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Transcript of interview: ABC, Insiders with Barrie Cassidy: 4 November 2012: Budget; GST; Labor Party

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PW 225/12 4 November 2012




CASSIDY: Penny Wong, good morning, welcome.

WONG: Good morning, good to be with you.

CASSIDY: Tony Abbott is being responsible there, isn't he, when he says that he will need to phase in or delay some of his programs?

WONG: I'm not sure it's very responsible to talk about the importance of bringing a budget to surplus and the importance of fiscal discipline but not telling people what your $70 billion worth of savings measures - your cuts - are.

And I'm not sure it's responsible to talk about the ending of the 'age of entitlement' but then oppose the tightening of some of the so-called middle class welfare benefits such as the Baby Bonus, and Family Tax Benefits.

The thing is, the Coalition doesn't really take a responsible position when it comes to the economy.

CASSIDY: But what he has done here is recognise a surplus is getting tougher to achieve and therefore changes need to be made. And he says he will need to phase in or delay some of his promises.

WONG: Let's look at the way the Government has approached funding our promises. What we've done since the GFC is offset new spending. What we've done is to make sure we found room in budgets to fund things such as paid parental leave and the increase in the pension that the Government put in place.

And in the most recent budget and MYEFO, we've seen a range of decisions which in fact Tony Abbott has criticised - as I said, Family Tax Benefit, the tightening of the income test, something you would think the Liberal Party might think is appropriate, was described as class warfare. And the most recent decision on the Baby Bonus has been likened to the one child policy.

CASSIDY: Nevertheless, if the situation continues to deteriorate, would you have no choice but to do precisely what he says he will do, and that is start to delay some of these big ticket items?

WONG: We've always taken the approach that our budget settings - fiscal policy - has to respond to economic circumstances, has to look to the economy and jobs, and that's what we've done. We've done that in the GFC when we acted to ensure people didn't end up on the unemployment scrap heap as we've seen in Europe, and we're doing it now, bearing in mind that of course our forecasts are still for an economy around trend, unemployment at relatively low levels and a very high level of private investment.

CASSIDY: But no longer is the surplus guaranteed apparently?

WONG: We've handed down a budget update, Barrie. We took, I think, $16 billion worth of savings to offset new spending, to also offset some of the very large revenue downgrades. I think that shows our discipline - our fiscal discipline - and it shows the approach we take.

CASSIDY: But you're no longer saying things like 'there will be a budget surplus, no ifs or buts, come hell or high water'. When did the doubt start to creep in and what caused that to happen?

WONG: As I said, we've just handed down a budget update. That has us -

CASSIDY: But since then there has been this doubt over it. What happened?

WONG: - that has us on track to return to surplus over the forward estimates, and those surpluses continue to grow. And, as I said, I think you can see the approach we take from what we did in that budget update which is to offset new spending; to take savings. It shows our determination.

CASSIDY: So it's wrong to say there's a bit of doubt creeping in?

WONG: I think what is important is that our position has never changed on this very clear issue; that our budget settings - our fiscal policy - should reflect what is appropriate for the economy and that's what our settings do.

CASSIDY: It just seems like you've got some news that you're not sharing with the rest of us?

WONG: I think our news is the budget update that was handed down and we stand by that update.

CASSIDY: No update since the update?

WONG: (laughs) The update was not very long ago from what I can recall, Barrie.

CASSIDY: In a recent speech, you pointed up a couple of stark realities. Since the GFC, Government receipts have been written down by $160 billion. And over the coming decade, the percentage of Australians over 65 will go up from 13 per cent to 22 per cent. Now this surely demands a whole new approach to economic management?

WONG: Those are really big challenges. And they're challenges we've been very cognisant of as we've done our budgets over the last number of years.

There's a very interesting statistic actually in the budget update that we've just handed down which looks at a range of the structural savings measures that we've taken and said if they weren't taken what would net debt be by 2020. And it's about $250 billion. So in other words, a number of the savings measures we've taken, a number of which have been quite bitterly opposed by the Opposition, would have, if they hadn't been taken, seen net debt at a much higher level, as I said - over $250 billion at 2020.

So we have been very conscious of the long-term effect on the budget of various decisions. That doesn't mean they're easy decisions and doesn't mean it can be solved overnight. But we've taken a very responsible approach to improving the structural position of the budget over a number of budgets.

CASSIDY: But it does also suggest different approaches have to be taken into the future. Will that mean for a start, more cuts? Tougher application of means tests? You've got Tony Windsor calling for this, and he says start going through, line by line, what John Howard did and have a look at that?

