SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

TRANSCRIPT

15 April 2012

CHANNEL 10 MEET THE PRESS WITH HUGH RIMINTON

TOPICS: ALP REFORM, BUDGET, CARBON PRICE, DEREGULATION, GREENS LEADERSHIP

E&OE - PROOF ONLY

RIMINTON: Welcome to the program, Senator Penny Wong. Bob Brown has left the scene – what does that mean for the Labor Party?

WONG: Firstly, can I wish Bob very well in his retirement. He’s been a very important political figure – obviously we might not agree on everything but he certainly made an outstanding contribution and we wish him well and I hope he has some good time with his partner.

RIMINTON: One of the achievements the Greens have got on the board, is they’ve taken a lot of progressive activists and taken them into their membership base –  people who may previously have gone to the Labor Party. Is this an opportunity to go out and reengage with progressive activists and get them back into the Labor camp?

WONG: With the Labor Party – and we stand for certain values and we are different to the Greens, just as we are different to the Coalition – we believe in making the economy grow. And how you make the economy grow is as important to opportunity and social justice as spending programs.

So we do take a different approach and, you know, it is our job to explain to Australians why we do what we do, why we want to bring the budget back to surplus, why we want the Mining Tax and what this means for the future of Australia.

RIMINTON: John Faulkner and other party elders have been plain in saying Labor must reactivate its base and membership. He has recommendations out there to that end which have so far been ignored by the party. Is this an opportunity right now to act? Because if not now, when are you ever going to get them back?

WONG: We always have to keep working to bring people into the party. It has been a difficult time for Labor. But you know, I still very firmly believe, we are a party that’s been around for a long time, we are a party that has fundamentally changed the nature of the Australia in which we live today. Imagine an Australia without Medicare, for example. We will continue to be a party that’s important to building the future.

RIMINTON: So it’s not important to you that you activate the recommendations of the Faulkner review?

WONG: No, of course it is – it’s always important to do everything that you can to ensure that the party continues to be strong. And there are a number of ways in which you do that. I think the primary way is making sure you advocate for the right policy.

RIMINTON: Let’s talk to policy – because we had the Business Advisory Forum, we had the COAG going on. The Government took a shellacking over the Carbon Tax. Here’s what the biggest business group had to say.

PETER ANDERSON, ACCI (THURSDAY): The Carbon Tax being imposed unilaterally by Australia in the absence of a global agreement is bad policy. It should not be proceeding… It’s a dead weight on the Australian economy, for very little gain.

RIMINTON: The argument is if you want to get rid of red tape, you’ve got to get rid of the Carbon Tax because it’s full of regulations.

WONG: I’ll make a couple of points. First, John Howard went to the 2007 election promising a carbon price and it wasn’t on the basis only that there was a global agreement. In fact, he talked very clearly about the benefit to Australia of ensuring that you put an efficient carbon price into the economy, because it’s about investment and the future.

In terms of red tape, if you really want to look at what would mean a lot of red tape, implement Tony Abbott’s policy. He wants to reduce emissions by 5% – the same target as the Government, a bipartisan position – he wants to do it by taxing people more, giving the money to public servants to dole out to polluters in the hope that possibly they may be able to reduce their pollution – now that’s inefficient.

RIMINTON: So you’re saying that there’s a fundamental dishonesty to have these Coalition Premiers turning up, have business turning up, complaining about red tape and the Carbon Tax?

WONG: I think it’s fundamentally wrong to suggest that a price in the economy is somehow less efficient than a bureaucratically-administered taxpayer-funded scheme, which is what Tony Abbott is proposing.

RIMINTON: The price in the economy –

WONG: The price in the economy, economists say, is the most efficient way to reduce pollution, which is why no economist actually supports Tony Abbott’s plan.

RIMINTON: But it’s nowhere near a market price, is it? Because you’re starting at $23, which is about two and a half times more than what it is in Europe at the moment. It’s a totally artificial price.

