PRICE: Senator, good morning.
WONG: Good morning.
PRICE: Are you playing tricks, and hoaxing the Australian public?
WONG: No we’re not. These are figures that Treasury and Finance have prepared, and they’re out there for the public to see. And we’ve shown where we’ve made difficult decisions which puts us, frankly, in stark contrast to Tony Abbott who was just on your show who is promising a lot of unfunded spending. He’s got $70 billion of unfunded spending and problems in his budget which means what he’s lining up for is a whole bunch of cuts that he’s not being upfront with the Australian people about. We are upfront and we’ve put our figures out there.
PRICE: Is it financially responsible to move some spending forward into this financial year and move some spending out to 2013-14 to improve the year in the middle?
WONG: Let’s have a look at what we’ve moved forward. And why we’ve seen more spending in 2011-12. We’ve moved forward funding for the rebuild in Queensland, so there’s about two and a bit billion dollars.
PRICE: That’s the natural disaster relief - $2.3 billion.
WONG: Correct. We have also given upfront assistance to household and business as we announced in July for the introduction of the carbon price. And we said we wanted people to get some of that assistance upfront because it was important people had that money in their pockets before the introduction of a carbon price.
We’ve seen $20 billion less revenue to government as a result of what’s happened in the global economy particularly Europe since Budget. So in the last six months, the Government’s actually getting $20 billion less across the forward estimates than we anticipated. And about $5 billion of that is in the current financial year. Because of course we’ve seen a lot of turbulence on global markets, so those are the reasons.
PRICE: There are some projects aren’t there where there is a mysterious disappearance in the year where you need to surplus and a reappearance afterwards. Is that acceptable budgetary practice?
WONG: Can I say on this, we are coming back to surplus. A modest surplus, acknowledged because we are in difficult economic circumstances with a significant amount of revenue being written down.
But we are coming back to surplus and those surpluses build over time. So if the Opposition are saying what they’re saying they can’t explain two things. First, we do see surpluses building over time and they can’t explain their own numbers.
So let’s remember, Mr Abbott he’s coming out and saying he’s going to fund certain things – he’s going to deliver tax cuts, he’s going to deliver superannuation, he’s going to deliver paid parental leave. But he doesn’t want to tell people what he has to cut to fund that. Now the biggest parts of the budget, I’ve just been through a pretty difficult mid-year review, are health, social security, defence and education. You can’t manage the sort of cuts he’s talking about unless you’re hacking into those areas.
PRICE: Are you fearful if you don’t get that slim surplus that the Opposition are going to use that as a broken promise during the election campaign? Now Tony Abbott wouldn’t admit that when I just spoke to him but that is what they will do. They’ll say Julia Gillard promised we’d never have a carbon tax and we’ve got one. Labor promised a surplus and they haven’t been able to deliver more than one in 1989 since the second War. Is this more about the politics than the economics?
WONG: You know what I worry more about, if you ask me what I’m worried about? I worry more about making sure we make the right decisions in what is a pretty complex economic environment.
PRICE: So there is no political –
WONG: We’ve got a situation where we’ve seen global growth downgraded. We’ve seen some reduction in the growth forecasts for Australia, but we still anticipate growing at trend. It is a complex environment, it is one where we do need to hold to fiscal discipline and the reason for that I think can be shown in Europe where you see what happens on financial markets when they don’t believe governments will do what they say. So we have to hold the fiscal discipline. But at the same time we need to do what we did during the GFC which is to support jobs and growth.
PRICE: Well I’m pleased you raised that because in 2008, as you well know you were in the middle of it, you gave $900 to every Australian. We funded the pinks batts scheme, school building halls and spent money. We’re now, if you believe Paul Keating, almost back to the 2008 global situation. This time, we cut spending. Why did we increase spending in 2008 to get our way through it? What’s different?
WONG: Well, I think the situation in 2008 was far worse. We have a situation now which is of concern –
PRICE: Well it might not be. It could get back to that point, couldn’t it?
WONG: Yes, but at the moment, the central forecast from the Treasury, which we released yesterday is for the economy in Australia to grow at trend So we’ve had a reduction in the anticipated growth for 2011-12 and 2012-13, but only to 3¼ per cent, which is about trend. Now, some people from the Opposition like to criticise the stimulus package. I think there’s a pretty good statistic: we entered the Global Financial Crisis with the same unemployment rate as the United States. We have an unemployment rate now with a 5 in front of it, they have a 9. Now, if you –
PRICE: But isn’t the reality that you had a lot of money then to spend, and now you don’t?
WONG: We certainly did make a very clear decision that the priority was to support jobs and growth. And that was the right call, if you look around the world –
PRICE: Why wouldn’t it be the right call now then?
WONG: We are in a situation where we still anticipate the economy growing at trend, where we are still getting a significant amount of investment in mining. In fact, it’s grown to $455 billion.
PRICE: What if the world gets worse?
WONG: Obviously we are always conscious of those risks.
PRICE: So you’ll have to turn your attention to spending, rather than cutting?
WONG: I’m always reluctant, Steve, to get into what if, what if, what if. I think we’ve got a pretty good track record of making the right calls and doing the right thing to support jobs and the economy. And our judgement at the moment is that the mid-year review that we handed down charts the right course in what is a pretty complex set of circumstances. Obviously you’ve got to keep a pretty weather eye both on what’s happening domestically, and what’s happening globally.
PRICE: What do you say to those 3,000 public servants three weeks out from Christmas, who might not have a job?
WONG: Let’s be very clear here. We have put in place an additional efficiency dividend. It is a difficult decision, I have acknowledged that. We have said our expectation is that forced redundancies would only be a last resort. The first line of efficiencies is to do things such as cut consultants, reduce travel, improve your procurement practices, a whole range of –
PRICE: But jobs will go, according to the union.
WONG: I understand that’s what they have asserted. We have between now and July for agencies to plan for how they will meet those efficiency targets. And I’ve set up a process, which includes the union, whereby there’s consultation on how that is being implemented across government.
PRICE: What does that mean, though? Does that mean there’ll be job losses or not?
WONG: There is significant scope to get efficiencies without resorting to that. I also think, if you look across the public service, there are significant attrition rate – that is, people leaving –about 7 per cent a year. So agencies have choices there about people they may choose to replace, or jobs they may choose to reallocate. I think there is scope to make these efficiencies, but I do not pretend there is not a difficult decision. And we will work through it with the union, and other stakeholders, to make sure this is implemented the best way possible.
PRICE: Do you get annoyed when people criticise Labor for not having a surplus, and then, when you try to achieve one, still criticise them?
WONG: (laughs) Well, I don’t know if annoyed is the word. One of the things that Tony Abbott and Joe Hockey keep doing is they keep banging on about surpluses, and then they criticise us for savings decisions. You can’t have it both ways.
PRICE: Commentators have done that to you as well.
WONG: You can’t have it both ways. You can’t bring the budget back to surplus, reduce spending, without making some difficult decisions about cutting spending. And if people are serious about wanting to be fiscally responsible, then they’re going to have to do the hard yards as well.
PRICE: Alright, thanks for your time.
WONG: Good to speak with you.
ENDS
