E&OE - PROOF ONLY
CARVALHO: We are joined now by the Finance Minister, Senator Penny Wong. Good morning, thanks very much for your time.
WONG: Good to be with you again.
CARVALHO: Wayne Swan has flagged more savings or structural savings to fund the Government’s budget promises. Where will these savings come from?
WONG: We have a good track record of making room for our spending priorities because ultimately budgeting is about priorities. We’ve done things such as our changes to the Private Health Insurance rebate and so forth. What the Treasurer is saying, and what we have been saying for some time, is we’ve got to make the same sorts of structural savings to fund the programs which are really important for Australia’s future. The reforms to school education, to lift the standards and the resourcing for schools across the nation and things like the National Disability Insurance Scheme.
CARVALHO: Where will these savings come from and how drastic – you are talking about structural savings, but are they likely to be drastic? Because one of the things that Wayne Swan warned in December when he said that the budget will more than likely not return to surplus, he said that: “our decision was not to drastically cut spending”.
WONG: What we said when we made that announcement was that we wanted to ensure we maintain the same economically responsible approach we have to date, which has seen our economy deliver over 800,000 jobs since the Government came to power, and that approach is an approach that says you have got to put jobs and the economy first.
On the revenue side of the budget, we are getting a lot less tax than we anticipated and that’s why the return to surplus in 2012-13 is unlikely. But that doesn’t mean that we do anything other than take a responsible approach to spending. It’s a different thing to ensure you make room for different spending priorities by making savings decisions to fund those priorities. In terms of what they will be, well you will see the same approach in the budget and prior to the election. We have made clear, particularly in relation to the education reforms and the National Disability Insurance Scheme, that we will make clear our approach in that timeframe.
CARVALHO: We’ll talk about that in a moment; I want to go back to your point about revenue being down. Does the Government need to make further savings because the mining tax revenue will be lower than anticipated, even in the budget update. For this financial year you estimated a shortfall in that initial prediction of $1.8 billion. Is there likely to be any revenue at all from the mining tax in this financial year?
WONG: First, can I just address the first part of your question, Karina. The revenues which have been hit are all the profit-based taxes. So it’s not just mining, it’s the resource rent taxes, it’s company tax, it’s superannuation tax; it’s all the taxes which derive from company profitability, and company profitability has been hit because of global volatility, commodity price movements – particularly last year – and of course the very high dollar.
But in terms of the minerals tax, I do want to make this point. It is a tax which is designed to reflect the profitability of companies. It’s designed to collect tax when profits are very high because commodity prices are high, but it’s designed to not be triggered if companies are not making a profit or making a low profit. That is one of the key design features of the tax.
CARVALHO: But the spending that the mining tax revenue was meant to bring in, that is already money that has been allocated and spent, hasn’t it? So if the mining tax doesn’t bring in any money, that’s going to be an even bigger shortfall for the Government?
WONG: We have factored in expenditure associated with a whole range of revenue heads into our budget bottom line and we have made very clear the priorities that we have. As I’ve said, in terms of the minerals tax, it is important to remember it’s a key design feature of the tax that it does respond to company profitability – which makes it different to State royalties which of course are levied on volume, regardless of what commodity prices are, which means taxpayers don’t get enough when the prices are high and companies are hit when prices are very low.
CARVALHO: The independent MP Rob Oakeshott in The Australian today has called on the Government for greater transparency when it comes to the mining tax. Will the Government say next week which companies won’t be paying any tax for the December quarter because that reporting is due next week?
WONG: I’ll make a couple of points. The first is that the administration of our tax laws is done at arms length from the Government. I print, as Finance Minister, monthly financial statements which include –
CARVALHO: But the Government negotiated with the three big mining companies to bring about this tax in the first place.
WONG: And what I was about to say is I issue every month monthly financial statements which include how much we are getting from resource rent taxes. What we can’t do is breach privacy provisions, and the Australian Tax Office has advised that we are not in a position to provide details of the MRRT if that would breach privacy conditions. I do issue every month, Karina, as Finance Minister – I know you probably don’t sit on your computer looking at my website – but I do issue every month the Government’s monthly financial statements which include a line item on resource rent taxes.
CARVALHO: Are any of the miners likely to pay mining tax for the December quarter?
WONG: As I said, the mining tax take will depend on what happens to company profitability and what happens to commodity prices. That’s not a discretionary decision of Government, it’s a feature of the design of the tax.
CARVALHO: When you talk about savings that the Government needs to make, does that completely rule out an increase in the Newstart allowance because some in your party have backed an increase in that?
WONG: There is no doubt it’s a pretty tough payment for people to live on long-term, which is why Newstart is intended to be a short-term payment for people looking for work. The Government has had a very strong focus on trying to get people back into work because that is the best way to ensure people improve their economic position.
CARVALHO: What is your personal view on it? Do you think the Newstart allowance should be increased? Is it too difficult to live on it?
WONG: As I said obviously it’s a pretty tough payment to live on. But I do want to say this: as Finance Minister, there are always many legitimate demands for government expenditure. Things like, as I said, the National Disability Insurance Scheme, demands for increased funding to our education system which are so important to Australia’s future.
The Government has to look at what are the best mix of investments to secure Australia’s future and to continue the sort of economic management that has seen over 800,000 jobs created. We are a party that has put a lot of work into getting more people into work. I think that the best thing that we can do for people who are out of the workforce is to support them back into the workforce.
CARVALHO: I also wanted to ask you about the Newspoll figures that came out today. Is the Government heartened by the six point jump in primary support?
WONG: There is only one that poll that ever counts and that’s an election. And that is decided not on you and I having a discussion about polling, it’s decided on who people think has got the head and heart to run the country and who has got the economic plans for Australia’s future.
What I’m interested in is making sure we meet the challenges of the future; we always have to look at how we ensure the prosperity that our children can enjoy and the opportunities they can enjoy are better than our own. That’s what I’m focused on.
CARVALHO: Senator Wong, just one more question. The LNP MP Andrew Laming tweeted last night about the troubles in Logan, south of Brisbane, that, ‘mobs tearing up Logan tonight, did any of them do a day’s work today or was it business as usual and welfare on tap’. What’s your response to that?
WONG: I think when you have these sorts of social and community problems – and I want to say violence is always unacceptable – it is incumbent upon members of Parliament to behave responsibly and to act in ways that don’t inflame the situation. I’m not from Queensland and I’m not the local member but I do think it’s important that MPs act in a way that’s responsible.
CARVALHO: Penny Wong, thanks for your time this morning.
WONG: Good to be with you.