E&OE - PROOF ONLY
JONES: Penny Wong, thanks for joining us.
WONG: Good to be with you again.
JONES: Should the Reserve Bank be empowered to act in the national interest to keep the dollar exchange rates under control, as well as inflation?
WONG: If you look at the Reserve Bank Act, it does talk about the well-being of the Australian economy. But what I would say is this: the Reserve Bank does a very good job and it’s a very important institution and it has a very difficult job. But, as an independent institution, it has to focus on exercising monetary policy in the interests of the whole economy. In terms of…
JONES: Does that include the currency, the exchange rate? Because Paul Howes is saying today … should it not have an exchange rate currency mechanism?
WONG: I understand Paul’s concerns about a high dollar and they reflect the concerns of a number of sectors of the economy where the high dollar is hurting competitiveness. But I think what’s important to recognise is this: you don’t deal with challenges like a high dollar – which arises from the change, effectively, in the global economy, and the change that’s been occurring in the Australian economy – you don’t deal with those changes by meddling with one of the institutions that’s been a very important part of Australia’s economic stability and economic success.
What you should do, what you should do, is put in place policies such as the minerals resource tax – spreading the benefits of the boom; what you should do is invest in skills; what you should do is look at how you support manufacturing; and what you should do is bring the budget back to surplus, which gives the Reserve Bank the flexibility to move, should it see fit.
JONES: What about simply bringing down interest rates to take the pressure off the very high Australian dollar which is having a massive impact on our manufacturing industries?
WONG: The dollar has been driven by many factors and primarily it’s a function of how global currency markets perceive the dollar and perceive the Australian economy.
JONES: But would you agree, though, if interest rates came down, the dollar would come down? It just happens like that.
WONG: What I think is that we, as a Government, should keep implementing the policies that I’ve talked about, which are about reflecting the patchwork economy. The dollar is a key driver or the key driver of that. Skills, innovation, the minerals tax – spreading the benefits of the boom – and very importantly, a surplus budget, because that does ensure the Reserve Bank has the flexibility to move, should it believe it’s necessary to do so.
JONES: Alright. Speaking about the manufacturing industry, can you explain briefly how today’s move to require Australian industry participation plans is going to help the manufacturing industry?
WONG: Australian Industry Participation Plans is one of the ways in which you can ensure that companies in Australia who get, for example, government grants or are involved in appropriate major projects, give the opportunity to Australian industry to compete and to participate in those projects.
JONES: But how will requiring disclosure, because I think that’s all it does, from the corporations who are doing these giant projects, how will that start them from simply deciding, “We can get things cheaper from other countries”?
WONG: It’s about a reasonable opportunity for Australian business. A reasonable opportunity for Australian industry. We’re not a protectionist Government. We’re not a Government that believes that you should be mandating how businesses are run and how businesses contract. And we know from history in Australia that going down that path has not served the interests of working people well.
JONES: Why does it work in America with the ‘Buy America’ policy and not in Australia? I mean, that’s a free enterprise economy, they do it.
WONG: I think buying Australian is a good thing. But I think…
JONES: No, but they mandate it.
WONG: What I’m saying is we want Australian firms to be able to compete. We have never in this country built our prosperity on not being competitive. Where we’ve succeeded is where we have been competitive and we can compete. This is about ensuring people have the opportunity to compete and it’s one of the ways in which this Government continues to support manufacturing.
JONES: Well, Paul Howes told us last year the big miners are only currently using 10 per cent local content in their major infrastructure projects. I mean, is that correct, to start with?
WONG: I don’t know what the precise figure is to date. There’s so much investment going on in mining I suspect those figures would move around a fair bit as more – billions more is poured into the mining sector. But there’s no doubt we can do better and the question is: how do we ensure we can do better? And today’s announcement by Minister Combet does encourage more Australian content and more Australian suppliers. It gives Australian industry the opportunity to compete and that’s what we need.
