SWITZER: Senator Wong joins us from our Canberra studio. How are you Senator Wong?
WONG: Good to be with you again, Peter.
SWITZER: Same here, same here. Now, one thing I've noticed this week, Penny, is that both the Treasurer and the Prime Minister have made speeches, both to, basically, to an overseas audience, where they're showing signs that they're a little bit worried about what's going on in Europe, and what's going to happen to the Global economy, and therefore what could happen to our economy. And, in the case of the Treasurer, he pointed to the pressure on the budget surplus. Is this a concern for you guys in Canberra?
WONG: I think everybody is concerned about what's occurring in Europe. We have a sovereign debt crisis in Europe, and we do need resolution to it. And I think we've got the Deputy Prime Minister and the Prime Minister saying very clearly, adding their voices to the other voices of the G20, and others, saying this must be resolved. We do need certainty markets need a clear resolution to these sovereign debt issues. And we know that these issues do weigh on confidence. We know that they are weighing heavily on markets. And that's why we need, not half-measures, but a resolution, and a way forward.
SWITZER: You know as well as I do that we've seen some conflicting signals in the economy recently, and more and more economists are saying that on the Cup Day we could see an interest rate cut. As a Government, are you hoping, I know that you can't influence the Reserve Bank, but are you hoping, for the sake of the patchwork economy, that we see a good reason for a rate cut?
WONG: Peter, you know I can't comment on that. But I can talk about the difficulties we see in the economy at the moment. And you've really identified them in your question. You've got parts which are growing very strongly, a part of the economy, and then you've got other parts of the economy which are finding life pretty hard.
And, that does make it more difficult I think for all policymakers to assess where the economy is going. It certainly makes it more difficult for business, doesn't it? Because you've got a whole range of signals.
Having said that, I thought the last National Accounts were pretty strong, stronger than anticipated, and we've seen some good figures. But there's no doubt we've got a lot of global volatility, we've got a lot of issues weighing on confidence. Obviously the situation in Europe is one of them. And those things will have to be taken into account by the Government. And I'm sure by other parties as well.
SWITZER: Now, I know that you listen to the criticisms the Government receives. And you, I guess, would evaluate them as being either fair or unfair. But some of the big end of town people have said that you guys aren't great listeners when it comes to some of the critical issues. But when it came to the forums last week, the jobs and the Tax Forum, you guys seemed to be in a real listening mood. Was that something you, as a group, decided you wanted to show us as a voting bloc, that you are actually good at listening to the community?
WONG: No, we listened because we thought it was very important to listen. I thought it was a great forum. I thought it was one of the best discussions we've had in national politics in a long time. Certainly better than some of the discussion we have, or the fights that are being had at the moment, inside the Parliament.
As Finance Minister, you have to look to the long-term. There were two takeouts for me. The first was that we actually saw people thinking about the long term that's a really important thing. We were thinking about what are the best policies, not just for the now, but for the future. And, second, that people might have had different views, they were asking the right questions. I mean, part of the problem in national politics at the moment is that we don't have enough people and, obviously I think, the Opposition answering the right questions. In that forum, there were people with very different views about what the right policy response was, but at least they were asking the right questions. Things like 'how do we improve productivity?', 'how do we deal with the fiscal gap in the decades to come?', and 'how do we best set this nation up, in the context of the mining boom, for the future?'
SWITZER: So, how are you going to improve your support for small business? Because that was something that Wayne Swan actually made a point, he actually said that he was going to COSBOA's Peter Strong's bookshop in Canberra, one of your colleagues said 'bookshops will never exist inside five years'. I think he's a small businessman, as a matter of fact. So, what do you hope to do, to help small business during this tough time, when we're going to see high currency, and probably still pretty high interest rates.
WONG: First I thought that small business was a very strong voice at the Tax Forum, and put a very clear set of views about issues. Which weren't always the same as other business groups, and that's a good thing, I think, to hear that voice.
We're already doing a range of things, which you'd know about. The company tax cut that's funded through the minerals tax, we will give that earlier to small business, so they'll get a head-start on that. There's an instant asset write-off which is also being increased through the minerals tax. We've got the business names registration reform which will be in place next year. That'll be good for small business as well.
But a particular process that came out of the forum, which I think is a very good process sometimes people don't like to hear process but I think this is about, as you said, listening and trying to work out sensible, practical policy responses was COSBOA working with Treasury, and others, to look at ways to simplify the tax treatment, the tax arrangements, the tax administration for small businesses. So, I'm looking forward to that work, because I hope you get the sort of practical suggestions that do help small business, who are obviously finding things difficult depending on which sector they are in the context of the patchwork economy.
