CLARKE: Senator Wong, thanks very much for joining us.
WONG: Good to be with you.
CLARKE: Now, the Government for some time has had the mantra that it doesnt comment on interest rate movements; that the Reserve Bank is independent, and its not for Government to comment on any movements. But, in the last few weeks weve seen both the Prime Minister and the Treasurer talk about getting the budget back into surplus to give the Reserve Bank every opportunity to lower interest rates. Is the Government trying to strongarm the Reserve Bank into making a move on interest rates?
WONG: The Reserve Bank is independent and it is a matter for them for the setting of monetary policy, the setting of interest rates. The point the Government is making is a very clear one, and that is one of the very important arguments for bringing the budget back to surplus is that it does give the Reserve the flexibility to move should it wish to do so. I think its a different proposition to the one youre putting to me, but thats one of the very important reasons for bringing the budget back to surplus at this time, given where the economy is going.
CLARKE: So why the change in policy from, in the past, refusing to preface or preview or talk about interest rate movements? We even had a few years ago, Kevin Rudd ridiculing Brendan Nelson, calling it the Nelson Doctrine, for daring to suggest about making moves that might see interest rates change. Yet now, suddenly, were prepared to bludgeon the Reserve Bank publicly to try and get them to move on interest rates. Why the change?
WONG: I simply dont accept the way in which youre construing it. I dont accept the word bludgeoning at all. It is a very different thing to comment on particular decisions of the Reserve Bank, which the Opposition have felt free to do, rather than what the Government is doing, which is making a broader economic point around the rationale for returning the budget to surplus.
Weve said, look, we want to return the budget to surplus, its the best thing for the economy. There are number of reasons for that and one of them is the global uncertainty, we want to have a buffer in these uncertain times so we can protect jobs. But the other is that it does give the Reserve Bank room to move should it wish to do so. Ultimately, that is a decision for the independent Reserve Bank.
CLARKE: Economists are overwhelmingly predicting that the Reserve Bank will in fact lower interest rates after its next meeting. Are you getting in ahead of regardless of what the Government does ... are you getting in ahead of the game to try and take credit when that does eventuate, presuming it does?
WONG: No, as the Government what we are doing is explaining to you and to members of the Press Gallery and to the Australian people why it is we have to bring the budget back to surplus. We have made that very clear, and our view is that thats the right thing to do for the Australian economy and for Australian households.
CLARKE: Joe Hockey has said that the Government running a deficit, borrowing $100 million a day in competition with the banks, and therefore is raising interest rates. By saying youre bringing the budget back into surplus to give the Reserve Bank opportunity to lower interest rates, are you conceding that Joe Hockey is right?
WONG: Absolutely not. What Joe Hockey has never explained is what he would have done during the Global Financial Crisis. Because, when he and Tony Abbott come out and criticise the Federal Government and the federal budget for where its at, they seem to forget there was a thing called the Global Financial Crisis that wreaked havoc across, mainly, developed economies across the world.
Australia has come through that far better than most other advanced economies. Our economy is larger and our unemployment rate is lower than most other major advanced economies in the world, and as the IMF said in its report yesterday, were projected to be in a stronger position over the next couple of years than almost any other major advanced economy. Thats a very good position to be in.
CLARKE: Why not consider giving the Reserve Bank a greater charter to work with, so it considers other elements of the economy other than inflation when making its monetary policy determinations?
WONG: My view is that the current arrangements have served Australia well and I dont think its a sensible thing to be altering those arrangements. But can I just come back, because I should have, in relation to your last question, spoken about Mr Hockeys recent speech last night.
I think its important that we do have a discussion about that because really what Joe Hockey is saying in that speech, despite his comments that you referred me to before, what hes saying in that speech is we should cut into pensions ... we should cut into pensions but we shouldnt cut into things like the Private Health Insurance rebate. It just shows he really doesnt make a lot of sense a lot of the time.
CLARKE: But the Government has been doing some of its own efforts to rein in some of the welfare budget by means-testing and the like. So, on a philosophical point of view, and he wasnt mentioning any particular targets, so, philosophically, are you agreeing that that element and the size of the welfare budget does need to be kept in check?
WONG: Im the Finance Minister and I have argued, I think before on this channel and many others that making responsible savings decisions, making fair savings decisions is important and weve done that.
In fact, some of the things weve done, like in relation to the $150,000 means test on family tax benefits, Joe Hockey has criticised. Now hes out there saying we should have gone further. But you have to make decisions which are fair. It isnt fair for Joe Hockey to be saying, school teachers should be subsidising the private health insurance rebates of millionaires, but we should be going harder on things like pensions. Thats simply not fair.
CLARKE: In your role as Finance Minister, obviously were getting down to crunch time with the Budget; its only a few weeks away. Theres certainly a lot of expectation in the community with talk around of a National Disability Insurance Scheme, aged care reform, the Greens pushing for Denticare. Do you believe that voters understand just how tight the budget is? Are they going to see what they are expecting in this Budget?
WONG: I think Australians expect their parliamentarians and their Government to be responsible when it comes to the Federal Budget, to prioritise. And I think they also expect us to make sure that we look, not just to this year, but to the years ahead. And thats the issue isnt it? That If you want to fund things, youve got to fund them, not just for one year, but you have to fund them for the years ahead.
When we look at the Federal Budget, we have to work out how we prioritise, how we make responsible and fair savings decisions, and how we find the resources to fund other priorities and thats the approach the Labor Government takes.
CLARKE: Because that certainly sounds as though we might have to wait for some of those major reforms that have been promised and have been prefaced. Is that the case? Are we going to have to wait?
WONG: Im not going to tell you what might be in the Budget, but Ive made clear, including I think in a piece today in the papers, that it is true you do have to prioritise and you do have to sequence. Because when youre funding a social policy program, you dont just fund it for one year, youve fund it for years. Thats what happens with Medicare, we continue to fund it every year, and increase how much we spend on it, because its a very important part of Australias social security system. So we do always have to find the way in which we fund these things not just for one year, but for the years ahead.
CLARKE: The Governments been very determined to keep its promise to bring the budget back into surplus for 2012-13. Will you be just as determined to keep your promises to those with which you share the minority government, that is the Greens, and the promises made to them in terms of funding various commitments?
WONG: I think weve got a pretty good track record of making sure we meet the commitments we made in forming government ...
CLARKE: ... I think Andrew Wilkie would disagree with that.
WONG: I think the reality there is the position that Mr Wilkie was putting was not going to pass the Parliament. But when it comes to budget decisions, youve asked me about the surplus, we are committed to that. And the reason is not because its a promise, its because its the right thing to do, its the responsible thing to do given where the economy is at.
CLARKE: And if I can just briefly come back to Joe Hockeys comments last night, talking about the size of Australias welfare budget. His general approach to this was saying that Australia really shouldnt be comparing itself to Western nations to the US, to the EU but rather closer competitors; Asian nations and how they formulate their budgets. Do you agree with that as a general premise?
WONG: No, I dont. I think thats not the right way of understanding how we have to participate in this century where we see the rise of Asia and we see Asia becoming a much more important part of the global economy.
We dont have to give up the things that are part of what make us Australian, and I think things like Medicare, and the age pension are a very important part of who we are.
What we do have to do is work out how we maximise the opportunities for Australia, in this Asian century. And that does mean things like investments in skills and research, and making sure that we give our people the capacity to participate.
CLARKE: Alright well have to leave it there. Senator Wong, thank you very much and good luck with the Budget.
WONG: Thanks very much.
ENDS