12 September 2011




GREENWOOD: Many thanks for your time Penny Wong.

WONG: Good to be with you again Ross.

GREENWOOD:  First things first, is the Government taking money from the Future Fund?

WONG: No we are not. Full stop. So the reports are not correct. We are not withdrawing funds. What is occurring is what you outlined in your introduction which is there is an accounting treatment which is reflected in the budget figures, and that is because the Future Fund has determined to sell what is called non financial assets. And the way they are treated in accounting terms means when they are sold, the funds are reflected in the bottom line but the money doesn’t actually come to the Government, it remains with the Future Fund. And presumably they’ll invest it in accordance with their investment strategy.

GREENWOOD: Yeah, well the thing I was a bit suspicious about was the $250 million because I thought the $250 million wouldn’t make much difference to the bottom line. If you were going to pinch money out of the Future Fund, it would have been more like $2.5 billion. That’s what raised my eyebrows about it.

But even so, having checked with the Future Fund, it’s quite clearly just a technical change in accounting policies that will just be all about infrastructure holdings in particular. And so, as you say, will not be reflected. So that report we can actually underline and put that to one side, it’s not correct.

WONG: That’s right and in fact if any government wanted to take money out of the Future Fund for the purposes of putting it back into government programs and so forth, they’d actually have to be a change to the legislation that governs the Future Fund. The Government is not going to do that. So I’ve made clear we’re not withdrawing funds from the Future Fund. Full stop.

GREENWOOD: Alright, now I want to go to another point however, because it doesn’t necessarily make your job as Finance Minister any easier. Last week, we had very strong economic growth figures that came out. Stronger than what were expected. And on top of that, there was a bit of a tick up on the unemployment last week. As a result of the previous quarters, where it went backwards because of natural disasters as Australia has seen, you’re still below the forecasts the Government has got this year for economic growth. If you see a tick up in unemployment rates that means less taxpayers’ money coming to you and more unemployment benefits going out to people. So that’s a negative for the Government. The third thing is the stock market falling today. Again significantly, more than three per cent. And I would suggest less capital gains tax as receipts for the Government. You as the Finance Minister, in order to make that pledge in 2012-13 come true, you’ve got a fair bit of costs saving to do somewhere in your budget, I would have thought. 

WONG: Well first on the National Accounts, it was extremely pleasing to see the economy having grown in the June quarter, 1.2 per cent. And obviously, all of the people who have been talking down the economy from the other side of the Parliament, would I hope have paused to think about whether that was the right strategy. It is a good thing that the economy is growing. It is a good thing that we have got 140,000 more Australians in jobs than we had a year ago. They’re all good things.

But obviously, we’re an economy in a global economy. And when there are some risks and difficulties in the global economy, we’re not immune. We do face them with a lot more strength in terms of our fundamentals than many other advanced economies – we’ve got low public debt, we’ve got relatively low unemployment and we’ve got a strong pipeline of investment and we’re still growing.

Obviously, the stock market has moved a bit today as you said. Others will have a view about what led to that. But obviously, there is concern globally about the Eurozone, there’s some concern that’s been reflected I think in equity markets internationally and we’re not immune from that. But I again want to say, we do face this from a position of relative strength.

GREENWOOD: No doubt. But you have also said to the public that you would get back into surplus by 2012-13. So as a result, if you have less revenue coming through the door, between now and then, you’ve got to do some significant cutting, or find some revenue from somewhere to be able to fill that commitment. Because as I say, right now, where we sit right now, you are behind in your forecasts of growth which means you’re also behind in your forecasts of revenue in your budget.

WONG: Well Ross, we’ve been upfront, it makes it harder. The global uncertainty makes it harder. But I’ll tell you, there is one thing we will do and that is, we will make sure our costings are transparent. Our budget numbers are clear. And that they add up. And that –

GREENWOOD: Can you actually make that forecast? Do you believe you can still make that surplus in 2012-13?

WONG: We have been clear, we have a plan to return to surplus and we’re determined to get there.

GREENWOOD:  Even not withstanding the fact that the revenues have actually fallen apart. You’ve now presumably got less capital gains tax. You may even have less company tax coming through as well. It’s going to make it tough.

WONG: I’ve said before on your program, I think Ross, the global uncertainties obviously make things harder for the economy more generally and the budget. Can I just get back to this point,  we will go through this process, we will update our budget figures and we will be transparent about that. Can I say on the other side, the alternative government. The have a $70 billion black hole in their budget costings – this is what they themselves have admitted.

GREENWOOD: They don’t know whether it’s a black hole or not, they can’t quite work it out.

WONG: Well that’s true, they’ve all said different things. But their shadow finance minister, Andrew Robb, has said that. But what’s even more concerning today is the shadow treasurer Joe Hockey has basically said, I’m not going to try and fix it, I’m going to try and hide it.

We’re currently debating a bill in the Parliament for setting up a Parliamentary Budget Office. That is a commitment the Government made, it’s a commitment the independents sought, a Parliamentary joint committee has agreed to it. This is an office that will ensure there can be clear costings of election policies. Because I think the Australian people are entitled to know if people want to be elected to Government that their costings add up.

And you know what Joe Hockey said today, he’s not going to submit his policy costing to the Parliamentary Budget Office. Now that is an extraordinary position for the shadow treasurer to take. What he’s saying to Australians is I don’t think I have to tell you whether or not my policy costings add up. Now in the terms of where the global economy is, and the importance of having a clear fiscal strategy, this is completely irresponsible.

GREENWOOD: Penny Wong is our Finance Minister. Tough job being Finance Minister as well Penny, and I appreciate your time as always.

WONG: Good to be with you.