WONG: We've, I think, done a lot on means testing. The savings measure which I think really shows the difference between the responsible approach of the Government and the irresponsible approach of the Opposition is the Private Health Insurance Rebate; without reform that would've taken up three quarters of the medical benefits budget by 2050. So we would've spent 75 per cent of what we spend on Medicare and medical benefits by 2050 on a health insurance rebate.

Now, we said that's just not sustainable. And we put in place reforms to that and there are some additional reforms in the budget update. All opposed by the Opposition.

CASSIDY: Both the Government and the Opposition have said to Nick Greiner and to the country that there will no changes to the GST; there will be no broadening of the base, there will be no increase on the tax. You're bipartisan on that. But isn't it just the political reality that neither political party can even start a conversation on that?

WONG: When it comes to the GST I think in your introduction you said 'I don't think Penny Wong will be changing what the Prime Minister said'. I think that was a pretty good guess.

CASSIDY: Let's talk about the reality of why that is the case. Is it simply because one side is as bad as the other? You just open up a conversation and it will immediately be seized upon as a gigantic scare campaign?

WONG: I think it's also a values issue. I think it's a question of who should be paying for tax reform. And we know who pays for changes to the GST - it's consumers. We know that it's regressive in the sense that low income people are charged the same amount on the same service or good as a higher income person. So there is also a values issue here.

The Prime Minister and the Treasurer and I have made clear we're not going to be changing the base nor the rate.

That doesn't mean that we're not going to continue the work we're doing on improving the structural position of the budget; tightening up tax offsets, tightening up the Private Health Insurance Rebate, making changes in terms of Family Tax Benefit and the Baby Bonus to make sure they're sustainable into future.

CASSIDY: Well there is another way of raising more revenue and the Greens have pointed this up only as recently as yesterday, and that is go back to the mining tax that Kevin Rudd first had in mind?

WONG: The thing about being in government is that you actually have to implement - you don't just talk about things. And we had a very clear understanding with the industry about the design of the new tax and that's the design that we've legislated.

CASSIDY: When you talk about just how difficult it's going to be and how challenging into the future, and you've got Gonski down the track, the NDIS, the Asian Century initiatives, is that something that you will explain to the electorate between now and the election, about how you will cover the cost the initial costs of all of those big projects?

WONG: What we made very clear when we handed down the mid-year budget review was that we would have more to say about Gonski and the National Disability Insurance Scheme by the next Budget.

CASSIDY: And that will be in terms of long-term funding arrangements?

WONG: We will have more to say about those policies before the Budget. And I think what you will see is, as the Prime Minister said at the Press Club, is more of the same. More difficult choices. Just as we've made difficult choices which have enabled us to double the funding to schools to date already. But there will have to be difficult choices made to ensure that these very important policies, which are both economically as well as socially important, are delivered.

CASSIDY: I want to ask you again about the Senate ticket issue in South Australia. As the senior politician you're now number one. Is that the rule, is that the message you now send to your membership that there is a benchmark, seniority comes first?

WONG: There has been a lot written and a lot said about this. There was a ballot. Senator Farrell has indicated his decision. I think it demonstrates again that he is a man who has always put the Labor Party first. He's been a senior figure in the South Australian branch for decades and he has demonstrated his loyalty to the Party by the decision he has made.

CASSIDY: But how do you explain it internally though, because the original process was democratic, or about as democratic as it gets. The members had a say and then this one character in Sydney made a fuss and reversed a decision that was taken by the membership.

WONG: Look Barrie, I think this matter is resolved. I don't intend to comment any further on internal matters. What I'm focused on, and I'm sure what Don is focused on and what all our candidates are focused on, is on continuing to take up the fight to Tony Abbott at the next election.

CASSIDY: Alright. Well speaking of that election - as you go into next year, what will be your priority? Is it the May Budget or is it looking at options to go to an election?

WONG: The Prime Minister made clear in her agreements with the Independents that we intend to serve a full term. What I would say about the next election is I think it will be very much a referendum on jobs and the economy. And what we see, I think, in the Abbott Liberal Party is a Liberal Party that really isn't up to it when it comes to the economy.

CASSIDY: So you're guaranteeing a surplus and also guaranteeing a May Budget before the next election?

WONG: As I said, I can only tell you what we've agreed, and my focus is certainly on making sure our next budget update, which is the next Budget, is one that reflects the discipline we've shown to date.

CASSIDY: Thanks for your time this morning.

WONG: Good to speak with you.