E&OE - PROOF ONLY
JOURNALIST: Penny Wong, thank you for your time. The growth figures today are softer than many expected. How will this affect your plans to get back into surplus?
WONG: Yes, you’re right, the growth figures are softer than some expected. Obviously there are some good signs that continue in terms of these national accounts, and certainly if you compare us to all other major advanced economies we’re extremely strong. But this does make it more difficult. We are seeing –
JOURNALIST: What concerns you most in the set of figures?
WONG: I’m the Finance Minister, lots of things concern me. But the reality is we’ve seen many revenue write-downs since the GFC, $140 billion over 5 years, and some $20 billion between Budget and MYEFO – between the Budget and the Mid-Year Review. So obviously that history has been something that the Government’s had to deal with.
JOURNALIST: And that’s continuing? So, if you do want to get back to surplus, you’re going to have to make further spending cuts, aren’t you?
WONG: It’s too early to tell. We are seeing some revenue weakness, but it’s too early to tell. But, leaving that aside, in terms of speculation, as the Treasurer said, you always have to make savings. We have had to make savings, not just to offset new spending, but also to reflect what’s happened to revenue in the last couple of rounds. And we’ll continue to have to do that in the future.
JOURNALIST: Some of the cuts that you have made are really putting means tests on various handouts, like the childcare rebate, the baby bonus, and you’re trying to do one on the healthcare rebate as well. Are there more means tests to come? Is this the sort of pattern we can expect?
WONG: This is budget speculation, isn’t it? I think it is budget speculation (laughs). We don’t resile at all from the changes that you’ve spoken about. It is our job as the Government to make sure that these systems are sustainable. It is our job as a Labor Government to make sure that whatever savings we make are as fair as they can be. And that’s what we’ve done.
JOURNALIST: Is there a point at which revenues – if there’s a continued deterioration in revenues, this whole thing of getting back into surplus actually will hurt the economy? Is there a point at which you have to say, look, it might be better to stay in deficit?
WONG: First, I’m not going to speculate on what’s going to happen to revenues; we’ve had the discussion about that. But, more importantly, let’s remember why we’re returning to surplus. We’re returning to surplus because Treasury still considers – and it’s consistent with other forecasts – that the economy will grow at trend. At a time where that is occurring, what you do want to do is return the budget to surplus.
The second point to make, and it’s a very important point, is that you need to be clear that you are serious about fiscal responsibility at this time. We see in Europe every day the consequences of governments not doing what they said they were going to do when it comes to their budgets. We’re serious about making sure we are responsible. It’s in the interests of the country that we are.
JOURNALIST: But just picking up what you said there, it’s responsible to get back into surplus when the economy’s growing at trend. Is it growing at trend, based on these figures?
WONG: We had a stronger result the quarter prior to this. This is obviously, as you said, softer than some expected. You did see growth in exports and some modest growth in consumption – they’re good signs. And through the year, you see business investment growing very strongly. These are good signs –
JOURNALIST: But if we’re not growing at trend –
WONG: This is a hypothetical. We make judgements on the best advice, and make judgements about what is the best economic decision for the country. How do we keep the country strong? We believe it’s to bring the budget back to surplus. Will it be harder? It will be harder.
JOURNALIST: Just to be clear, there’s nothing in these figures that means it shouldn’t happen?
WONG: We anticipated – and you might recall there was some revision in the forecasts at the Mid-Year Review – we anticipated that you would see some of the global headwinds impacting on the Australian economy. But we still have the forecasts that we’ve outlined, and they mean a return to surplus is appropriate. I’m not going to get into speculation about where the economy – what might or might not happen. My job is to look at what is the forecast, what is the best decision for the country.
JOURNALIST: What impact are the floods going to have on the budget?
WONG: It’s too early to tell on that, I’m sorry to have to say that again, but it is true. I think one of the better things in these figures is we see some of the coal production and the export out of Queensland is returning. That’s taken a bit longer than anticipated. Certainly in terms of the current floods, our first thoughts are with the communities who are affected, and obviously the Government’s assisting with emergency relief and the like.
JOURNALIST: But it is worth pointing out that there is a difference to the Queensland floods. As you say, it’s not shutting down coal mines, it’s not wiping out whole towns or bridges, or a lot of infrastructure, at the moment at least.
WONG: All I know is that there have been some significant flooding events, and obviously there are communities affected. We do know that the floods in Queensland last year were very significant.
JOURNALIST: They had a greater national economic impact.
WONG: That’s true.
JOURNALIST: Now the Opposition today, Joe Hockey has said that they will, the Coalition will, definitely deliver a surplus in their first year.
WONG: That’s today’s line, is it?
JOURNALIST: That’s what he’s said today; based on today’s figures they will deliver a surplus in their first year, and that they will do this by cutting waste in the budget. Do you say that there isn’t waste to be cut in the budget?
WONG: What I’d say is this. What Joe Hockey outlined today wasn’t a plan, it was a grab bag of slogans – more of the same. What we do know of his plan is that it’s not deliverable. He says he wants a budget surplus, but he’s got a $70 billion black hole. He says he wants tax cuts, but he can’t fund them, they’re not deliverable. The reality is no one will take Joe seriously until he actually puts forward costings that add up. He hasn’t done that yet since he’s been shadow Treasurer.
JOURNALIST: Well, he has to – surely the Coalition have to wait until closer to the election and work out where the numbers are going to be. I mean, this year alone we’ve seen the deficit blow out from $32 billion to $37 billion. The figures move around a lot.
WONG: This is what they say. This is what they say. But the reality is you’ve got to look ahead. You’ve got to say ‘how do we fund this?’. What Joe Hockey is doing is saying ‘I’m going to oppose the mining tax, oppose this source of revenue, I’m going to privilege the position of wealthy miners ahead of ordinary Australians’ –
JOURNALIST: Well, because they doubt the figures. They doubt the figures –
WONG: No, that’s not reasonable. What he’s saying is ‘I’m going to oppose the revenue source, for whatever reason, because my priorities are as they are. But I’m going to continue to fund the superannuation component, but don’t know how I’ll fund that’. And he says ‘I’m going to fund tax cuts, but don’t know how I’ll fund that’. I mean nothing adds up.
The reality is this is not deliverable, and I think they’re starting to realise it. And I think that’s why you’re seeing Andrew Robb coming out and occasionally telling people what he really thinks, and saying ‘our policies aren’t finalised’, because he knows he can’t fund everything that Tony Abbott’s promised.
JOURNALIST: Finance Minister Penny Wong, thank you.