TERRI BEGLEY: Penny Wong is the Finance Minister. Good morning.
WONG: Good morning to you.
BEGLEY: Senator George Brandis is the Deputy Opposition Leader in the Senate. Hello Senator Brandis.
BRANDIS: Good morning Terri, good morning Penny.
WONG: Morning, George.
BEGLEY: Starting off on this budget review. Penny Wong, you’re the Finance Minister. How much input did you have into the spending cuts, and the rearranging of money the Treasurer announced last night?
WONG: Well, that’s part of my job. A Finance Minister has to look at spending, and how we bring sensible fiscal policy to bear. And in terms of this mid-year update, it was a very complex one to put together, given the current economic environment.
So we’ve got a much weaker global economy, a lot of risk in the global economy, as particularly evidenced by what’s occurring in Europe, which is having an effect on financial markets. But at the same time, whilst there is a lessening of the growth forecast, we’re still projected to grow at trend, and we’re still seeing continued investment in mining.
So the job of the Government in this context was to steer the right course, given the global risks, but also the medium-term growth prospects for Australia. And we also had to deal with a $20 billion revenue downgrade. In simple terms, what that means is that we had $20 billion less coming into Government than was projected at budget time. And that obviously had a very significant impact on the budget.
BEGLEY: George Brandis, the Treasurer says the Government has had to walk a very fine line on this one. It had to do something with the worsening economic crisis overseas. Your view?
BRANDIS: Well, a couple of points to be made Terri. First of all, I don’t think we can take very seriously the Government’s promise to get us back into surplus in 2012-13, when they got their predictions wrong by almost a factor of, almost double, between May of this year and November of this year. In the May budget, they said well the budget deficit for 2011-12 is going to be $22 billion. Six months later, they’ve almost doubled it, to $37.5 billion. So, if they’re out by more than $15 billion over 6 months, I don’t think we can be very confident they’ll get it right to within a very small surplus of $1.5 billion by the middle of the year after next. And it just goes to show, it’s just another example of how the Labor Party are very, very bad at managing the budget. They’ve now produced four deficit budgets in a row. This Government – the Rudd/Gillard Labor Government – has yet to deliver a budget surplus, and I don’t think they ever will.
BEGLEY: Penny Wong, this $1.5 billion budget surplus that’s been allocated for 2012-13, many people are calling it a very thin sliver, this budget surplus. And economists have also come out to say it’s not worth it. It’s a counting chicanery, it’s about politics more than anything else. Why must we hold onto this budget surplus?
WONG: We need to hold to fiscal discipline, and surpluses are part of that. And if you look at the forward estimates, the surpluses grow steadily over time. Obviously they are modest, and they are modest because we are seeing a much greater downgrade in the global outlook than was anticipated at budget.
And, can I just say, in terms of the Government’s credentials: yesterday, coincidentally, the mid-year review was released at the same time as one of the ratings agencies upgraded Australia’s rating to AAA. This is the first time Australia has had all three international, global ratings agencies giving us a AAA rating. And one of the things this ratings agency, Fitch, referred to was the Government’s fiscal policy. So, I think the markets are probably a less biased judge than George in terms of his criticisms of the Government.
BEGLEY: But the –
BRANDIS: Well, I don’t know about that, Penny. Because the last time the Labor party was in power, the Australian credit rating was actually downgraded, not once, but twice. And it took years –
WONG: Why do you –
BRANDIS: It took –
WONG: It’s interesting you want to talk about the past, and not about the present, George. People are interested in what you say about the present –
BRANDIS: I want to talk about –
WONG: And all you want to do is talk about the past.
BRANDIS: Penny, I –
WONG: We are AAA across three ratings agencies.
BRANDIS: Penny, I want to talk about the past –
WONG: And –
BRANDIS: Can I just have a go please?
WONG: You want to talk about the past because it’s easier.
BRANDIS: Could I have a go please? I didn’t interrupt you. I want to talk about the present, and I want to talk about the past and the future. So let’s get this into context. You say we’ve got a AAA credit rating. We have a AAA credit rating because after the last period of Labor Government, which also blew the budget, Australia was downgraded, not once, but twice. And it took years of work by the Government of John Howard, and under the Treasurership of Peter Costello, to get us back to AAA. Now secondly –
WONG: Even Peter Constello has not delivered three –
BRANDIS: Secondly, Penny, you say – I wrote it down as you said it – ‘we need to hold onto fiscal discipline, and surpluses are part of that’. Penny, your Government has never delivered a budget surplus, for as long as you have been in power. You have, in fact, racked up the four biggest peacetime budget deficits in Australia’s history. So, so much for your fiscal discipline.
