WONG: Good to be with you again.
HENRY: I was talking about this a little earlier with Hugh Riminton, and I think youve done quite a clever job. Youve posed quite a problem for the Coalition here, because one would assume that the Coalition were going to go to the next election saying wed have to pull money out of your bank account because they will not be supporting the $820 and $410 payments that youre going to be making ...
WONG: We havent done this to cause a problem for the Coalition. Weve done this to try and give more support to low and middle income Australia. Thats what this Budget is about a strong economy, a surplus, about spreading the benefits of the boom particularly for low and middle income families.
But youre right, the Coalition have got a problem. They have consistently said theyre not going to support anything that the Mining Tax funds. If they do support these measures, and wed encourage them to do so because theyre good measures, theyre measures that will help families, the problem theyll have is how theyll fund it when it comes to the election and they actually have to be upfront with people about their election costings.
HENRY: Of course one of the problems with regards to funding from their point of view is that they say theyre going to knock the carbon tax on the head. How big a problem though in reality has the carbon tax posed for your Government?
WONG: Ive heard some of your comments on it, Paul. Its a difficult reform. Were asking this generation to do something in order to change the economy. And ultimately I believe if were going to be a competitive economy in the years ahead we have to start to reduce our pollution and this is the most effective way of doing it.
But what we have done, consistent with being a Labor Government, is make sure that the assistance associated with the carbon price, particularly for low and middle income Australia, is very comprehensive. And were also including tripling of the tax-free threshold. So your early childhood educator who was speaking to your colleague before, if he earns less than $80,000 a year he will get a tax cut as a result of that.
HENRY: Which he probably does.
WONG: I dont want to make assumptions, but if he does.
HENRY: I think its a safe assumption to make though, isnt it? Childrens bonus that we were talking about just now: Joe Hockey says this is just a sweetener, and in reality it is just a way of appeasing people because sooner or later, probably sooner, theyre going to be faced with significantly increased bills as a result of the introduction of the carbon tax.
WONG: I think thats a line to get Joe Hockey out of a problem hes got, which is that theyve said theyre going to oppose families with children getting more support for education costs. I mean its a pretty extraordinary thing, isnt it? Weve said we want to provide more support for families with school kids because we understand the costs.
Its important to remember the history of this Paul. We had this sort of assistance through a tax refund process. And what we found was that too many families were missing out. Obviously keeping receipts isnt the top of everybodys to do list and as a result what we saw is too many families missing out. Thats why we want to make this an upfront payment.
HENRY: The Budget in general ... I mean I looked at the Budget, and for me there were no real surprises. To me, this is a typical Labor Budget, perhaps more like a Labor Budget than weve had for quite some significant amount of time in Australia. At the end of the day youve focused on carving the pie up in a different way, rather than growing the pie.
WONG: Im not sure Id agree with the second part. Id agree with the first part; it is a Labor Budget, and, in terms of Labor values - focusing the priority on low and middle income Australia, absolutely - unashamedly so.
In terms of growing the pie, one of the things I think is important to recognise is what we chose not to cut. In a Budget where we took nearly $34 billion worth of savings, we didnt take money out of higher education. We didnt take money out of research. We continued to grow funding when it comes to skills. Weve doubled the amount of money almost doubled the amount of money were putting into schools. Now, why is that? Because we recognise those investments are drivers of productivity. Were still investing in infrastructure, another driver of productivity.
HENRY: Most people would argue youre not investing enough in infrastructure. Most people would argue that that there isnt enough investment in infrastructure and, in reality, you cannot grow the pie by taking money from the engine room of the country, the corporate engine room and giving it to poor people.
WONG:Theres a couple of points there. First, in terms of infrastructure, the Nation Building Program has rolled out about $36 billion. There is an infrastructure deficit in this country, thats true. We have not been able to fix what has been years of neglect at both State and Federal Government level in the time weve been in Government. But we have ticked off on a lot thats been on Infrastructure Australias ready-to-go priority list, so thats important.
But in terms of the company tax cut and the mining tax, remember what were doing through this Budget is were taking tax, more tax, from wealthy miners, highly profitable miners, and were providing it to low and middle income Australia. I think thats the right thing to do.
HENRY: To be fair though, Penny, those miners need to be highly profitable. They are keeping the economy going at the moment. So surely, as a payback for keeping the economy going and putting you in the position youre in at the moment, which is an enviable position globally, surely they should be allowed to make a few profits and benefit from that?
WONG: And they only pay the mining tax if they make a substantial profit, remember that.
HENRY: And shouldnt they be able to make a substantial profit? Theyre propping the entire economy up.
WONG: Yes, yes, absolutely. Absolutely theyre entitled to make a profit. But Australians own the resources. And Australians are entitled to get a fair share of those resources. And I think it is one of the extraordinary divides in Australian politics that Tony Abbott is actually saying he wants more profits for miners rather than providing a fair share of those profits to all Australians, which at the time of a patchwork economy is very important.
HENRY: Penny, isnt it reasonable to say that every Australian benefits from the mining boom. Right now, irrespective of what youve done in this Budget, every Australian is benefiting hugely as a result of the mining boom. We are in the advantageous position were in because of it.
WONG: Theres no doubt that the fact that our economys continuing to grow, as a result of many things, including whats happening in mining, is a good thing for all Australians. But I think, if you did another cross to your colleagues and spoke to people in the street, many people might say look, this isnt my boom. You know, I dont feel this boom. So part of the job of government is to try and spread the benefits of the boom more widely. Thats what this Budget does.
HENRY: I mean, many people might say that, but theyd be wrong if they did. Just very, very quickly Penny, projected Government revenue, are you worried about that? Because youre projecting surpluses into the future; Wayne Swan is projecting surpluses into the future. That depends on Government revenue. And, over the last few years, your Government has been hit dramatically by a downturn in Government revenue.
WONG: Thats true. About $150 billion worth of revenue write down
HENRY: So why wouldnt that money continue
WONG: ... and what weve done is continue to make savings to protect the bottom line, to protect the surplus, as well as to offset savings, because weve been dealt with that blow and thats an important determination. But, you know, Treasurys still forecasting a return to trend growth, forecasting very reasonable unemployment rates, particularly by international standards. So, you know, we think this are very sensible figures, sensible forecasts.
HENRY: Ok, having said that, the Budget blew out this time by over $20 billion. So theres nothing to say that wont happen next year.
WONG: True, but ... to what extent did people anticipate natural disasters and also what occurred in Europe last year?
HENRY: I think we can predict that occurring in Europe again. Look at whats happening in Greece now, we can predict that happening again, cant we? So theres the surplus gone, down the tubes?
WONG: Thats the extent of it, isnt it? I think if you look at the Treasury forecasts, the Governments budget has much more conservative forecasts around Europe than even the International Monetary Fund. So were not backing Europe growing as a way of getting the budget back in surplus.
HENRY: Ok, thats very wise I think. Penny Wong, thank you very much for joining us this morning, I appreciate it.
WONG: Good to be with you again.
ENDS