LIPSON: Penny Wong, thanks for your time today.
WONG: Good to be with you.
LIPSON: A $7.5 billion write-down in revenue since October last year, due to factors that arent likely to change any time soon. What does that mean for this Budget and the Budgets in the future?
WONG: Well, its pretty challenging as were putting this Budget together. Lets understand why this is happening: we have a high Australian dollar, the prices were getting for the things we sell to the rest of the world have come off significantly. That means business is making less profit, and when business makes less profit government gets less money in terms of tax revenue. Thats what were grappling with.
What you have to do when youre confronted with this is to make responsible savings decisions. You dont cut to the bone, you dont chase revenue down, but you do have to make responsible savings decisions in order to invest wisely.
LIPSON: What does it mean, though, for the deficits or the potential for deficits in the future?
WONG: Well, certainly, as the Treasurer has said, we dont anticipate this trend on revenue being turned around any time soon, and thats not a political statement, thats a statement of fact. And thats a reality that the Government has to deal with. So, understanding that, youve got to say, well, that doesnt mean you stand still.
You have to make the right investments for the future of the nation, such as the plan for school improvement which is all about, not only our children, but the economy and our competitiveness. You have to make that investment. What do you have to do to find the room in this budget situation to make that investment? You have to make a responsible set of savings.
LIPSON: When you talk about savings, the savings that have been made over the past five Budgets or so have really been ploughed back into the economy or eaten up by other factors there hasnt really been any net save, as the Grattan Institute is calling for.
WONG: I would make the point that weve made quite a lot of structural savings decisions and they will yield an improvement to the budget position from what it would otherwise have been for the decade ahead, and Treasury has made that clear in the last Budget.
But what we confront is a revenue situation where revenue is declining. You have a couple of choices as a Government: you can either chase revenue down; you can cut too much and cut in the wrong places, which is Tony Abbotts plan. What does that do? It hits the economy, hits jobs. Or, you can take the Labor Governments approach which is to make responsible savings decisions. Let me tell you, a lot of them wont be popular, but they are the responsible decisions in order to make the right and smart investments for the future.
LIPSON: But ultimately its going to mean that debt will increase this year and in the years ahead in order to put jobs and growth first.
WONG: What it means is we will make responsible savings decisions, not irresponsible decisions which are about cutting to the bone. I dont want anyone to think that this will be a Budget without savings decisions it will be. And youve had a taste of that with the universities decision which was unpopular with some people but as the Prime Minister said, this is part of what we have to do to make sure we can fund a priority for the nation, which is investment in our children and our schools.
LIPSON: So, whats the long-term plan then to bring the budget back into the black?
WONG: The plan always has to be, as we have said, our medium-term fiscal strategy: bringing the budget back to surplus over the cycle. Unfortunately thats got harder given whats happened to revenue, but that remains the Governments fiscal strategy.
LIPSON: So, does that mean that, as the Grattan Institute suggests, we need to look at health, education, welfare if were to avoid a debt quagmire similar to what weve seen in Europe in the decade ahead?
WONG: Lets remember the Government has already made a substantial number of savings decisions across a range of areas, and Ill give you one example which is the private health insurance rebate. Thats a very significant saving in the health area. Without having made that decision we would have seen a blow-out in that particular spending item. We dont think its a priority to subsidise the health insurance of people who are earning very high incomes. Mr Abbott does think its a priority. I dont think its a priority for the country.
LIPSON: But I suppose what Im getting at. is now really the right time to be investing in the NDIS and Gonski? I mean Grattans saying no, we need to be cutting education and health and the like.
WONG: I think investing in our schools is an absolute economic imperative. You only have to look at the data. Were falling behind the rest of the world, particularly our region. And too many of our children are being left behind. So it is an economic and social imperative to fix this up. But youre right, you dont do it just by deficit financing, you do it by finding savings. Thats what the Prime Minister has said very clearly she will do.
Particularly over the longer term, thats the sort of approach we have to take as a nation. Because if you just say this is all too hard what youre actually saying to Australians is were not going to invest in a future. Were not going to make the smart investment decisions now to ensure we have a strong economy into the future.
LIPSON: The Manager of Opposition Business this morning was on Sky News and he used the word crisis in a discussion about the economy. Lets just hear exactly what he said first of all. Sorry, we just had a bit of a problem there with the Christopher Pyne grab, quite clearly, but I can paraphrase what he did say.
WONG: He usually says the sky is falling, thats usually what Christopher says.
LIPSON: Well what he was saying, he was talking about the deficits running out into the future. He said that the Government is in crisis and there is a crisis here. Whats your response to that?
WONG: Well, Christopher always says that. Youve been interviewing him now for a number of years and he probably says that in most interviews. But, you know, this is a Shadow Education Minister who is saying to Australian parents: Its fine that a 15-year-old here is a couple of years behind a 15-year-old in Shanghai when it comes to maths. Its fine that the children from poorer backgrounds are up to three years behind their peers when it comes to literacy and numeracy. Well, I dont think its fine and I think thats the crisis we need to address. The fact that Christopher Pyne thinks thats okay really says something about his priorities.
LIPSON: Yesterday, we heard Tony Abbott say as well that hes happy to go to the election promising to spend less than Labor. Are you happy to go to the election being framed as a big spending, big debt Government?
WONG: I want us to go to the election with a very clear Budget for the future. A very clear plan for the future, being upfront with the Australian people about our choices and saying Were going to have to make this savings decision in order to fund better schools. Were going to have to make this savings decision in order to fund DisabilityCare.
Well be upfront about our choices. Tony Abbott will hide his choices thats what he wants to do hide his choices from the Australian people prior to the election. I dont think thats appropriate.
LIPSON: Senator Penny Wong, thanks for your time.
WONG: Good to be with you.
ENDS