BENSON: Penny Wong, good morning.
WONG: Good morning Marius.
BENSON: Now you have a $20 billion hole in the budget. You can do three things. You can forget about returning to surplus. You said you won’t do that. You can cut spending or increase taxes. Which will it be?
WONG: Marius, we’ve been saying for some time that the global economy, particularly what’s occurring in Europe was inevitably going to have an impact on our budget and the figure you used is the impact; that’s very significant. Some $20 billion less revenue coming into government than we anticipated at budget time.
That gives an indication that Australia is not immune. The Government does think in the current circumstances, which are complex, the best thing to do is to ensure we do bring the budget back to surplus. In doing that, we’ve got to strike the right balance obviously. We are a Labor Government, our priority is to support jobs and to support the economy. And we will bring those values to the way in which we approach this.
BENSON: But if there’s a choice between jobs and a surplus, you say surplus comes first?
WONG: What we’re saying is that it’s important for the economy for us to continue to bring the budget back to surplus. Obviously that’s been made much harder by the figures that have been released. But I think it’s important to remember why. We see with our own eye what occurs when governments lack credibility, in terms of their budget strategies. We see that in Europe. We see that markets do take a very dim view and do punish those governments which are not able to deliver on their fiscal responsibilities. It’s not in Australia’s interests to be in that sort of category and we have no intention of being there. So we will continue with our commitments in terms of fiscal responsibility and they include being determined to bring the budget back to surplus. As I’ve said, it does make it much harder when you’ve lost $20 billion as a result of the impact of a weaker global outlook impacting on the Australian economy.
BENSON: If you’re looking for $20 billion, you’re going to have to take money from people. Who will hurt?
WONG: Marius, we’re releasing as you know the Mid-Year Economic and Fiscal Outlook today and all those details will be there. I’ve said previously, we’re a Labor Government and those values inform the way in which we manage this budget. They’ve informed them from the day we were elected, they’ve informed them when we intervened in the economy to save jobs during the global financial crisis and they inform decisions that we’ve made today.
BENSON: The CPSU, the public service union is saying that if you do make cuts, it will reduce services. Are you prepared to pay that the price of reducing services?
WONG: I’m not going to get into the detail of what might or might not be in MYEFO. What I would say is that when we’re facing this sort of tight fiscal environment, we obviously have to look across the budget to make the decisions necessary to hold to fiscal discipline.
BENSON: The Opposition and some economists say the same thing. They say that you’re just shuffling numbers back and forth across the years to produce what is in fact a phony surplus.
WONG: The Opposition really have no credibility in this discussion. This is an Opposition that has never once got its numbers right. This is an Opposition that by its own admission has to make $70 billion worth of savings just to get to the starting line. And that was before Mr Abbott added more spending in relation to superannuation whilst opposing the revenue source to support that policy. Tony Abbott and his economic team have no credibility when it comes to budget numbers.
BENSON: The OECD is saying a recession is probably already here in Europe. It’s coming in the United States in all likelihood. Any danger of recession in Australia?
WONG: The OECD also says that Australia’s outlook is one of solid growth and is forecasting above trend growth in 2012 and 3.2 per cent in 2013. They are saying what we have said, that we see a much more uncertain outlook, certainly globally and in this case in the OECD. And they have downgraded their growth figures for the OECD economies in 2011 and 2012. Their figures and their outlook are consistent with what the Government has been saying.
ENDS