WONG: Remember also, that’s not the price that most or many of the big polluters will actually pay, because we are giving away free permits and recognise the importance of transition and supporting jobs. The highly emissions-intensive, the very highly polluting industries, do get a substantial amount of free permits which really reduces the amount of real carbon price they pay. That’s one of the things you have to do – ensure you transition the economy.

But look, just stepping back. Why are we doing this? Fundamentally in 10 and 20 years the Australian economy won’t be competitive in the global economy if we continue to be one of the most polluting economies on the face of the globe. So we have to do it.

RIMINTON: We have a lot to talk of with the budget. We’ll take a break and come back with the journos.

[BREAK]

RIMINTON: Welcome back, this is Meet the Press. Our guest is the Finance Minister, Senator Penny Wong and welcome now to our panel, Sabra Lane from the ABC and Tim Colebatch from The Age. Good morning to both of you.

COLEBATCH: Good morning. Minister, we thought we were going to be growing at 4% or 5% at this time when the budget surplus was going to be happening and it made a lot of sense. We are, in fact, growing at about 2.5%. Our state here in Victoria has just lost 30,000 jobs in six months. Is this a good time to take $40 billion out of the economy?

WONG: We think it’s the right thing to do to bring the budget back to surplus and there are a number of reasons for that. One of them is that fiscal policy should look to the long-term. As a Finance Minister, you would expect me to say, we should set ourselves up for the long-term, but also, as you know, it’s important for Government at a time where the economy is on track to return to trend growth.

COLEBATCH: “Trend growth” – what is trend growth? Can you explain that?

WONG: To ensure that the RBA has the flexibility to move when it comes to interest rates, should it choose to do so. Tim, I’ve read a couple of your columns, I understand the position you have on this. I would make the point that the forecasts that the Government made and the Treasury made in the mid-year review do take into account the fiscal consolidation that the Government is proposing.

COLEBATCH: Ok, which is 2.5% of GDP and you’re saying that if you take that out, you’ll still get trend growth which is 3 or 3.5%? Seriously.

WONG: What I’m saying is that the mid-year review, which forecast, as you recall, 3.5%, assumed the fiscal policy that the Government’s got in place. And you mentioned your home state of Victoria – we are very conscious of the very different experience of the economy that we have at the moment.

I mean, things are very different if you are a manufacturing firm in South Australia, my home state, or here in Victoria, to a mining company in Western Australia. But let’s also remember what sort of jobs growth we had – I think it was 44,000 last month. That’s a very substantial increase in employment. The unemployment rate still has a five in front of it, putting us really in a very good place compared to most other comparable economies.

LANE: On Tim’s point, an analyst this week from Société General warned that markets were watching Australia and were very concerned that you would pull out too much money, possibly triggering a recession. He said international credit rating agencies would have no problem in his words, “stabbing Wayne Swan in the back” – the implication being that they would downgrade Australia’s credit rating.

WONG: Let’s remember, first – this is the Government that in the GFC acted to support jobs. Of course, we are a Labor Government. We acted to support jobs. In our view also, that it is the right thing to do, to bring the budget back to surplus, given where the economy is going.

One of the things we seem to forget is what’s happening on the investment side. In the three-year period of which we’re in the middle of at the moment, mining investment goes $47, $95, $120 billion over three years. $120 billion is slated for next year. Now, I accept that there is a different experience in different sectors in the economy. But we shouldn’t forget what that investment boom means and what that investment pipeline means.

When you’re talking about the different experience of people in the economy, that’s why you should do things such as the Government is doing – investing in skills, innovation, participation and the mining tax – which is about taking money out of profitable mining companies and spreading it across the economy through things like tax cuts for small businesses.

RIMINTON: Going beyond the mining tax, is there more to come out of mining? The diesel rebate?

WONG: I think that’s a ‘rule in, rule out’ budget question, isn’t it? And it’s not bad – we got to the second segment before you asked me that (laughs).