BEGLEY: Well –
WONG: Terri, can I respond now?
BEGLEY: Just quickly, yes.
WONG: In terms of surpluses, I’d remind George, as he seems to forget, that there was a thing called the global financial crisis. And the Government’s intervention into the economy ensured that many hundreds of thousands – a couple of hundred thousand Australians who would be on the unemployment queue – are actually still in jobs. And we’re a Labor Government, we’re proud of that.
But can I just say this one last point: if George believes in surpluses, where are his costings? There is a $70 billion black hole in the Coalition’s costings. We still see Tony Abbott out there saying he’s going to oppose savings like the baby bonus. We still see him going out there saying he’s going to give tax cuts without funding them. They have no credibility, because they are essentially saying to Australians, ‘we will spend the money without finding the funds to fund these promises’.
BEGLEY: Alright –
BRANDIS: Penny –
WONG: They need to be upfront with the Australian people about this before the next election.
BRANDIS: Penny, I’ll tell you what we won’t be doing –
BEGLEY: Alright, well –
WONG: I’ll tell you what you won’t be doing, is you won’t tell me now –
BRANDIS: I’ll tell you what we won’t be doing –
WONG: What you’re going to cut to fund those promises.
BRANDIS: We won’t be waging –
WONG: You won’t tell me what you’re going to cut to fund those promises.
BRANDIS: Can I, I’m sorry, Penny, would you mind stopping, just letting me have a go please?
BEGLEY: George Brandis, a very quick response on this, because we’ve got a lot more things to discuss.
BRANDIS: Two points. First of all, we won’t be waging an ideological war on stay-at-home mums, which was one of the really nasty things in yesterday’s budget. And secondly –
WONG: Oh, come on, George.
BRANDIS: We will be producing our costings –
WONG: Come on.
BRANDIS: We will be producing our costings, as all Oppositions do, closer to the election.
BEGLEY: OK, alright, picking up on that point, Penny Wong, cutting the baby bonus to stay-at-home mums. There’s been criticism this morning that you’ve done that to stay-at-home mums, but you’ve left working parents alone. You have been criticised for making a moral judgement on this one. Were you aware that you would get criticism for that? And why not cut both, if you’re going to disadvantage parents out of this budget?
WONG: There is no moral judgement –
BRANDIS: (laughs) Oh, sure.
WONG: There is no moral judgement. And that’s why we are still paying a baby bonus of $5000, which is significantly more than was first introduced by Peter Costello when it was $3000. And I’m interested that George decides to attack us on that, because what I saw yesterday was Mr Hockey leaving very open the possibility the Opposition will support it.
So if this is the new Opposition policy, that they’re going to oppose this particular savings measure, that’s an interesting proposition. But, can –
BRANDIS: It’s a relatively small proportion, by the way, of your savings, and I think it will strike the listener as –
WONG: George, you oppose all these savings –
BRANDIS: I think it will strike Terri’s listeners as very strange –
WONG: And you keep wanting to make more promises.
BRANDIS: That of all the measures you could light upon, in order to find these savings, you would punish stay-at-home mums and traditional families.
WONG: If I could make this point. First, if George wants to oppose savings, he is, I think, obligated to tell Australians what else he would cut –
BRANDIS: We will indeed.
WONG: Given that he wants bigger surpluses –
BRANDIS: We will be telling you that at the appropriate time –
WONG: Now if I can finish.
BRANDIS: Before the 2013 election.
WONG: I was asked a question, I’d like to finish it. Given that you want bigger surpluses, you’re going to have to do this. But can I just say, on families, we’re still providing $5000 through the baby bonus. We have put more money into childcare than was ever put in by John Howard and Peter Costello. We have increased the childcare rebate. We have lifted the cap on the full amount. We have provided additional payments for families with teenagers, and we’ve also provided paid parental leave. Now that is a very substantial set of reforms which are all about supporting parents with children, regardless of whether the mothers are at home or not.
