SWITZER: I interviewed our Finance Minister Penny Wong and started off by asking was she proud of her first Budget?
WONG: Im absolutely proud that were going to get the budget back to surplus in the year we said despite the hit on revenue, despite the softer conditions in the economy at this point. And very proud of the investment in skills and in participation. Its a budget thats very focused on jobs. Creating jobs, getting more people into jobs and training people for those jobs.
SWITZER: Minister you know your colleague Mr Swan has copped a bit of criticism for the spending cuts. But in reality this is your portfolio, spending cuts is your territory isnt it?
WONG: Finance ministers are in charge of looking at the spending side of the budget and managing that. And Im pleased that weve been able to restrain spending in this budget in the way we have. I mean the real growth in expenditure in this Commonwealth Budget handed down last night over the budget period is about on average about 1 per cent a year. The last time that was achieved by a federal government was in the 1980s. So thats been a very important part of our strategy to come back to surplus.
SWITZER: Given the fact that your job is to look at the spending line by line and make some of the tough decisions. Did you find it sometimes, the tough recommendations that you made were actually knocked back by your leader? Because that was just too tough?
WONG: I have to say Julia Gillard needs no convincing on the need to come back to surplus and the need to apply discipline. She has been very strong on that. We know that this is key to the position of the economy; we know this a key economic and fiscal challenge. So obviously thats been something all of us have been focused on. But that doesnt mean ministers havent put forward spending that we would have preferred to see in the budget. Weve had some tough decisions to make sure we do what we said which is come back to surplus in 2012-13.
SWITZER: Now theres been a bit of criticism because you guys have seemingly said a family with $150,000 at least look wealthy enough to not get the same kind of compassionate welfare they got before. Whats your defence to that?
WONG: What Id say is this: weve done a lot over the last few budgets to address cost of living pressures for many families. Weve increased the child care rebate as you know. Even in this Budget, we extended family tax benefits or increased them for families with teenagers who are studying.
But weve also had to make hard decisions and the reason we had to make hard decisions is because we dont want to compound cost of living pressures. As you know Peter, weve got a very large wave of investment in the mining sector. Thats putting pressure on the economy, price pressures will continue to emerge. Governments have to do our part not to compound those, and coming back to surplus is the best way to do that. That has meant weve had to make some difficult decisions.
SWITZER: Do you think as a Government you are caught between the pluses and the negatives of this China boom which have affected many parts of the economy in a negative kind of way by a high dollar and rising interest rates. On the other hand youve got the Reserve Bank. It seemed to me when I looked at those two conflicting forces if you went too hard on this Budget youd really ruin the slower part of the economy. But whos to say the Reserve Bank wont punish you in June?
WONG: Thats a very good question because it really reflects the sort of complex circumstances were in where youve got some parts of the economy that are finding things hard. Weve got consumers spending less than they were spending, so thats going to hit those parts of the economy such as retail which rely on consumer spending. Weve got a high dollar which is affecting manufacturing and those exporters for whom that is a disadvantage.
But at the same time, weve got this wave of mining investment thats gathering pace that you have to prepare for. So theyre some of the complexities that youve got to manage at the moment. And the key focus has to be to look at the medium term and how do you prepare for that? And how do you manage that? Bring the budget back to surplus and invest in the capacity of the economy through skills and participation.
SWITZER: I notice the Treasurer started off by saying this is a Labor Budget. Do you think that was wise? Because in a sense, we know youre a Labor Government, but you do govern for the whole country.
WONG: I think its important that we explain to the people what our values are and why those values are relevant to the economic times and how we put them into practice in the economic statement we put before the nation, which is the Budget. Its about the value of work and the importance of using these times to get more people into work. And of course, we know Mr Abbott will have the opportunity to do that tomorrow night in his budget reply; when he has the opportunity also to tell us how hes going to come back to surplus. I notice that theres been some suggestion the Opposition are going to oppose some of the savings measures. Well as you know, Peter, you cant come back to surplus unless you pass some of the savings measures.
SWITZER: But Minister Wong, what if for example, the growth is actually better than what youve expected? Some of these spending cuts may well, you know, when history is looked at, be a little bit too excessive. Given the fact that youre in a lot of pain out there consumers suffer interest rates, small business in particular in that slow part of the economy.
WONG: Peter, if in next years budget things look better than theyre projected to be, well then thats a problem Id like to have. Because that means we can look to the various things that we can do for the benefit of the nation. But at this point, we have to have that discipline for the reasons Ive outlined.
SWITZER: Did you find it difficult? What was the thinking behind reducing the Medicare rebate for people going to GPs for their services?
WONG: Weve put in place a very important package of spending in mental health. Thats an area that I think anybody would say is important and needs more additional funding. Weve had to make some savings to make space for that. Weve had to reprioritise health expenditure to make space for the $2.2 billion were putting into mental health and weve done that.
SWITZER: What of the Greens? I think Bob Brown gave you a six out of ten he mightve given you six and a half but six out of ten. Does it sound as though
WONG: (laughs) I think its the same, thats the same as you gave us, wasnt it, Peter? Have you and Bob been talking?
SWITZER: I gave you six and a half, I think.
WONG: Oh, OK.
SWITZER: But the point is this. Thats not a great recommendation given the fact that you need him to support those measures. Do you think youre going to have to do a bit of horse trading with Bob?
WONG: You know, we put a lot of effort into looking at the policy rationale behind both our savings measures and also our spending measures. So theres a good policy case I think on the decisions that underpin this Budget. And we will talk to Bob and to other members of Parliament about those.
But lets just remember. We only need the vote of the Greens in the Senate on this Budget and on the budget measures the savings measures if Tony Abbott chooses to be irresponsible. Thats the only circumstance in which the Government needs the Greens vote, is if Tony Abbott refuses to support sensible savings measures.
SWITZER: It just seems to be, I dont know if it got back to you, but I called this a Seinfeld Budget because I thought it was a Budget
WONG: (laughs) Yeah, and I said I dont think I look like Elaine. Do you?
SWITZER: (laughs) I think you do, you could easily
WONG: Well whos Jerry then?
SWITZER: Youd probably push like Elaine as well if you got backed into a corner. The point Im trying to make is that you couldnt go for a big order issue because you dont control Parliament. I would have loved to see you guys go long on immigration because we have a labour supply problem in this country. You used to be the minister for environment. Do you have difficulties in increasing immigration, Minister?
WONG: We have increased skilled migration in this Budget. And weve increased also the regional component of that, which is a sensible thing to do because we know a lot of the labour shortages are in regional areas where the sorts of projects that you and I have been speaking about are occurring.
But the other thing around labour supply is to do what were doing. And that is, to tap into the Australian workforce. Weve got a pretty high participation rate at the moment; we need to make it higher. We need to get more people into the workforce. And more importantly or as importantly we need to make sure theyve got the skills that the market needs. And thats why the training measures are important, not just the investment, but the reform in those, which is about getting training more responsive to industry needs and getting industry at the heart of our training effort.
SWITZER: Minister Wong, thanks for joining us on Switzer.
WONG: Really good to speak with you tonight.
ENDS