SWITZER: You've been in politics long enough to realise that lots of Governments have jumped on the 'reduction of red tape' bandwagon. Is this going to be another red tape bandwagon, Senator?
WONG: I'm in politics for the outcomes. I've been around for a fair while now, and I've heard a lot of people say a lot of things. And my view is, if you're in these jobs, you should focus on the outcomes, and that's what we've tried to do when it comes to the seamless national economy reforms, which are about harmonising, which are about deregulating. Business names registration is one of those. These are practical things, which can help businesses who are working in a national market, but have to deal with a whole range of different state legislation.
SWITZER: Now, you might have seen a brilliant article in The Australian on the weekend, which I wrote, Senator Wong, about a fantastic prize that Queensland University put up for entrepreneurs a $100,000 prize and the entrepreneurs that came through, and the businesses, were absolutely fantastic. Do you think we do enough to encourage entrepreneurs in this country?
WONG: I'm sure you can always do more. The sorts of things, like recognition, are important. I think in terms of how we talk about this entrepreneurship is something we should celebrate. But from a Government perspective, it's all about getting the settings right, isn't it? Making sure you manage the economy well so that there are stable settings, so that people can take account when they make those decisions, when they take those risks that they need to take, to provide the certainty which is required.
And that's one of the reasons, Peter, I think that the current Opposition's campaign of uncertainty around carbon is so damaging. Because what it's saying to business is don't take risks, in fact, we're going to increase the risk for you. Which, as you know, you increase the risk, you increase prices. And in the electricity sector, too, what you're doing is saying let's have an investment strike. And if you have an investment strike, that'll put strains on the grid. So my view is, when it comes to fostering the circumstances for good business, the climate for good business, governments need to provide certainty, good economic settings, continue to support jobs and continue to support growth, and that's what we're working to do.
SWITZER: But Penny, you know you've been criticised because you haven't provided certainty, because the carbon tax has been seen as something that's created uncertainty. OK, you've got it through now, but you know yourself that, even if this could be argued it'd be a good long-term thing and that's obviously debateable in certain quarters in the short-term there's going to be dislocation.
All good reforms when we reduced tariffs, there were dislocations. And those dislocations are going to be in the patchwork part of the economy, aren't they?
WONG: First, there is a transition that this bill will bring. It's not the sort of overturning of the economy that Tony Abbott wants to talk about, that's just ridiculous. But there is a transformation which will occur over time.
Can I say, both parties agree that we should reduce emissions. We just think that you put in place a market based mechanism, and you get going. That's the way you lessen the economic costs. So if you care about lessening the economic costs, then you go with a price on carbon, because it's a market mechanism. There's a lot of transitional assistance in the package we put forward, and that's for the sorts of reasons you're talking about. Because we know once you price something that's currently free, that's going to have an impact, you've got to manage that impact.
There's a $9.2 billion jobs and competitiveness package, which is about managing that transition. Because we do understand you've got to support jobs through this transition, but you've also got to give the signal to investors, Peter, and this is the bit of the debate that a lot of people don't hear about. What does a carbon price do? It's a signal to investors about where to invest, and that drives the change, that drives the transformation, and that drives the new investment in clean energy jobs and in that sector of the economy.
SWITZER: Now, one big problem I think you've got, Senator, is that you have relied on Treasury analysis. And Treasury analysis hasn't always been as accurate as you'd like. Now, if next year, ahead of the election, if costs go up more than you expect, well then, it's going to be pretty sad for both you, and, I think, the small business sector. What's your anticipation of Treasury's accuracy?
WONG: I think I've read some of what you've had to say on that, Peter. Economic forecasting is always difficult. There's no one, I think anywhere in the country or around the world, who is going to get it absolutely right. But I would say, in terms of the economic modelling that Treasury has done on the carbon price and they've done an extraordinary amount of work what it does show is, very simply, this: we can grow our economy. We can increase jobs. We can grow our national income, and put a price on carbon, which will reduce emissions from what they would otherwise be. So, that is a pretty good outcome. Obviously there's always transitional issues, which is why we've got a lot of assistance on the table, both for business, and also for consumers.
SWITZER: Well, the doomsday merchant Steve Keen is on this program, and I always finish the interview saying 'I hope you're wrong.' In your case, Senator, I hope you're right.
WONG: (laughs) Thank you very much, Peter. I do think this is a reform that's been long overdue, and it's a very important economic reform for the future.
SWITZER: OK once again, I hope you're right. Thanks very much for joining us on the program.
WONG: Good to speak with you.
ENDS