BEGLEY: Absolutely. I think though, there will be people struggling this morning to understand this, when they’re promised something, and then part of that promise is given away in the next year or two. Families who are planning to have their babies, expecting that full amount for the baby bonus, only to wake up this morning and think ‘hang on a minute, didn’t we hear, leading up to this budget review that your everyday working Australian isn’t going to be financially impacted.’ That could be big news on the budget for stay-at-home mums.
WONG: Sure, and I accept that this is a difficult decision, I do. And we have made a number of difficult decisions, for which we’re being criticised. But that’s what you have to do if you want to run the budget responsibly. So, I just want to say, remember the context. This starts in, I think it’s September next year. It is a few hundred dollars less payment.
People are still going to get the $5000. And we are putting more money into childcare, paid parental leave, and also, into family tax benefits for teenagers.
BRANDIS: But Penny, the point of supporting stay-at-home mothers through the tax and transfer system is actually to give parents the choice, so they don’t have to send their kids to childcare, so that the mum can stay at home. And what you’ve done –
WONG: We’re continuing to support them.
BRANDIS: And what you’ve done by this decision, in ripping money out of the pockets of those people –
WONG: We are continuing to support them George.
BRANDIS: Is to make it more difficult for them to make that choice.
BEGLEY: OK, let’s move on to just another one that has pricked people’s ears up after this budget review, and that has been the Government’s decision to impose another efficiency dividend of 2.5 per cent on most public sector workers, Commonwealth departments and agencies, to help return the budget to surplus. The unions this morning are saying this is going to mean longer queues at Medicare, and that jobs will have to go. It won’t all be voluntary redundancies, either. Penny Wong, hasn’t your side criticised the Coalition for planning to do something very similar to the public sector workers?
WONG: Well the Coalition had a different policy, they not only increased the efficiency dividend, they also imposed a recruitment freeze for two years. That had a far bigger cost impost, and a far bigger impact on jobs. And the advice to Government was that a recruitment freeze – that is, not being able to replace anybody at all, across the public service – was not the smart thing to do. That would make it very difficult for agencies, for example, if people left from areas that were critical.
Look, Terri, I’m not going to pretend this is an easy policy, it is a difficult decision. It does impose a requirement on the public service to make greater efficiency gains. What I’ve said is, when you’re a Labor Government, you’ve got this sort of a hit to your budget because of Europe and the global economy being downgraded, and you want to continue to fund good things – such as the low-paid workers, social and community sector workers’ pay increase, which obviously the Government supports – then we have to find savings across the budget. And this is one of the savings which we have put in place.
BEGLEY: You’re listening to Inside Canberra this morning, with Finance Minister Penny Wong, and her counterpart this morning, from the Opposition, is Senator George Brandis. Let’s move away from the budget announcements overnight, to a couple of other issues, if we may. We’ll try and keep it brief so we can get as much as we can in. On the subject of the Greens, and their influence in the Parliament in making policies etc, employers say you two have to unite. You have to vote down some of this Greens legislation. Heather Ridout from the Australian Industry Group is quoted this morning as saying Greens policies will drag the Government down a path that will damage employers and employees. It’s going to start hurting investment and jobs. Penny Wong, are you listening to what industry, employers are now saying about the Greens?
WONG: Actually I’ve just come from a meeting, which includes Heather Ridout and a number of other employers, on manufacturing. And we consult with people across the board, and business, on a whole range of issues. One part of what Heather says is particularly important to recall, the Greens’ votes only matter if the Opposition says no. And what we’ve seen under this Coalition, under this leadership, of which George is a part, is a very consistent position that they simply say no. The example is immigration, where the Coalition has said they’ll vote with Bob Brown to prevent offshore processing. Now, I’m very happy to have that discussion with George –
BRANDIS: That’s not the truth Penny, if you’re going to –
WONG: It is the truth. It is, actually –
BRANDIS: If you’re going to appear on radio, you should tell the truth –
WONG: And I am.
BRANDIS: The Opposition supports offshore processing, we invented offshore processing. We want to reopen Nauru.
WONG: You will vote with Bob Brown against the Government’s bill.
BRANDIS: We want to open Nauru.
WONG: You will vote with Bob Brown against the Government’s bill. That’s your position.
BRANDIS: We want to open Nauru, the only venue that has ever successfully stayed the tide of illegal immigrants. And you stubbornly refuse to countenance opening Nauru.
