ALBERICI: Senator Wong, thanks very much for being with us here.
WONG: Good to be with you.
ALBERICI: Now, how can you predict with any certainty a surplus next year of $1.5 billion when you were so wildly out in your forecasts for this year by about 100 per cent? From $22 billion deficit we've gone to a $44 billion deficit.
WONG: Let's understand the determination that the Government's shown in this Budget and in the past Budget towards getting the surplus and we have dealt with a write-down in revenues over a number of budgets that now totals about $150 billion.
We have taken savings of $100 billion in our previous budgets, previous four budgets, we took more savings at MYEFO to protect the surplus and in this Budget what we're putting forward is $33.6 billion worth of savings.
What that shows is we are prepared to engage in the discipline that's required to bring the budget back to surplus.
And let's remember why we're doing it. We're doing it because the surplus is the right thing to do with the economy where it's at the moment. It's about the strength of the economy, it's about a buffer in uncertain times globally and it's about giving the Reserve Bank the room to move on interest rates should it see fit.
ALBERICI: But with Europe teetering on the brink of another potential crisis and next year's assumptions about growth and unemployment, they're all far from certain, the assumptions that underlie this surplus.
WONG: I think if you have a look, we've been quite... or the Treasury's been quite conservative in its assumptions particularly around what's occurring in Europe, probably by comparison with some of the international agencies, you might say more conservative.
These are the same estimates, the same parameters that were Mr Hockey and Mr Robb in charge they would get and these are the Treasury's assessments of the economy going forward.
But let's remember what this Budget is about. It's about a strong economy, but it's about a fair community. It's about spreading the benefits of the boom to low and middle income Australians and to businesses through making sure business has the flexibility to respond in this time of change in the economy.
ALBERICI: Your Government's made a lot of its ability to enact serious tax reform, but you've just heard there from Michael Chaney the business community for one is terribly upset about your abandonment of the 1 per cent tax cut, given especially, as he points out, that the Henry Review actually suggested a five percentage point cut in the corporate tax rate.
WONG: Well I'm very happy to talk about the company tax cut. I'm very happy to talk about the fact that the Government was prepared to vote for it and that the party of Robert Menzies, led by Tony Abbott, was prepared to vote against a tax cut, a tax cut for companies was opposed by ...
ALBERICI: You didn't put it to the test though.
WONG: Come on, you're basically saying to me we should have hoped that Tony Abbott would change his mind. When has he ever said yes to anything? I mean, this is a bloke who's saying, I will not pass with the company tax cut. I will vote with Christine Milne in the Senate to ensure we can't get the company tax cut.
Well, I tell you what: the Government was not going to allow Tony Abbott's intransigence and habit of wrecking to simply prevent us from spreading the benefits of the boom and that's what we've done in this budget.
We've said, OK, we will - we will fund this assistance for low and middle-income Australians. We will ensure we fund the loss carry-back measure, which is a way of ensuring companies have more flexibility in this time of change, more flexibility to invest and to innovate.
But on the business tax cut what we've also said to the business community is this: we do want to work with you to deliver a tax cut, a tax cut that can both be funded and get through this Parliament. We haven't taken any of the savings propositions which were put forward by the Business Tax Working Group.
We've said we're not going to touch those and if the business community want to sit with us and work through that process, the Business Tax Working Group to fund the tax cut and to ensure we can get it through the Parliament, we're willing to work through that process with them.
ALBERICI: Now part of the reason why you've registered such an enormous deficit in this year is because you've shifted much of your spending out of 2012-13 in order to achieve your surplus.
WONG: This is one of the lines from the Opposition. And I'd make this point
ALBERICI: A lot of economists have said the same thing. It's there clear in black and white.
WONG: I'd make this point: first the deficit in 2011-12 is driven in significant part by writedown in revenues. That is not... they are not decisions of government.
It is true we funded a number of things in the mid-year review, for example the carbon price assistance. We were upfront with that. We said we are going to fund a lot of families and pensioners upfront. And there are good reasons for that; we want people to have that money ahead of the price coming in.
But I would make this point: when you're looking at a budget over four years, when you're looking at the number of decisions which are required to have a budget surplus growing over time, when you look at the discipline on payments where you see the longest period of payments below 24 per cent of GDP since the 1980s, I think what that shows is much more ongoing discipline than your question would give us credit for.
ALBERICI: But it's quite clear that $1.1 billion in grants to states, some of which was meant to compensate Queensland for the effects of the disasters, the floods they had there, is going in this year instead of next year when they're actually needing to spend that money.
WONG: I don't
ALBERICI: It's a clear shift, it's written there in your papers that you were supposed to be spending it next year, but instead you've decided to spend it this year.
WONG: We have brought forward some spending as a result of natural disasters so we can fund infrastructure rebuild. We don't apologise for that. But again I come back to the big figures: have a look at what payments do over time. They stay, as a share of the economy, below 24 per cent for the whole of the forward estimates period. You have to go back to the 1980s before you get that level of payment. A lower spending government as a share of the economy than we've seen in years in decades in fact. And a lower taxing government a lower taxing government than Peter Costello, and that's important. We inherited a tax-to-GDP ratio of 23.7 per cent and we stay well below that through this budget period. So we're taxing less and we're spending less.
ALBERICI: Well you're getting less in taxes also because you're getting less in revenues from
WONG: That's right, that's true!
ALBERICI: corporate Australia. So I don't know that that's technically necessarily fully correct.
WONG: No, no. Well, the point is that the figures demonstrate a level of discipline - and, you know, why have we done that? And we've made these decisions because budgets are about priorities. A surplus because we have a strong economy, but the spending measures because we want a fair community.
ALBERICI: Penny Wong, thanks so much.
WONG: Good to be with you.
ENDS