CURTIS: Penny Wong, welcome to AM.
WONG: Good morning.
CURTIS: If the higher dollar has taken $10 billion off revenue since the Budget, how much more will you be down if the dollar remains at its current level?
WONG: Well it is the case that the soaring dollar has a number of effects and one of them is a big hit on Government revenue. I mean that's the reality, a high dollar is going to hit Government revenue and the MYEFO, the Mid-Year Economic and Fiscal Outlook that we'll be releasing today, will confirm that we see a significant hit to Government revenue as a result of the higher dollar.
CURTIS: And that's going to mean more spending cuts, isn't it, by next Budget time?
WONG: Well Lyndal we have made very clear what our fiscal rules are. We have put in place very strict rules, we will offset new spending. That is one of our rules. We complied with it during the election campaign, unlike the Opposition, we will offset new spending as we go forward. That's our commitment to the Australian people. That's what will be delivered today and that's what the Government will adhere to in its term of government.
CURTIS: But you won't only have to deal with new spending, you're going to have to deal with a bigger hit to the revenue from the higher dollar. Will you offset that revenue fall as well?
WONG: As you know, the higher dollar does have an impact on revenue, but despite that the Government is determined to bring the Budget back to surplus. And you will see today that the Government has made the decisions it has to make to ensure that we deliver a surplus despite the soaring Aussie dollar.
CURTIS: The higher dollar will also mean less revenue from the mining tax. Now you've committed all the proceeds from the mining tax, so will the higher dollar mean that there will be less spending from the tax, that you will have to delay the timing of some of that spending?
WONG: Look all the details of these issues, including the revenue impact, obviously will be released today. But there is no doubt that the Government does have to ensure that we bring the Budget back to surplus, that we reflect the change to Government revenues from the soaring Aussie dollar. That's what we will do in the budget update, the MYEFO, that we release today.
CURTIS: The Treasurer has castigated the Howard Government for spending all the proceeds of the mining boom. You're going to spend all the proceeds of the mining tax, yet the higher dollar makes that difficult because it will lower the revenue. Does it show you shouldn't have committed all that tax money?
WONG: Can I just make a point about both the previous government and the Opposition? I mean we have far more strict fiscal rules than were applied by the Howard and Costello governments. We have a stronger fiscal position than Mr Robb and Mr Hockey delivered during the election campaign, when we saw a $10.6 billion hit to the budget from the fact that they got their costings wrong.
We are determined to bring the Budget back to surplus. Obviously one of the challenges is the soaring Aussie dollar. That's going to slug Government revenue, we've made that clear, we're upfront about that. But despite that the Government has made the decision it has to make to ensure that the Budget comes back to surplus in 2012-13 as we told Australians it would.
CURTIS: Most of the savings announced today were announced during the election campaign. The Opposition says you've taken no hard decisions. Your Coalition counterpart, Andrew Robb, says he can't recall one hard political decision the Government has made. Can you?
WONG: Well it's pretty rich coming from Mr Robb, criticisms when it comes to budget position. This is a man who spent most of the election campaign explaining why he couldn't give his costings to Treasury and Finance under the Charter of Budget Honesty, making every excuse under the sun. And when they finally did provide them they'd got their costings wrong and the Budget would be in a worse position if they had been in Government with those costings. The reality -
CURTIS: But what hard political decisions have you, has this Government taken?
WONG: The Government has made a very clear commitment to offsetting all new spending and we delivered a range of savings decisions in the election campaign which will be reflected that enable us to put forward our election commitments.
So the hard decision is to ensure that we offset all new spending. The hard decision is to ensure, unlike Peter Costello, that we hold growth and expenditure, so real growth in how much the Commonwealth spends each year, to 2 per cent a year. That's just over half of what Peter Costello delivered in his five budgets. That is, we will ensure that we will only allow spending to grow to by just over half what Peter Costello did. Now that is a tough decision.
CURTIS: But some people say you haven't taken the structural work, that you need to do things like rein in middle class welfare, rein in industry assistance and, in fact, in the election you increased middle class welfare by giving out education tax rebates, you increased industry assistance through things like the Cash for Clunkers program. Are you going to do any of that structural work in this term in Government?
WONG: We recognise the importance of ensuring that you have a sustainable Budget. That is why we have the sort of fiscal rules that we've got in place. That's why we're saying we'll ensure that real growth and expenditure is only 2 per cent a year, or less than 2 per cent a year. That's a very big limit, a cap, on expenditure and we will offset that new spending.
Now that's not a commitment that was delivered in the last five Costello budgets, it's a commitment that we're giving. And we will obviously work methodically through the budget processes to make sure we deliver, not only a surplus, but sensible savings measures so that we can ensure that the Budget comes back to surplus as we said.
CURTIS: But you could go further though if you wanted to and perhaps lower the caps on some of that so-called middle class welfare and really boost the Budget surplus?
WONG: Look Lyndal I'm not going to have a rule-in, rule-out of every single idea that anybody puts up about what governments should do with budgets. We're going to take a much more responsible approach. We have taken that approach in MYEFO, we have ensured we've offset new spending. And despite a very high Aussie dollar, despite the slug to Government revenue that that dollar, high dollar brings, we will ensure the Budget comes back to surplus in 2012-13 as we said it would.
CURTIS: Penny Wong, thank you very much for your time.
WONG: Good to speak with you.
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