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Bolstering IMF fund 'good for jobs' -

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Bolstering IMF fund 'good for jobs'

Broadcast: 06/11/2011

Reporter: Barrie Cassidy

Finance Minister Penny Wong says it makes sense for Australia to support the bolstering of the
IMF's fund despite Opposition criticism.

BARRIE CASSIDY, PRESENTER: And we'll go to our program guest now the Finance Minister Penny Wong
who joins us from Adelaide.

Minister, good morning, welcome.

PENNY WONG, FINANCE MINISTER: Good morning, Barrie, good to be with you.

BARRIE CASSIDY: If I could take you to Europe to begin with, what is the status now of the plan
that was drawn up a week ago to deal with the sovereign debt crisis in Greece? The fact that the no
confidence motion in the Greek parliament didn't succeed, does that mean the plan is now back in

PENNY WONG: Well look, there were some important steps, I think, over the weekend including at the
G20. Obviously Greece has stepped back from the brink, that's a good thing. We also saw, in the G20
context, Italy making important commitments and agreeing to public verification of their

But on the European plan generally there is more work that needs to be done, there's a lot of
implementation that needs to get underway and whilst it was extremely good and important that the
G20 back that plan in, I think the eyes of the world are still focused on the Europeans to get on
and implement the plan that they set up just about a week ago.

BARRIE CASSIDY: And in the end the developments in Greece and in the parliament that blindsided the
G20, didn't it, so it wasn't able to tackle the big picture?

PENNY WONG: Well, they were unfortunate developments, weren't they, to say the least. They weren't
good, they weren't good for Greece and they weren't good for Europe but it's a good thing that
Greece has stepped back from that.

I think what the G20 did do if you look at the communiqué and the action plan that was put out; it
did start to address some really important issues. It backed in the European plan, as I said, it
also important moves on Italy including the public verification of their implementation on a
quarterly basis by the IMF, that's a good thing. And there was a very important set of medium term
priorities set out as well which is important because we need to not only deal with the sovereign
debt crisis, we also need to look at the drivers of global growth in the medium term including, you
know, rebalancing the global economy and there are a number of things in the communiqué which I
think go to that. But much more needs to be done.

BARRIE CASSIDY: When you see that sort of erratic behaviour by Greece, a country that doesn't seem
to know how to help itself, do you think twice then about putting up money to the IMF to help them
out indirectly?

PENNY WONG: Not at all, and I think that that was one of the more irresponsible as well as
inconsistent things we've seen Tony Abbott say in recent times and there's a lot of competition for
that prize.

Let's remember countries around the world and both parties of government have contributed to the
IMF. We get that contribution back with interest. We've had a bipartisan position on the
International Monetary Fund which is not about Greece or Europe in particular, it's about
buttressing the global economy and that's about Australian jobs.

So Tony Abbott's position on this this week was not only completely irresponsible, it was
completely inconsistent with the position that the Liberal Party as well as the Labor Party have
consistently taken. Another inconsistency on the economy for populist reasons just like their back
flip on super that we've seen that your panel was talking about.

BARRIE CASSIDY: But Tony Abbott's point is this; that with debt and deficit problems in Australia
then this is the wrong time to be helping out a big economy like Europe's?

PENNY WONG: Well, let's remember we're not funding Greece, what we would be doing, what the Prime
Minister has said is that we stand ready, as do the G20 and that was something G20 leaders agreed,
to increase the resources to the IMF that the IMF could call on. And what that does is bolster
market confidence; market confidence is good for the global economy, that's good for Australian
jobs. This is about Australian jobs and Tony Abbott's position is more akin to something Pauline
Hanson would say than something a leader of the Liberal Party would say.

BARRIE CASSIDY: Speaking of Australian jobs, if you look at the Reserve Bank statement during the
week it does seem to imply that unemployment must rise in the near term?

PENNY WONG: What the RBA is saying is what the Government has been talking about for some time
which is that when you see this sort of turbulence on the global economy obviously that's going to
have an effect on Australia, it's going to have an effect on growth and that's reflected in the
RBA's recent statement; the Government's been upfront about that.

But we do face this turbulence, this volatility with a lot of strength. We've got very low public
debt, strong public finances and you talk about unemployment, we remain with an unemployment rate
with a 5 in front of it; that's a very good position to face this volatility with.

BARRIE CASSIDY: The forecast on growth they've adjusted it down from 4 per cent to 3.25 per cent,
you don't have any reason to doubt that forecast?

PENNY WONG: Obviously we always, we will update our figures, our budget figures in the usual way
and the midyear review, as you know Barry, is due before the end of the year and we'll update our
figures but of course if there's an impact on the global economy and there has been from the sort
of turbulence and volatility we've seen for some of the reasons that you and I talked about
earlier, that's going to have an impact on growth here in Australia, it's going to have an impact
on the budget. We've been upfront about that and it's common sense.

BARRIE CASSIDY: But to what extent? Because reading between the lines the Reserve Bank seems to be
saying that you can't hit your budget target, you can't hit a surplus in the time that you say that
you can.

