SENATOR THE HON PENNY WONG

LEADER OF THE GOVERNMENT IN THE SENATE

MINISTER FOR FINANCE AND DEREGULATION

TRANSCRIPT

2 July 2013

ABC LATELINE WITH EMMA ALBERICI

TOPICS: ASYLUM SEEKERS, ECONOMY, ED HUSIC

E&OE - PROOF ONLY

ALBERICI: Penny Wong, thanks so much for joining us.

WONG: Good to be with you.

ALBERICI: Do you still expect to return the budget to surplus in 2016?

WONG: Well, that is what the Budget forecasts say and it’s consistent with the fiscal strategy that the Labor Government has had in place for a number of years which the Treasurer reaffirmed today and that is to return the budget to surplus over the medium term, over the economic cycle and that’s the right economic call.

ALBERICI: The new Higher Education Minister Kim Carr has confirmed that he’d like to undo the $2.3 billion in higher education cuts announced by Julia Gillard. Welfare cuts worth $700 million are reportedly also being reconsidered. A regional processing centre and more money for Indonesia to deal with asylum seekers and moving faster to an emissions trading scheme, all these things will cost many billions of dollars. How will you pay for them?

WONG: I’d make a couple of points. The first is we have a number of new ministers, as you know, and it is entirely reasonable for new ministers to scope their portfolio, to have discussions with stakeholders, but I’d make two very important points. The first is that the Prime Minister has made clear that any Government deliberations on any matters will go through a proper Cabinet process and the second point is that the Government, as the Treasurer said today, remains committed to our fiscal strategy. That is, to return the budget to surplus over the economic cycles so anything that the Government might or might not contemplate, we would obviously make sure it was consistent with our fiscal strategy.

ALBERICI: So does that mean that in your role as Finance Minister, as Kevin Rudd categorised it, you’ve been having to play the role of ‘Dr No’?

WONG: I think that means exactly what I just said, that if the Government is going to consider any policy initiatives between now and the election or for the election, they will be considered in a proper Cabinet process and they will also be consistent with the Budget and with the fiscal strategy that I’ve outlined. And there’s a very important reason for that, Emma. The reality is we are seeing a number of changes in the Australian economy, we’re seeing a number of risks in the global economy. We understand that a responsible fiscal strategy – running the Budget appropriately – is part of responsible economic management. And that’s the same sort of management that saw Australia come through the global financial crisis and also subsequently.

ALBERICI: Now the Business Council of Australia and the Australian Industry Group, groups that you were part of meetings with today, they say they see Kevin Rudd’s leadership as an opportunity to hit the reset button in the Government’s dealings with business. What will you and the PM and the Treasurer need to do differently to mend this relationship with business?

WONG: Look, let’s start with first principles. My view is we are as an economy very resilient but the reality is that there are a number of economic challenges Australia faces. The transition in our economy off a very, very substantial mining investment boom, and of course the risks that are occurring in the global economy. Now the way we have to deal with them is to ensure we continue to grow our economy. The best way we do that and the best way we meet those challenges is to work collaboratively with business, with the labour movement and with the community and a good dialogue with business is an important part of being in government.

ALBERICI: Did you not have a good dialogue with business before?

WONG: My view is I’ve always had a good dialogue with business. Sometimes pretty robust, didn’t always agree. But my view as a minister whether it was as Climate Change Minister where I had a lot of negotiations, as you might recall, with the business community, or as Finance Minister is even if we don’t agree or where we do agree we still need to make sure we have an open and constructive engagement. So I welcome the initiative of the Prime Minister today to open that dialogue.

ALBERICI: So was there something wrong with the dialogue more generally perhaps with Julia Gillard and Wayne Swan?

WONG: Emma look, there are many ways you might ask that question. I will not, as Finance Minister, as a Labor Minister, be looking backwards and getting into commentary about what’s gone before. My job is, as I suspect your viewers would expect, to make sure I look to the tasks today and tomorrow. And the most important task, which is to ensure we have a strong and prosperous Australia, not just in the near future but for our children. We want to make sure – always have to make sure – that we are making the right decisions to ensure our kids have better opportunities than we have today.