BEGLEY: Alright, this is getting sidetracked from the issue. We don’t want to be going back onto asylum seeker policy. I know we’ve discussed that a lot, George Brandis, in recent weeks.
BRANDIS: Sure, and can I –
BEGLEY: Are you prepared –
BRANDIS: I would like to respond to, Penny had a good go, so if I may respond to a couple of the points she made. Heather Ridout is absolutely right. This is a Government that is run by the Greens. It is only in office because Julia Gillard signed a written agreement with the Greens. And as Senator Bob Brown, and his Deputy, Senator Christine Milne, tell us practically every day, whenever they get a big policy win, this is because the Greens have so much power. The only reason we have a carbon tax today, which the Prime Minister solemnly promised we wouldn’t have, is because of the power of the Greens over this Government.
BEGLEY: But you also have power, as the Coalition, to vote with the Government, and down Greens policies that you don’t think will be good for our economy.
BRANDIS: And we do. We support – and you wouldn’t know it, listening to Penny speak – but we support, in fact, most of the Bills that go through the Parliament. But the political controversy and debate, of course, is about the bills which we oppose. And we will always oppose bad policy. It makes me smile, Terri, to hear Julia Gillard and Penny Wong say well, the Opposition says ‘no’ so often. We’ll always say ‘no’ to bad policy. The reason we have to say ‘no’ so often is because this Government is responsible for so many bad policies, and much of it at the behest of their Greens alliance partners.
WONG: So will you say ‘no’ to the baby bonus save?
BRANDIS: When you produce some legislation, we will look at it.
WONG: So, you’ve had a go today, on radio, you’ve said we were ‘waging a moral war’, but you can’t tell the listeners that you’re now going to –
BRANDIS: I think, I think –
WONG: No, let me finish, I listened to you.
BRANDIS: I think this is an ideological decision.
WONG: And I don’t agree with you. But that’s what you’ve said.
BRANDIS: That’s right.
WONG: So, therefore you’re going to oppose it?
BRANDIS: Well, we will look at the legislation. We will look at the legislation when you produce it. That’s the way the system works, Penny, the Government produces legislation, the Opposition examines it, and announces whether it will support or oppose it.
WONG: It’s pretty telling, isn’t it? Pretty telling.
BEGLEY: Let’s move on to another couple of things quickly. I know, Penny Wong, that you do have to go. The asylum riot enquiry, this is something that came out yesterday, fairly well overshadowed by what was happening with the budget. Penny Wong, doesn’t the fact that a surge in asylum seeker arrivals being credited as one of the reasons for these riots, show that the Labor Government has handled asylum seekers poorly.
WONG: Well, Terri, we seem to be back on the subject I thought we didn’t want to get back on. I’m happy to respond.
BEGLEY: I know, but I guess we have to address that this independent report has been quite critical of the Government, and how it has handled its treatment of asylum seekers, for riots the size they did to break out.
WONG: Sure. Look, to be honest with you, I haven’t read the report. I’ve seen reports of the report. Obviously I’ve been focused on the budget in the last 24 hours. I understand there are some 48 recommendations, I understand that the Minister, Chris Bowen, has indicated the Government has accepted all of those. Obviously, those incidents were unacceptable. And we’ve made a range of changes, and we commissioned an independent enquiry, because we do regard –
[AUDIO CUT]
BEGLEY: Penny Wong?
WONG: Sorry, actually, we cut out. So I haven’t been (laughs)
BEGLEY: Oh.
WONG: We’ve had a mad scramble here in Canberra to get me back on, but you all disappeared on me, so I’m sorry, I apologise, I haven’t actually heard what’s been said.
BEGLEY: No, that’s OK, it was just a quick thought on former Senator Gareth Evans being named a ‘top thinker’, and I wondered whether or not you understood what that means?
WONG: Well I assume that it means that he’s a pretty good thinker, and comes up with a lot of ideas. He certainly was a very significant figure in past Labor Governments.
BRANDIS: You know the test, Penny, is not how many ideas you come up with, but how good the ideas are.
BEGLEY: Alright –
WONG: Well, I’m sure he came up with many good ideas too.
BEGLEY: I think we’ll leave it on that note. Thank you both for your time this morning.
BRANDIS: Thank you very much indeed, Terri.
WONG: Good to be with you.
END
