4 December 2012




SPEERS: I’m joined by Finance Minister Penny Wong. Thanks for your time.

WONG: Good to be with you.

SPEERS: Now it is true the Reserve Bank generally doesn’t cut rates to emergency lows if everything is fine with the economy.

WONG: Let’s remember what the Reserve Bank has said and let’s remember a few of the facts. Relative to other countries, Australia is doing very well. Whilst of course not everyone is on easy street, we know that we are projected to grow faster than any of the major advanced economies. We’ve got relatively low unemployment, we’ve got low interest rates, contained inflation and a lot of investment and solid growth. So these are all good things and I don’t think it’s good for the country to have people like Mr Hockey trying to talk down the economy.

SPEERS: So why does the Reserve Bank have to cut rates to emergency lows?

WONG: Well you should go to their statement and the comments – the extracts – that you put. In their statement they referenced a few things: the global economy – and it’s true, the global economy has been much more fragile than you would have hoped. That is true –

SPEERS: And is that fiscal cliff in the US a big worry for you?

WONG: … there is what’s happening in Europe, there’s the fiscal cliff. Now we look forward to that being resolved, as does the rest of the world.

SPEERS: But on the domestic economy, clearly there are some concerns there.

WONG: I think there’s two points. I think the quote you read out where the Reserve Bank itself talks about the economy growing close to trend, I think that is an important thing for us to recall –

SPEERS: Over the past year, but looking ahead… it was talking about over the past year, but looking ahead it does seem to have some concern.

WONG: The second thing the Reserve Bank also referenced is public spending being constrained. So I think a very important thing to remember in the face of Joe trying to make political hay out of an interest rate cut which is obviously good for many people around Australia, is that we’re in a very different position to where the world was in 2009.

Let’s remember what happened during the GFC: global growth fell off a cliff, literally, in fact the global economy started contracting. We had governments across the globe including the Australian Government putting stimulus into the economy and interest rates obviously very low.

So it’s a very different context to now where what we’re seeing is solid growth in Australia, certainly risk in the global economy but relatively low unemployment and the Government being very disciplined in its spending and this of course means we’re in a very different position.

SPEERS: But do we still need to push back into surplus given some of the concerns that are out there about the economy?

WONG: We have been really clear, you have the right economic settings for the time and our latest Budget update still has us not only returning to surplus but also as the Reserve Bank has referenced –

SPEERS: Do you still think that’s the right thing to do?

WONG:… as the Reserve Bank has referenced, the economy growing at or around trend. But can I talk about the future because I think that’s really important and you did ask about that earlier. Certainly the Government is really clear that you do need to look ahead to make sure you plan for the future, to make sure that beyond the peak of the resources boom we still continue to increase the country’s wealth and ensure Australia’s prosperity.

SPEERS: So what are you doing about that? What are you doing about post-mining boom?

WONG: That’s right. Well what we’re doing is, you try to increase Australia’s productivity. You invest in your people, you invest schools, you invest in our universities, you invest in schools. Now we’ve done a lot of these things. We’ve substantially increased funding to universities and the number of people going to university. We’ve substantially increased the number of available places when it comes to skills –

SPEERS: But all of that investment seems to be at odds with getting back into surplus. It’s a lot of spending.

WONG: That’s true you’ve got to make your priorities. But there are other things you do to try to increase your productivity. Investment in the NBN, that’s a long-term investment, again opposed by those opposite, but I think critical to a 21st century –

SPEERS: But this is all spending. Is it still a priority to get back into surplus?

WONG: We have taken a lot of savings, something that I think the Opposition seem to forget – that over the course of a number of budgets we’ve got in excess of $130 billion worth of savings –

SPEERS: You’re still struggling to get back into surplus.

WONG: If the revenue was at the level it was under Peter Costello we would have a $24 billion surplus this year.

SPEERS: But it’s not. So the question is, is it still a priority to get back into surplus?

WONG: I think we’ve demonstrated our priorities by the savings we just took in the MYEFO.

SPEERS: So it is still a priority?

WONG: It’s absolutely very clear that the Government believes fiscal discipline is a priority.

SPEERS: Can I ask you about the mining tax, because the Reserve Bank points out that the peak in mining investment is approaching and the Opposition is saying get rid of the mining tax. Now it’s not just the Opposition; there are calls for at least some major changes to the mining tax from your own GST Review. John Brumby and Nick Greiner who chaired this say that you’ve got to fix this issue of refunding state mining royalties. Will you do that?

WONG: That Review has been handed to the Government and the Government is considering the outcome of that review. I mean I’m always interested in the Opposition’s shifting position when it comes to mining –

SPEERS: I’m not asking about the Opposition –

WONG: Well, no, you –

SPEERS: Will you look at that?

WONG: Hang on, you referenced the Opposition’s position and I’d just simply make one point. Initially remember this was going to be the worst thing in the world, it was going to stop the economy, it was going to be dreadful. And now they’re saying, “Oh, but the design’s not the right design and you…”

SPEERS: Well it hasn’t raised any money and you’ve committed funding from it.

WONG: And all of our funding commitments are in the Budget bottom line. It shows us going into surplus –

SPEERS: Will you consider changing this part of the mining tax that refunds state royalties?

WONG: We said we are considering the GST Review recommendations and that’s the position of the Government.

SPEERS: Is there a case for doing this?

WONG: I’m not going to go any further than what I’ve said which is that we are considering the recommendations.

SPEERS: And finally on a completely different subject John Faulkner, your colleague, gave a speech today. I’m sure you would have read it.

WONG: (laughs) Well, I’ve been a bit busy today but that’s OK.

SPEERS: He calls for urgent action on a number of fronts; electoral funding disclosure, whistleblower protection but also internal reform within the ALP. For example he’s saying the entire party membership should choose Senate candidates, there should be an independent panel to resolve internal disputes, not factionally dominated committees, and any member found guilty of corruption should be expelled. Do you agree?

WONG: Absolutely, certainly on that last point.

SPEERS: And Senate candidates should be pre-selected by the entire party, Senator Wong?

WONG: I certainly wouldn’t mind that but obviously you’ve got to work that through the party processes and people may have different views on that.

SPEERS: And the electoral funding disclosure laws, will that happen before the election?

WONG: Gary Gray has been dealing with that, so he’s probably the person you need to speak to about that. But I would say we’ve got a pretty good record in terms of increasing transparency and disclosure.

SPEERS: Finance Minister Penny Wong thank you.

WONG: Good to speak with you.