ALBERICI: The business community wants to see a company tax cut as indeed was recommended by the Henry Tax Review which was commissioned by Kevin Rudd when he was Prime Minister last time. Is that something you’re going to be able to deliver?

WONG: Well, we’re already a lower taxing government than Peter Costello.

ALBERICI: But we have one of the highest company tax rates in the world.

WONG: And our tax take is a share of the economy which is the key measure, which really tells you whether you’re a high or low or medium taxing government, our tax take as a share of the economy is significantly below the tax take that Peter Costello enjoyed when he was Treasurer. So I would make that point and I’d also make the point, and this is as Finance Minister, there are always more spending requests, there’s always tax cut requests, but ultimately you do have to ensure you run a sound fiscal strategy and that’s what we’ve done to date. That’s what we’ll continue to do.

ALBERICI: So no commitments either way to a tax cut for the business community which is obviously something they no doubt asked you for today?

WONG: The business community have been clear about their asks on a number of fronts for some time. I would make the point that if they’re concerned about company tax cuts then they should be talking to Joe Hockey whose policy is a company tax increase to pay for his paid parental leave scheme.

ALBERICI: Now it’s not just a spending problem you’re facing. As the Treasury Secretary has warned government revenues are likely to be much lower than you expected at Budget time, do you accept that?

WONG: This has been an issue, a challenge, for some time now. And this is the challenge where we see nominal GDP, which is the growth in value, the value of our economy, being below the real GDP which is the growth in the volume of the economy. That’s a very unusual set of circumstances which unfortunately we see at the moment. That’s something we’ve had to manage and you will recall in the Budget we took a very substantial hit to revenues, a writedown to revenues which we reflected in the Budget papers which reflects this economic challenge.

ALBERICI: Well the fact is that the tax system isn’t bringing in enough revenue. The terms of trade, as Martin Parkinson has said very recently are going to be less than what was expected, lower than what was expected at Budget time, the China boom is at or coming to an end, and the resources investment peak is also coming to an end. Now respected economists like Ross Garnaut and Saul Eslake at Bank of America, Merrill Lynch are warning that Australia is potentially headed for a recession in 2015-16. What do you think of their analysis?

WONG: Well look I’d say it’s important to recognise and assess the challenges but it’s also important not to over blow the analysis and unfortunately. Obviously economists have a range of views, but I would make the point that I think Mr Abbott has made a real habit of trash talking the Australian economy. I don’t think that’s been a responsible position from him.

But you’re right, there are substantial challenges. We’ve seen the biggest mining investment boom, the biggest investment boom the country’s ever seen. That’s going to plateau. We’ve seen very high terms of trade, they’re going to continue to come down. They’ll still remain high by historic standards but obviously not as high as they once were and in addition, we see risks continue in the global economy.

So the question always is when it comes to economic policy what are the things we have to do to make sure we best manage those challenges and those transitions. Now one of the things you do is you run a sound fiscal strategy, you give room for the Reserve Bank to move and we see at the moment we have low interest rates and they will work their way through the economy. But there are obviously other things that the Government has to look at and the business community has to look at. We’re always focused on how it is you continue to ensure growth and jobs growth in Australia and, look, 960,000 jobs created to date I think that shows the priority we place on job creation.

ALBERICI: So do I take it you don’t accept their analysis that we are potentially headed for recession?

WONG: That’s not the Government’s assessment and our figures in the Budget demonstrate continued growth, solid growth, but we absolutely accept that the economy is going through a set of transitions. We absolutely recognise what’s occurring in the global economy and we’ve said consistently you’ve got to invest in things like infrastructure, in skills, in those things which will drive Australia’s competitiveness in the years ahead.

ALBERICI: Now on the issue of asylum seekers, the Human Rights Commission is upset by the Government’s decision to stop processing refugee claims 11 months ago. Was that decision made to save money?

WONG: I’m not across everything the Human Rights Commission has said on asylum seekers. What I would say about this area of policy is that it is a very complex and difficult area and I think it’s a great regret to the Australian community that it has become such an aggressive debate and a debate around simplistic slogans.

