SUBJECTS: The budget;
Matthew Abraham: Where will the pain be in this budget?
Penny Wong: Well, we’ve taken over $33 billion worth of savings in this budget and they come across government. There’s a net reduction in the number of public servants. There’s savings in defence. There are savings as a result of the deferral of the (inaudible). Essentially there’s been savings across government. We have redirected a number of those savings to important priorities and they include the school kids bonus for giving familles up front assistance for school costs as well as increases for low and middle income families through the family tax benefit system.
Abraham: You’ve pulled back promises that were made as compensation to ordinary taxpayers. We know you’ve done that to the business community, but you’ve pulled back promises that were made in selling the mining tax. There were going to be compensation sweeteners. There was going to be a deduction to simplify their tax returns and a discount on interest income that was meant to encourage bank savings. That was promised in the original mining tax. If you can break those promises what’s to stop you breaking the promises for compensation from the carbon tax?
Wong: Well, the carbon tax assistance is already rolling out so you don’t have to trust me on it. You can just receive the assistance. If you’re a person on less than $80,000 a year you’re going to get a tax cut, if you’re on a family tax benefit of pension, you’re going to get those increases, but in terms of the two issues you raised they were part of the original mining tax package, but recall what we have done instead is triple the tax free threshold. So the standard deduction, once you’ve taken a million people out of the tax system through raising the tax free threshold was not the most effective policy. Remember also what we’re doing with the mining tax revenue now is providing it to families. That’s what the increases for family tax benefit…..
David Bevan: While you’re handing out cheques to families; those same families, what sort of services will they get in South Australia when the South Australian Government is looking at GST revenue being cut by billions of dollars?
Wong: Regrettably the South Australian Government, like us are having to deal with the same problem, which is less revenue than occurred previously. Remember we are actually getting much less in tax than Peter Costello got when he was the federal treasurer.
Bevan: Yes, but you could compensate the states for that fall in GST revenue. Yet instead you choose to hand out cheques to families, which is very good politically for you, but those same families turn up to a hospital; there might not be the same services. Their school might not have the same services. Jack Snelling is going to cop the pain there isn’t he while you’re handing out cheques?
Wong: Well, let’s recall how much more money the Federal Government is investing in health. Health spending will continue to grow as a result of our policies. We’ve also increased infrastructure spending. We have in fact doubled the annual infrastructure spending per South Australian since we’ve come to government. So there is a substantial amount of assistance that we’ve put into the state. All governments, this government and state governments are having to deal with the fact that revenue, that is tax to government is less than it used to be for an equivalent level of growth and the way we’ve dealt with that is to make the savings measures, the cuts that we’ve had to.
Abraham: Chris Pyne, is this really snookering Tony Abbott, your leader? Paul Kelly describes it as an “Abbott trap”; using the mining tax to fund a nearly $5 billion resources boom family package. It’s substituted the corporate tax cuts that the Coalition has opposed. This time politics surely dictates that Tony Abbott cannot oppose the new cash splash for families?
Christopher Pyne: Matthew, no, I don’t think that’s the case at all. The truth is this is an unbelievable budget. The public won’t believe that the Government can deliver a one and a half billion dollar surplus while they’re saying they wan the debt ceiling raised by $50 billion. So they want the debt ceiling raised from $250 to $300 billion at the same time that they’re saying they’re going to have more money than they did last year. So if you have more money coming in, if you have a surplus why would you need to borrow $50 billion more and I think that is the hole in the heart of this budget. I just heard how Penny was talking about how they had less revenue, but they’ve forecast $39 billion of more revenue by next year when the terms of trade have fallen by five per cent. So I don’t think the public will buy this budget.
Abraham: You will pass the Budget. Will you block any of these measures?
Pyne: We don’t since 1975, I think most people remember that particular year, we don’t make a habit of blocking supply. The Government is entitled to pass its Budget bills. Not of course are all measures part of the Budget and the Opposition doesn’t have to pass every singe measure but we don’t have a position where we would block supply. This is a fiddled figures Budget and I think the public will know that. There’s also cruel hoaxes in this Budget. The Government says its delivered a National Disability Insurance Scheme but the Productivity Commission said it would cost $3.9 billion when the Government’s saying it’s going to cost $1 billion so $2.9 billion that was to go to the National Disability Insurance Scheme has been cut. And so I think people who had high expectation that an NDIS would be delivered should be very disappointed today. In my own portfolio area, the Gonski Review called for $5 billion a year for education, the Government’s delivering $5 million. That’s $5 million rather than $5 billion.
Bevan: Penny Wong, just quickly before we go to calls. Can you respond to Christopher Pyne?
Wong: Well a few things. On is he isn’t being up front with you about what they’re going to oppose and what they’re going to support and what that means. Christopher’s the Shadow Spokesperson for Education, is going to be opposing the Education Bonus.
Pyne: It’s not an education bonus.
Wong: Well it’s an upfront payment…
Pyne: It’s not an education bonus.
Wong: It’s an upfront payment to families to deal with the cost of putting children through school.
Pyne: It can be spent on anything, Penny.
Wong: Can I finish my sentence?
Pyne: Well if it can be spent on anything you should tell the truth.
Wong: I try to tell the truth but I actually can’t speak at the moment.
Pyne: That’s never stopped you before.
