LIPSON: Penny Wong, thanks for your time. We know this Budget will contain some deep cuts, but Wayne Swan has also said it will protect some of the lowest income people. What would be the justification for scaling back unemployment benefits for single parents?
WONG: Lets start with the first proposition. This will be a Labor Budget. It will be a Budget that comes back to surplus because thats the right thing to do for the economy, it continues to give the RBA the room to move, just as it already has. But in terms of the issue you raise, obviously thats Budget speculation, Im not going to comment on that.
I would say this Government has done a lot of things in past Budgets to ensure that people do participate; to ensure we reduce the number of jobless families in Australia, and those are important objectives.
LIPSON: But unemployments at 5.2 per cent at the moment. How many more people can we squeeze into the workforce? Thats pretty low, historically. Can we really encourage people back in?
WONG: Im pleased to see that you recognise that unemployment is low, unlike the Opposition who like to talk down the economy. Its true, we do have a low unemployment rate, but encouraging participation is always something that the Government has supported. But, as I said, Im not going to engage in budget speculation.
I will say to you that this will be a Labor Budget; it will very much have Labor values at its centre.
LIPSON: But encouraging with a stick, doesnt that hurt people without actually achieving the outcomes? Or wait and see?
WONG: Again, I think were into rule in, rule out and give me detail. Im not going to get into that.
LIPSON: OK, whats your response to criticism, then, that the Defence cuts to the budget that were announced yesterday could have potentially catastrophic consequences in the future?
WONG: The first thing about yesterdays announcement can I say as a South Australian how pleased I am that the submarines project is continuing, and well see the next phase of that. Its disappointing that we see the Opposition being so negative about this and refusing to give bipartisan support. I would hope that some of the South Australian Members of the Parliament from the Liberal Party do something about that.
But in terms of Defence, weve made clear for some time that we are asking many portfolios to make a contribution to the fiscal strategy. But the Prime Minister made very clear yesterday were protecting our troops on the front line, were protecting the numbers in the Australian Defence Force, and were protecting the kit for those people on deployment. And we will ensure we continue to deliver core capability.
LIPSON: Just more generally on the surplus, Wayne Swan said today that Australia stands tall compared to other countries and in these conditions its an appropriate time to tighten the belt and deliver a surplus. But shouldnt we be focused on our own economy, rather than comparing us with the rest of the world?
WONG: And it is the focus on our own economy which leads us very much to the proposition that we should bring the Budget back to surplus.
LIPSON: But the Reserve Bank seems to suggest that the economy needs stimulus. Theyve delivered the biggest rate cut since the GFC.
WONG: And one of the reasons you want to bring the Budget back to surplus is to continue to give the Reserve Bank the room to move should it seek to do so should it see fit just as it has recently. A very good thing, if I may say, for people holding mortgages, and businesses.
So, coming back to surplus is good from that perspective in terms of giving the Reserve Bank room to move, but its also a very important sign of confidence, its a very important signal to the rest of the world, and finally it is a buffer in a global economy which is uncertain.
LIPSON: Three out of the four banks have not passed on the full rate cut. Isnt it the case that any jawboning and not threats, but any encouragement gentle or otherwise from the Government pretty much falls on deaf ears from the banks? They make their own decisions?
WONG: The key policy program the Government can put in place when it comes to the banks is to ensure competition to try and support competition. And we have done that. Weve been working very hard, the Treasurer has put forward a range of policies in the last period of time which have improved competition. And what Id say to people is, if your bank is not giving you the sort of rate that you want, look at what else is out there, because competition is the best way to ensure people get the best deal.
LIPSON: But most people are with those big four banks, and they have not necessarily walked down the road to get a better deal, and theyre still being slugged by the banks.
WONG: I think customers of the big banks will be very disappointed, and rightly so, at the failure to pass on the full rate cut. What Im saying is that the best way to deal with that is to look at the competition. The best way for Government to deal with that is to do what weve done which is to support more competition. And we have actually seen more Australians changing financial institutions to get a better deal.
LIPSON: So the Budget is released on Tuesday. Will there be any Government advertising to sell this Budget?
WONG: Weve actually cut advertising. Were certainly spending much less on advertising than was spent by Mr Howard on selling his WorkChoices policy. Now I think youll continue to see the sort of restraint when it comes to advertising that weve demonstrated.
LIPSON: But there may be advertising to sell it?
WONG: Im not going to get into decisions about what advertising there might or might not be. What Id say is this: were spending far less on Government advertising than the Liberal Party did.
LIPSON: Penny Wong, thank you.
WONG: Good to be with you.
ENDS