The reality is we have millions and millions of people moving worldwide. We have much more sophisticated people smuggling arrangements and networks than we saw five, 10, 15 years ago. And we see a set of arrangements being proposed by the Opposition which Indonesia has said won’t work. Now I think what the Australian people do deserve is an honest and open debate about some of the complexities of this policy area. It isn’t as simple as simply chanting “stop the boats.”

ALBERICI: Well, in an effort to bring honesty to the debate, as you’ve just pointed out, what do you make of Bob Carr’s claim that 100 per cent of asylum seekers coming to Australia are lying to authorities and are actually economic migrants?

WONG: Well, I did listen to Senator Carr’s answer in the Senate chamber in question time and he laid out his response to that proposition and I’d invite you to consider that. I certainly would say we see both people seeking protection for political reasons, we also see people who are seeking to move for economic reasons and your immigration system has to recognise that we owe protection obligations to refugees but not to people who are simply moving for economic reasons and that’s the reality of our system.

ALBERICI: Now, Dr Parkinson who I referenced earlier, the Treasury Secretary, has warned of a big gap between what the community demands of Government and what it’s prepared to pay for. Do you fear that in his effort to win over voters Kevin Rudd might be prone to over promise in areas he won’t be able to deliver?

WONG: I think Prime Minister Rudd has made very clear his approach to matters economic and that is to recognise the importance of the Government’s fiscal strategy, but also to recognise you have to look at what it is the country has to do and to meet the challenges of the changes in our economy that you and I have discussed.

ALBERICI: At your first Cabinet meeting with Kevin Rudd this time around, did you see any evidence that he’s changed from those days of chaos and dysfunction during his first time as PM?

WONG: Look, I’ve been asked this a bit and I’m tempted to say well, you know, you will just have to observe how he continues to govern. My observation is that Kevin is consulting widely and we had a very useful and constructive discussion at Cabinet.

ALBERICI: You say we’ll have to watch and see how he governs but the problem last time was that it wasn’t apparent to the public what was obviously apparent to those close colleagues who came out in criticism of him and the public was quite surprised about?

WONG: Well, again, I go back to what I said. I’m really not going to engage in a lot of analysis of the past and I think Australians do expect the Government to focus on them, what’s important to them, and what’s important to their children and their children’s future.

That’s the approach I’ll be taking and there are many more important things, I think, than going through an analysis of what’s gone before.

ALBERICI: Of course the public is still curious to know what it was that led to his dumping in the first place and Julia Gillard’s replacement subsequent to that. There is a lot of confusion about the events of the past week or so and I guess my question is just – what stability and comfort can you give to the Australian public that this time around things will be on a calmer footing?

WONG: Well first I’d acknowledge it was a pretty bruising week for everybody in the Labor Party but also a difficult week more broadly. But I think what’s really important is to draw a line under that, and to get on with the job of governing and dealing with some of the pretty big challenges that the future holds.

And I think the important thing is to get into that space of making really clear to people what our priorities are and frankly, to contest the very simplistic and aggressive politics that unfortunately Tony Abbott has been so successful in projecting onto all of us.

ALBERICI: Finally Minister, Ed Husic and the controversy surrounding the fact that he swore his ministerial oath on the Koran. There was a social media backlash about that – did that surprise you?

WONG: Look, it disappointed me. And I think the point I always make when it comes to prejudice is that we are better than this. I think the vast majority of Australians are fair-minded people that judge people on the basis of their ability and their character and I think that the sorts of comments that I’ve seen aired publicly about that really were not worthy of the best of Australia nor are they reflective of modern Australia.

I thought it was very moving, actually, sitting there watching him be sworn in and the Governor General, as you know, said it’s a great day for multiculturalism in Australia. I think it is. I think the Parliament best serves the people if we closely reflect the makeup of the Australian people and we’re a diverse nation.

ALBERICI: Penny Wong we’ll leave it there. Thanks so much for your time this evening.

WONG: Thanks very much, Emma.

ENDS