E&OE - PROOF ONLY
BEVAN: Minister, good to see you. Thanks for coming in.
WONG: Good to be with you.
BEVAN: Your colleague, the Treasurer Wayne Swan, has called the 0.6 percentage growth in the economy a “pretty impressive outcome”. But such a miniscule rise – that’s hardly impressive, is it?
WONG: Well, it’s 3.1 per cent through the year and, if you look at what most of the OECD, what most of the advanced economies are doing, I think a lot of them would be very, very happy to trade their GDP growth rates for the one we’ve posted today. And it has some good components too – one of the drivers of growth is an increase in export volumes, and that’s a good thing.
BEVAN: But certainly consumer spending has softened. The Westpac Economics First Impressions Assessment was very blunt: “The National Accounts confirms a loss of momentum in the Australian economy in the second half of 2012”.
WONG: And I think we’ve been upfront about the fact that, particularly, global volatility and what’s occurred in the global economy has an impact on the Australian economy. I just would say, again, let’s remember that we’re in a much better position that most of comparable economies around the place. As I said, most of the OECD would quite like to have Australia’s figures.
It does show a few things that we have to understand. One of them is that nominal GDP – that is the value of goods and services – is below real GDP – that’s the volume. That’s a very unusual situation. In fact to have three quarters of nominal GDP being below real GDP hasn’t happened in half a century. Now, that does explain what’s happening to government revenues and that we’re getting less tax than we would expect.
BEVAN: Let’s talk about government revenues and government spending. The Business Council of Australia has warned that the Labor Government’s spending as well as the need to fund some very expensive promises is pushing towards some long term budget crises. Now when a Council, the Business Council –
WONG: I’m not sure that that’s what they’ve said actually, Scott, but – (laughs)
BEVAN: Well, a budget deficit… long term budget deficits –
WONG: I’m happy to take the question and I’d make a few points. We agree with a great deal that the Business Council has said. We don’t agree on some issues, but we do agree, first, that having a sustainable budget strategy is important. You should budget not just for an election year but for the long-term. That’s precisely how we approach the Budget. And we welcome that there are aspects of the medium-term fiscal strategy that the Government’s outlined which they agree with.
I would make this point though: If we are serious about having a sensible discussion about fiscal policy I’m happy to argue the Government’s plan and set that out and talk about that. But let’s remember what the Opposition is doing at the moment. They’re trying to be all things to all people, and we see at the moment Tony Abbott on the one hand saying ‘I’m going to get rid of the carbon price but I’m still going to have the tax cuts and the increases to the pension which are funded by that’.
Now, let’s understand what that would mean. His promise would cost in 2014-15 $5 billion. $5 billion. Do you know how much that is? That is everything the Commonwealth spends on childcare for a year.
BEVAN: Okay, what about –
WONG: So, is he saying he’s going to cut childcare to fund these tax cuts?
BEVAN: What about some of the funding of some major reform packages that your Government’s put on the table, such as Gonski, such as disability insurance.
WONG: And that will require difficult choices. And I’d refer you to the Prime Minister’s Press Club speech where she said a structural spend – that’s a spend that’s locked into the budget for the long-term – that needs a structural save. Now, we’ve taken a lot of those. When you add some of the structural savings we’ve taken up, what the Treasury has said is, without them, our net debt position would be $250 billion worse by 2020.
So, that’s things like private health insurance, the changes to family tax arrangements, the Baby Bonus, tax offsets, tightening up some of the tax concessions. We do believe that it’s important to have structural savings – many of those, I have to say, were opposed by Joe Hockey.
BEVAN: Given that there was expectation that you placed there of a surplus and the electorate had expectation of a surplus; that’s now been removed, that has not been achieved, you say it cannot be achieved. And, here we are in an election year which requires spending. How are you going to marry those all in this budget?
WONG: It’s a good question, but whether or not an election year it’s important to make sure you do the right thing for the nation in the long-term and in the medium term and that’s what we’ll do. The issue for example with Gonski, I think that is the right investment for the country, particularly in the Asian Century. But we have to make the right decisions to ensure we can fund that.
BEVAN: Does the electorate have to forget about the word ‘surplus’ for the foreseeable future? Should the Australian public get used to the idea that we are going to have, and be living with, a budget deficit for some time?
WONG: No, I think what the electorate should expect from the Government and the Opposition is very clear plans about how they will fund their promises. Now, we will do that. We will hand down a Budget; we will ensure we comply with the Charter of Budget Honesty. The Budget will make clear, well ahead of the election, our plans for the spending that we’ve outlined and our savings decisions. What we have from Joe Hockey and Tony Abbott is nothing other than a secret set of plans; a secret plan of cuts is the only plan they have.
BEVAN: If I can ask you on another issue … How embarrassed are you about the PM’s comments and the Government’s comments about cracking down on 457 visas?
WONG: I’m not embarrassed at all by a policy proposition that says you should limit temporary skilled migration to genuine areas of skill shortages where Australians can’t fill those positions, and a position that says we should ensure we make those opportunities available to Australian workers. That’s not an embarrassing position.
BEVAN: You’re comfortable with the racial debate that seems to be stirred around this issue with the endorsement of Pauline Hanson?
WONG: I’m never comfortable with Ms Hanson and I’ve made my view on Ms Hanson very clear.
BEVAN: She’s endorsed what has been said here …
WONG: Yeah. And I’ve made very clear my view about what Ms Hanson says on multiculturalism and migration. Ms Hanson wanted people like me to go back to where I came from. Prime Minister Gillard put me in her Cabinet. They’re very different positions.
BEVAN: Given the need for the skills that come in on a 457 visa – the people who use this and the skilled migration that flows as a result – in terms of what we were talking about at the outset and the economy what’s needed and where its headed, are these people not needed to play a vital role in achieving some economic goals that your Government has set out?
WONG: Skilled migration is important, which is why we have a very substantial amount of skilled migration in this country. But what is not appropriate is a misuse of temporary visas. And what is not appropriate is any excuse to not make sure Australian workers are both trained and able to get opportunities which are there.
Now, we’ve put a lot of effort over the years we’ve been in Government into increasing the training opportunities for Australians, and I think it is not an unreasonable position to say we want to make sure that people are entitled to those job opportunities and that the visa system is not misused. Now, the Minister’s outlined some of the reasons for this and I think he’s right.
BEVAN: Finally, if the electorate perceives at the moment that this doesn’t seem at all like governing but campaigning, would it be wrong?
WONG: I’ve spent a lot of time in these last days looking at and working on the Budget, as has the Treasurer. There’s a lot of governing going on. What I would also say though is I think the electorate is entitled to assess the policies of both parties. We’re going to be transparent. Tony Abbott is trying not to be. I think Australians are entitled to more accountability and transparency from someone who wants to be Prime Minister.
BEVAN: Finance Minister, Penny Wong, thanks so much for coming on air.
WONG: Good to be with you.