recruitment. That would have imposed an unreasonable burden not only on the public service but on Australians who would have seen services affected.
JOURNALIST: So this is something Mr Swan has recommended also, that it is adopted?
WONG: This is a Government decision which Im announcing today.
JOURNALIST: Any comments, Minister, on the riots in Villawood? It comes after a lot of unrest in detention centres, a lot of detainee suicides. Is there something wrong with our immigration policy?
WONG: Look, I understand Minister Bowen is or will be making a statement today so Ill leave the comments to him.
JOURNALIST: Can you just enlighten me the way youll apply the efficiency dividend across portfolios, what difference that makes?
WONG: It provides additional flexibility within portfolios. So, for example, there might be some agencies where their capacity to yield efficiency savings is greater than others. So within a portfolio, a minister or a secretary can make a decision that there should be a greater contribution to the efficiency dividend from some parts of the portfolio, from some agencies, than others. So it provides some flexibility. As I said, an essential recommendation of the Review Im releasing today.
JOURNALIST: If its, say, a proposition for two years, why would you not keep it if its an efficiency drive? Why would you maintain efficiency?
WONG: We will be keeping the efficiency dividend of 1.25 over the forward estimates was an election commitment. That remains. What we are doing is a temporary increase to 1.5 per cent for two years.
JOURNALIST: [question omitted]
WONG: I dont have any comment to make on that matter.
JOURNALIST: So youre confident that this tweak on the dividend is not seen as penny pinching just to boost your coffers?
WONG: What Im saying to Australians is that were putting together a Budget thats about the future. We know that the investment boom is gathering pace. We know that that is likely to increase price pressures and in that context, its the right thing to do, for the Government to bring the budget back to surplus. Thats why were very focused on it. And this is about government tightening its belt to contribute to that.
JOURNALIST: So no comment, Minister, on the controversy today, on the issues in South Australian politics?
WONG: Ill leave those matters for the South Australian party. Thank you.
ENDS