JONES: These new rules about disclosure, as we said before, they’re simply going to increase red tape and paperwork without any guarantee of changing anything, aren’t they?
WONG: I don’t think that that’s fair. I think what we’re saying is: this policy of an Australian industry participation plan has applied previously to a smaller proportion of firms and what we’re saying now is that we’re going to expand that. What we’re saying is: you should disclose to the market how you’re giving Australian firms, Australian businesses, the opportunity to compete for the contracts that you’re letting. I think that’s a reasonable proposition and one that’s consistent with best practice.
JONES: OK, but the increase in red tape comes at exactly the same time the business community is demanding the Government slash what they’re calling red and green tape. Now will you be offering up, for example, tomorrow, measures to streamline environmental assessments and approvals?
WONG: Tomorrow we are having the Business Advisory Forum here in Canberra and we’re looking forward to it very much. Obviously it includes the States and Territories as well as Australia’s business leadership and we’re very pleased at the response we’ve had from the business community. It’s a very important opportunity, an opportunity for First Ministers – the Prime Minister, Premiers, me – and others to listen to the views of business.
JONES: But they’re already putting their views out there, that’s the point, and one of the key things they’re calling for is a streamlining of environmental assessments and approvals. Will be you offering up anything in that area?
WONG: What I was going to come to is, I think one of the consistent things people are saying is we have to reduce the compliance load. Regulation is put in place by governments – State governments, Federal Governments – often for very good reasons. But sometimes the compliance load associated with regulation is excessive. We have duplication and there are ways in which you need to resolve that.
It might be through harmonisation and we’ve actually got some runs on the board on that front. It might be through other means. For example, bilateral arrangements with States or Territories to try and avoid duplication. Environmental assessment certainly is one of the things that the business community have put forward and we are open to hearing their views on this.
JONES: OK, well here’s another one, because they’re open to hearing your views. How would you respond to demands the Government kill off the $10 billion Green Energy Fund?
WONG: Well, I think that’s a different issue. That’s an issue about whether or not you support investment in renewable energy and clean energy and whether you believe that’s one of the ways in which we can do that. And that Fund was announced some time ago, as you know, as part of the Clean Energy Future package. But can I just come back to the regulation point: I think what is very important about tomorrow is that Ministers – First Ministers, Premiers, the Prime Minister, Ministers such as myself – collectively can gain a deeper understanding of precisely what business priorities are and how we can achieve reform to deal with those priorities.
I see this very much as part of the productivity challenge, meeting the productivity challenge. We are seeing the economy change. We know Australian businesses are dealing with that change. It’s very difficult for some sectors – and you and I tonight have discussed manufacturing. Alleviating the compliance load through deregulation and streamlining regulation is one of the ways in which we can contribute to improving Australia’s productivity in this time of change.
JONES: OK, well you know the Opposition’s point about this: they’re saying the biggest piece of green tape is the carbon tax. Now, are you prepared for a kind of fresh onslaught from business on this question?
WONG: I notice that Mr Sinodinos said that and I wonder if he told John Howard that when he advised him prior to the 2007 election to go to that election with a carbon price. And in fact…
JONES: He didn’t say to go with a carbon tax, he said go with a carbon price associated with an emissions trading scheme.
WONG: Well – a price on carbon. And as you know, and we’ve had this discussion, Tony, we have a fixed price that moves to a floating price which is an emissions trading scheme, it’s a transition process, but a carbon price is the most economically efficient way, as you know, to reduce emissions.
JONES: Sure, but we’re nearly out of time, so I’ve got to ask you: you’ve seen what the business groups are already saying. Are you prepared for a fresh onslaught on the carbon tax?
WONG: I hope that tomorrow we can look to how we improve Australia’s productivity. It is a national challenge and one that government and business need to work together on. That’s why we’ve established this forum and that’s what we want to achieve tomorrow.
JONES: Penny Wong, we’ll have to leave you there. We thank you very much for taking the time to join us tonight.
WONG: Good to speak with you again.