SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

TRANSCRIPT

3 July 2012

SKY PM AGENDA WITH DAVID SPEERS

TOPICS: CARBON PRICE, INTEREST RATES

E&OE - PROOF ONLY

SPEERS: Penny Wong, thanks for your time. Can I ask you what you think of the Reserve Bank’s decision today to keep rates on hold? Was it the right call?

WONG: Good to be with you, David. Obviously, the Reserve Bank makes its decisions independently, and it’s decided to keep rates where they are. The context, of course, is that we have seen some easing in monetary policy. We saw a rate cut before the Budget, rate cuts after the Budget, and someone on a $300,000 mortgage is paying substantially less than they were when we came to office. So that is the context. But, ultimately, its a matter for the Reserve Bank.

SPEERS: Well, in its statement, the Reserve Bank, and Governor Glenn Stevens, talks about, quote, “maintaining low inflation over the long term will require growth in domestic costs to slow”. Is he saying there that wages do need to be kept in check?

WONG: I think that sentence refers to the fact that the Bank believes that the inflation target will broadly be where it should be, but, of course, as the exchange rate lessens, then you have to look at what domestic costs are doing. So, I think the context is that the Bank has made a judgement about where the inflation settings are likely to be.

SPEERS: But what’s the Government’s view on this? Does a message need to be sent to unions, in particular, not to seek too many wage rises at the moment?

WONG: I think we always have to be aware, and everyone, whether it’s unions or employers, need to be aware about the importance of making sure we have a long-term perspective and that that long-term perspective is brought to bear on investment decisions, on training decisions, and also on wage claims. Because, ultimately, what we all want is as much as possible of the pipeline of investment coming into this country actualising into projects.

We’ve got a very, very big pipeline, a lot of confidence in the Australian economy. But what we all want is to make sure as many projects actually come to fruition as possible. And that’s where the prosperity and the jobs come from.

SPEERS: Now, the Reserve Bank is looking through the immediate impact of the carbon tax. A lot of others though are looking right at it, at the moment. We saw your colleague, Craig Emerson, burst into song and dance in ridiculing the Opposition over this yesterday. What did you think of his performance?

WONG: I thought thank goodness that nobody can get a video of me at Chinese New Year dinners doing karaoke, because I think I’d be pretty embarrassed too. But look, I think, I’ve seen some sort of feigned outrage from the Opposition on this. And if they’re so concerned about peoples’ fears, why is it that Tony Abbott has been telling people that industries would end and that whole towns would be wiped off the face of the map? I mean, some of the reaction from the Liberal Party to Craig’s interview and singing really flies in the face of the fact they’ve been very happy to whip up peoples fears in a very irresponsible way.

SPEERS: There are people concerned about this carbon tax though; probably more so than anywhere else, in the La Trobe Valley. Now a committee set up by the Victorian and the Federal Governments has warned of flow-on impacts for businesses, communities, families, jobs in that region. What can you say to them about this, the impact, specifically on the La Trobe valley? Are we going to see one of the big power generators there shut down? Are we going to see jobs lost?

WONG: In general terms I’d say this: it is true that putting in place a price on carbon is going to lead to changes in the economy. Not the sort of changes that Tony Abbott talks about. But, over time, what we do want to see is investment much more in clean energy, and we need to make that transition. And so, what I’d say to the people of the La Trobe Valley is that, we are working with you in this transition. Simon Crean, particularly, as the Minister responsible, as well as Martin Ferguson, have been working with that community. We’ve set aside funds to work with that community. So there are a range of decisions which companies may or may not make. But we do understand that there are particular regional dimensions to the change that will come or that is coming as we move to cleaner energy.

SPEERS: But what does that mean? What does that mean? And, in plain, honest language, does that mean some jobs will be lost there?

WONG: That’s ultimately a matter for those companies in terms of whether they continue or not, and how they choose to deal with the changes as a result of the carbon price. But remember, change does occur in the Australian economy all the time, and the challenge for Governments – it would occur if Tony Abbott were in Government because there’d be a whole range of other things he’d be implementing, including higher taxes on those families to pay for his carbon policy – but the key thing is we’ve got to work with –

SPEERS: But one of the key parts of the Government’s scheme is the contract for closure, trying to shut down some of the dirtier coal-fired power generators. The negotiations have been stretched out for that. They were meant to wrap up before this week. How are they going? When are they going to be concluded and can you give us any insight as to what it’s going to mean for La Trobe?

WONG: Well, David, as you know, those negotiations and discussions are commercial in-confidence so I’m not going to be discussing them. They’re occurring as they should be, in the context of commercial and in-confidence discussions. But the broader proposition, which is reasonable for people to ask about, is what does this change mean for me and how will the Government help? And what we’ve said is that we’ve put structural adjustment funds on the table. We’ve got a Minister who’s working with these communities. We understand that regardless of when decisions are made and what decisions are made, that we are shifting the nature of our economy. There is a particular regional impact in the La Trobe Valley and they’re entitled to have Government working with them. And they have.

SPEERS: Alright, Finance Minister Penny Wong, we’ll have to leave it there. Thanks for joining us.

WONG: Good to be with you.

ENDS