GILBERT: My colleague David Speers asked the Prime Minister a bit earlier, and I want to get your response to it the budget still would have been in deficit, wouldnt it, even without the write downs the spending has outpaced the write downs. You keep pointing to that but we would have faced a deficit anyway this year?
WONG: Well in 2012-13, the write downs certainly drive the vast majority of the deficit, and, in addition, some of the spectrum revenue the sale of spectrum that we anticipated in 2012-13 because the auction was deferred slightly is obviously is in a different year.
But you need to look at this budget across the forward estimates and you need to look at the economic facts. I know that Tony Abbott and Joe Hockey dont want us to look at them, but these are the facts that any government would be presented with: the second largest write down in revenue since the Great Depression. That is, government getting less tax money, having to make room for the responsible investments for the future, and taking $43 billion worth of savings across the forward estimates, some of which well be criticised for, but which are really important for two things: the pathway back to surplus, and weve seen all three ratings agencies reaffirm our AAA credit rating which is a big tick but also to fund the investments for the future.
GILBERT: But the Treasurer promised a surplus this year. Even without the write downs that you refer to, we still would have been in deficit?
WONG: Ive just answered that question.Ive explained theres also spectrum revenue, certainly in the 2012-13 year. But is anybody really saying that you cant look at the pathway back to surplus? I mean that is
GILBERT: But how is it believable, thats the question. Because when you look at the promise last year of four years surpluses and the fact the Government hasnt delivered any over recent years?
WONG: And well take some political criticism for that, as I am in this interview. But when you are confronted with the economic facts that we were confronted with as a Government, which is revenues crashing compared to what they were anticipated to be, you have to make a decision. You can either chase revenue down and cut to the bone which would impact jobs, risk economic growth and harm the Australian economy or you say well just take our political medicine and do whats right for the country and that is to take responsible savings, to look to the longer term, plot the pathway back to surplus and make sure you build that, and weve done that, and ultimately make sure you make the right investments in the future.
GILBERT: On the P-A-Y-G rules for business they believe that this is going to create a red tape nightmare. When you say youre looking to the long term, is that really the way to boost economic growth?
WONG: Lets be clear about what this is this is a Pay As You Go measure which was originally for companies and was announced previously, and what we did when we consulted on the previous measure
GILBERT: To pay tax on a monthly basis ...
WONG:... to pay tax on a monthly basis as many companies in other countries do... when we consulted on it, one of the points that was raised was that there should be neutrality between different structures and so we are extending that to other structures and we are going to phase it in over time depending on what peoples income is ...
GILBERT: But its more red tape isnt it?
WONG: Its paid monthly and theres a lot tax which is paid monthly already. Im not sure some of that criticism is necessarily measured criticism, but were certainly prepared to consult as we did on the earlier measure with the business sector.
GILBERT: Youve announced some thin capitalisaiton rules. How does that work and is there a risk here of deterring international investment as a result?
WONG: Well, if were really saying as a nation that were going to only attract investment on the basis of lowering taxes, I think theres a real problem with that. Weve got an enormous amount of investment in this country - weve had business investment as a share of GDP at record levels because people want to invest in a strong economy. An economy that is regarded by world standards as being very strong, and an economy that obviously has a great deal of natural resources and other good investment destinations. This a measure thats about saying to multinationals, we want your investment but what we dont want is you to artificially load up debt in Australia and thereby gain deductions that wouldnt otherwise be available to you. This is, I think, a fair and reasonable measure.
GILBERT: The Opposition targeted David Bradbury yesterday over questions that hed briefed some companies and not others and gave them a market advantage as a result. Now, what do you say to that, to that criticism?
WONG: Id say to them, show us the evidence of that, thats the first point Id make. The second thing Id say is, what would you do? I think its very easy for the Opposition to make criticisms on process or anything else. But the reality is, what would they do? Tomorrow, Tony Abbott is giving his Budget Reply. Weve laid out our choices. Some people are criticising some of them and I accept that but we have laid them out and they are upfront. Its time that Tony Abbott was actually upfront with Australians. Come on, let people into the secret what are the plans? What do you say the choices should be if people bring in an Abbott Government which is what he is urging everyone to do.
GILBERT: Arent there some inconsistencies in terms of the Government priorities here? Youre getting rid of the Baby Bonus and yet you keep the SchoolKids Bonus. If you get rid of one, shouldnt both go? Arent they both handouts?
WONG: Well, youve got to make a judgement about where you make your savings and how you make room for the reforms of the future. Someone asked me yesterday what are families getting out of this, and I said you know what theyre getting? Theyre getting investment in our schools that means we dont keep leaving Australian children behind because of where they live and the circumstances of their families. Thats what families are getting.
GILBERT: Finance Minister Penny Wong, thanks very much for that.
WONG: Good to speak with you.
ENDS