BYNER: Good Morning Penny, to what do I owe this call?
WONG: (laughs) Gday Leon, how are you?
BYNER: Good.
WONG: I just thought I should respond to some of the things that Senator Cormann and Senator Birmingham said on your program. I understand that people are concerned about pricing carbon, and this is a big change, but I dont think its helpful when people come on radio and suggest that the skys going to fall in.
I just wanted to get two facts on the table. Treasury says the effect of the carbon price is likely to be less than one cent in every dollar. So an increase on what we call the Consumer Price Index of about 0.7 per cent.
BYNER: Now Penny, you are aware of what was said this morning by Frontier Economics Danny Price on that?
WONG: I understand, and I know Dannys view, but these are the same people that advised John Howard on the introduction of the GST and
BYNER: These are the same people who advised Bob Carr on the first CPRS scheme.
WONG: Well no, Im talking about the Federal Treasury who advised Peter Costello for all of his budgets and
BYNER: But the GST was underestimated, it delivered to the state of South Australia, as you know, monies that were never thought that would actually come to fruition, but they did.
WONG: But I think if you look at the Treasury modelling of the price impacts and the introduction, they got it pretty much right. The second
BYNER: But we dont know that yet, because the tax is not here.
WONG: No, Im talking about past performance in terms of the GST. So what Treasury have said is that youre talking less than one cent in every dollar, so we should keep this in perspective
BYNER: Well, Senator, the public
WONG: When
BYNER: Penny, I understand what youre saying, but the public dont believe you. Because two-thirds want an election to clear this up, and you dont want to give them one.
WONG: I understand Leon, and weve got a lot of work to do. But thats why Im ringing your program
BYNER: Cool.
WONG: And trying to put it very clearly, that were talking less than one cent in every dollar. The next point Id make is that we are offering tax cuts, and I know youve made some comments about
BYNER: And youre borrowing money to do it.
WONG: These are tax cuts over many years, which are about increasing participation as well as ensuring we get people on up to $80,000 a tax cut to help cover the increase in prices that will come from the carbon price.
BYNER: But youre borrowing money from the IMF Penny to do it.
WONG: If you want to talk about that, Im happy to talk about that Leon. Our public finances are in a better position than almost any other developed economy in the world. In the world.
BYNER: Yes but normally you see, can I just explain this. The public are used to getting tax cuts from monies that come from surpluses. In other words, governments have from their tax collection pool monies which are already there. Its very different to go out and say to people, were going to cushion you from this tax and this tax or whatever so were going to borrow the money, in order to pay you. Thats a different concept altogether, I sure youd admit that.
WONG: If I can answer that. First, we are funding these tax cuts through putting a price on pollution that is paid by the 500 largest polluters, thats how were funding them.
BYNER: But youre still borrowing the money though in the first place.
WONG: Second, if youre wanting to talk about borrowing money, the person who will have to run down the surpluses to provide the tax cuts hes talking about is Tony Abbott. And you know that.
BYNER: Penny, Penny, Penny now if you want information, lets not politicise this. Im happy to accept your Treasury modelling which well soon know within the next year whether its right. Tony Abbotts not in government, weve already been told if he gets to be in government, the Greens wont let him repeal the carbon tax. Im asking you, a very simple question. Your Government wants to borrow money from the IMF to pay for these cuts. Now normally, thats not a way the budget works.
WONG: Im sorry Leon, I dont agree with that. The person who said that the budget surplus would be run down to fund tax cuts was Joe Hockey. So Im not making a political point, other than explaining to your listeners that if Mr Abbott is going to provide tax cuts his own shadow treasurer said
BYNER: Penny, why is it wise to borrow money from the International Monetary Fund when normally thats not the way we do things?
WONG: Were funding this, not out of borrowings Leon, although
BYNER: The Treasurer said he was.
WONG: - hang on, although there is a modest impact on the budget over the forward estimates period after the scheme is up and running. But the primary source of funding this package, the majority of it, is all funded from putting a price on pollution that is paid by the 500 largest polluting companies in Australia.
BYNER: Alright, Penny, thank you for calling in this morning.
WONG: Good to speak with you.
ENDS