PENNY WONG: Well, look, our plan is to return the budget to surplus; we remain determined to get
there. We've made the very common sense observation that changes in the global economy are going to
affect the Australian economy but we will go through the very proper process of updating our
figures in the usual way in the mid year review, which is in stark contrast, if I might say,
Barrie, to what we see from the Opposition. We saw this back flip on super, which they say now they
will deliver without the revenue source of the mining tax. This is just another, number of hundreds
of millions of dollars that they're going to have to add to the $70 billion worth of savings
they're going to have to find before the next election; and at some point they're going to have to
be accountable for that.

BARRIE CASSIDY: But you say that you will get back to surplus but it may mean adjusting your

PENNY WONG: No, what I'm saying is we have a very clear plan to get back to surplus in 2012/ 13.
We've laid out that strategy over a number of Budgets, a number of updates. I've simply made the
common sense observation that when you have this sort of turbulence and volatility in the global
economy, obviously the Australian economy and the Government's budget are not immune from those
sorts of fluctuations.

BARRIE CASSIDY: On inflation the Reserve says there's now a good chance that inflation will settle
in that comfort zone between 2 and 3 per cent for at least two years. There's plenty of scope there
I'd imagine then for further falls in interest rates?

PENNY WONG: Well, that's a matter for the Reserve Bank. Obviously everyone, perhaps except the
Opposition, welcomed the reduction in the rate that was announced on Cup Day and certainly the
Government is pleased that we've been able to continue to deliver fiscal consolidation, which the
Reserve has pointed to in previous statements, which obviously contributes to enabling the Reserve
to have room to move. But ultimately as you know, interest rate movements are a matter for the
independent Reserve Bank.

BARRIE CASSIDY: On purely political domestic issues, why is the Government incapable of shaking off
this constant speculation of a challenge to the Prime Minister's leadership?

PENNY WONG: Well I could turn the question around and say why is it that people continue to write
stories which are unsourced?

I'm focused, the Prime Minister's focused on some of the big issues that you've been talking about
with me this morning. Things like what's happening in the global economy, how do we ensure we work
here and internationally to support jobs, to continue to support growth internationally and in
Australia? Those things are much more important to Australian families, Australian households than
the sort of unsourced and anonymous speculation that is the focus of that discussion.

BARRIE CASSIDY: You say unsourced but one newspaper in fact named a backbencher that they said was
believed to have leaked the latest story. Is there a lack of discipline from above in terms of
bringing these people into line?

PENNY WONG: Well, look, there's no lack of discipline certainly on the Prime Minister's part. She's
completely focused and very disciplined, I think, in terms of the focus she brings to these issues
on the important reforms that we need to modernise the economy, make sure we move to a clean energy
future and make sure we continue to support jobs and I think it was very good, for example, that
the G20 picked up the issue on trade that the PM had talked about at the Commonwealth Heads of
Government meeting, which was the need to try to take a different approach. We get movement on
world trade, that's very important for Australia as a very proud trading nation.

BARRIE CASSIDY: Do you understand that there might be a reshuffle in the New Year?

PENNY WONG: (laughs) Again, speaking of unsourced comments in papers, I'm not going to comment on
that other Barrie, other than the very obvious point, the Prime Minister always has the discretion
to do as she sees fit when it comes to ministerial positions.

BARRIE CASSIDY: One of the problem areas is undoubtedly poker machine reform. Is there a compromise
in the wind there? There's now talk of placing a $1 limit on poker machines as a compromise?

PENNY WONG: Can I say on poker machine, as you described it, or gambling reform, that the Minister
Jenny Macklin's been doing an outstanding job in an area that's obviously pretty difficult. It's
obviously very heavily contested by some vested interests and the politics of it has been very
difficult for the people advocating reform and for the Government. But this is the right thing to

I challenge anybody to tell us that it's fine to have a business model that is predicated on
problem gamblers, people who are addicted to gambling and who lose money, tens of thousands of
dollars a year that is not going to the kids, it's not going to the family home and certainly not
going to put food on the table.

BARRIE CASSIDY: So you would say hang in there with precommitment and not compromise on $1 limits?

PENNY WONG: I would say we should do what works. We're committed to mandatory precommitment because
the Productivity Commission has said that's what works and that is consistent with what we've
agreed with Mr Wilkie. And fundamentally this comes down to how do we stop the sorts of money being
spent, the sorts of addiction that we unfortunately see too much of in some families?

BARRIE CASSIDY: Now you have finally made your position on changes in the Marriage Act perfectly
clear. You will be supporting those changes at the national conference but nevertheless would you
be satisfied if the conference decided that it should be a conscience vote or do you want the
conference to take that decision that changes ought to be made?

PENNY WONG: Barrie, I have made my position clear on this and I've said I will be arguing for
changes to the act. But this will be a matter that will be debated in full, including on the issues
you raise at national conference and I'll leave my views on those issues until national conference.

BARRIE CASSIDY: But would a conscience vote be a cop out? Do you want the conference to take that
hard decision on the act?

PENNY WONG: Well, Barrie, I've made my position clear but I think it's best for the party if we do
have a full and proper debate at the conference and that's where I intend to put my views on those

BARRIE CASSIDY: Minister, thanks for your time this morning.

PENNY WONG: Good to be with you.