RIMINTON: I think that’s the ‘dodge the question’ as we’re coming up to –

WONG: We don’t, as you know, confirm or not confirm anything that might or might not be in the budget because once you start down that track, we get into a very long interview. But we will put this budget together with a very clear eye – not only to the figures but also the quality of the spend.

LANE: There is an expectation that you’ll announce further measures in the budget on the National Disability Insurance Scheme – what about Tony Abbott’s offer to work with the Government on this? On Friday he said the Opposition and the Government should form a committee to roll this out.

WONG: I think Tony Abbott is starting to realise that being only negative requires some change and you know, the best he can come up with is ‘put me on a committee with you’.

LANE: So is that a “no”?

WONG: The reality is we’re doing the real work and that is putting together a National Disability Insurance Scheme which takes a lot of work and there was some very good progress in terms of the principles which were discussed between the Prime Minister and first ministers of the COAG.

COLEBATCH: Wouldn’t it be a good idea to get the Opposition on board though?

WONG: It’d be interesting to see if Tony Abbott could ever get beyond words around this or anything else and actually get to telling people how he might fund things.

One of the interesting things I think, in the paper today is we see Barnaby Joyce, the leader of the National Party in the Senate, the guy who wants to move to the Lower House and take Warren Truss’ job, still advocating for the doubling of the Baby Bonus – that’ll cost about $3 billion. I see that some Coalition members have said, that’s not actually Coalition policy. It looks again like the National Party tail wagging the Coalition dog.

COLEBATCH: Let’s come to something the Coalition’s saying which makes a little more sense – that’s your Shadow counterpart, Andrew Robb. He gave a speech where he spelt out eight different measures where the Government has shifted more than $6 billion of spending out of 2012-2013. I’ll just quote one example – the Energy Security Fund gets $1 billion this year, $1 million next year, $1 billion the year after and $1 billion the year after that. Now, that’s surely a budget fiddle. How can you – if those are the ways you get a budget surplus, people are going to say, this is phoney, aren’t they?

WONG: But you know the sorts of numbers you’re talking about are… in the scheme of the budget, you can’t simply achieve a surplus by pretending – you’ve actually got to make hard decisions. And if Andrew Robb is so concerned about budget integrity, why is it he keeps getting his costings wrong? –

COLEBATCH: But I was asking about yours –

WONG: But Tim, the criticism from the Coalition – and people should start saying to them, well, but why don’t you put up or shut up?

RIMINTON: What Tim’s just said though, is tricky accounting. And that’s the argument that the Coalition –

WONG: The ‘tricky accounting’ is the Coalition who has never actually put forward costings which add up.

COLEBATCH: But the tricky accounting in this case, is also the Government, surely.

WONG: What I’m saying to you is that we have laid out our path to return to surplus and as you know, we will lay that out again in the Budget which will be handed down. No doubt, people like yourself will scrutinise it closely. But it is true, there were some up-front payments for example, in relation to the carbon price. And we explained why that was the case. But again, what I’d say is you don’t come back to surplus simply through accounting. You come back to surplus because you make hard decisions and hard decisions which so far, Andrew Robb has talked about but never delivered. In fact, he’s been overruled.

RIMINTON: Just quickly, what you’re trying to do here is leave room for the RBA to lower interest rates. The ANZ bank this week has put up interest rates. Do you blame them for doing so and is the Government to blame for them doing so?

WONG: On the first, I think it’s very disappointing and ANZ customers should make sure they look at some of the very competitive rates which are on offer. But in terms of some of the commentary by Tony Abbott, suggesting this is somehow the Government’s fault – well, frankly, it’s ridiculous. I think even Tim, who’s been critical of us, would agree with that.

To suggest that the Government, which actually has a very small amount of debt – if you look at our debt compared to most OECD or advanced economies, we’re one tenth of the average of the G7 – to suggest that somehow, what the Government is borrowing in terms of global capital markets, is driving interest rates is simply nonsensical.

RIMINTON: Senator Wong, thanks very much for your time today.

ENDS