Wong: It’s an upfront bonus because we had in place an Education Tax Refund and we found that about a million families weren’t claiming what they were entitled to because obviously keeping receipts isn’t at the top of the ‘To Do List’ for families is the first point I’d make. The second point I’d make is we have close to doubled the amount of funding for schools so I think it’s wrong to say this Government is not investing in education. I think what’s more interesting is what will the Coalition do? I notice Andrew Robb, my counterpart, last night was promising a surplus of $15 billion. Now that would mean this year that the Coalition if in government would have to not pay any Medicare out. So if they’re seriously saying to the Australian people we believe we can deliver a surplus…
Abraham: Well there are other ways…
Wong: Well then tell us.
Pyne: Now you’re interrupting the radio host.
Abraham: Well that’s OK. This is a robust democracy as we all know (inaudible)… now your public service cuts. 3,000 jobs out of a workforce of 258,000, so 1.2%. Are you saying you couldn’t find any more? I mean that’s almost the level they’re looking for in South Australia.
Wong: It’s actually slightly more than that if you take out the increases as a result of Defence Reserves and so forth. They’re not the only efficiencies we’re making.
Abraham: And if you take out casual census collectors moving off the books, its less than that. There’s well over a thousand there.
Wong: I’m not sure that’s right. But I think it’s important to remember we don’t say to people we want you to sack people. What we say is we want to take more efficiencies out of the public service and we’ve done that. We put in place what’s called an efficiency dividend, a very high one. 4% for 12-13.
Abraham: What your saying is you could only take out 1.2% out of a workforce of over a quarter of a million public servants.
Wong: No what I’m saying is that we have taken many efficiencies and my instruction, or my indication, as Finance Minister was people should look to non-staffing matter first. They should look to consultancies, travel, advertising, those sorts of things and that voluntary redundancies and forced redundancies should be a last resort and that’s the approach the public service has taken. This is the first net reduction in the public service that we’ve seen since figures started which were in I think the early 2000s. So it is very substantial.
Bevan: Lets go to a call (name inaudible).
Caller 1: Good morning. Chris actually said my point about the deficit and the debt, the debts increasing and yet we’ve got a surplus. But where does the actual money come from? Do they actually, in cartoonistic terms, do they actually go to another big bank to draw out $50 billion cap in hand?
Bevan: Penny Wong, where do you get the money from?
Wong: No, no, look there is currently what is called a debt cap, a legislative debt cap in place which keeps the size of what we call the government bond market, so how much money the government can issue in terms of its debt. We anticipate being below that at the conclusion of every financial year and the forward estimates. But during each year there is a large amount of variability because of technical reasons of about when you get payments, when revenue comes in when the expenses go out and also different government bond lines maturing at different times. So the advice from the Office of Financial Management is we do need to have the capacity to deal with this temporary fluctuation during the year.
Bevan: If you are as fiscally responsible as you’re telling our listeners, you wouldn’t need to increase it by that much would you?
Wong: Well we are seeking to increase it for the reasons I’ve outlined.
Bevan: Yes, but if you were fiscally responsible, you wouldn’t have to.
Wong: We are fiscally responsible and that’s why we have taken $100 billion savings in the last budget and an 11 and half billion..
Bevan: why do you need to borrow then?
Wong: Let me finish, and another $34 billion in savings from this budget. We have as a government experienced $150 b right down in revenue as a result of the financial crisis, but we are still protecting return to surplus, and the only way we have done that is by protecting the bottom line by taking savings.
Pyne: Can I make two points?
Bevan: Make it one because Robin wants to call.
Pyne: Ok, well very quickly, Penny Wong keeps saying they are making $33billion worth of cuts or savings as she euphemistically calls them, she’s not. A half of those $33 billion dollars are new taxes and charges in six new areas and forecast high dividends from government business enterprises. It’s actually about half of that $33 billion are actual cuts in a $350 billion budget.
Pyne: Hang on; I let you speak; now you let me speak. Secondly, Penny Wong talked about the forecast the government has planned. Two years ago they forecasted a $12b dollar deficit this year, last year it became $23 billion dollars, then it was $37 billion at MYEFO, and it’s ended up being actually $44b dollars of deficits. Why would anybody believe that this government can deliver (interruption) the actual deficit this year is $44b dollars, forecasted next year to be a one dollar and half a billion surplus, why would anybody believe that a government that can’t get it right so often is suddenly going to find fiscal prudence.
Wong: Can I just make one point; we have laid out our budget. My challenge to Christopher, if he is so sure that he can do better is get Tony Abbott to tell Australians what he’d do.
Bevan: Let’s go to Robin from Winnvale. She’s called; she wants to put something to the both of you.
Caller 2: Hello, my question is regarding the Medicare funding of mental health services with regard to better access schemes to psychologists and mental health social workers. Penny in last year’s budget your Government told sufferers of anxiety, depression and other mental health illnesses that they must recover in 10 sessions, which is half what research shows, research says 18 – 20 sessions.
Abraham: You want to know what happened to that funding whether it’s been restored or cut further I suppose, Minister?
Wong: There has been no change to that in this budget, but you’re right we did make some savings in the mental health package that we announced in the last budget. Bearing in mind there was a very substantial additional investment in mental health and I think, whilst I can understand that some people would prefer more sessions, what I would say is we did find a lot more other services, services that were very much needed by people who suffer from mental illnesses and their friends and families.
Pyne: I actually introduced the better access to psychologists and social workers when I was the Minister responsible for mental health. So I thought the government measure last year was the wrong measure and I am still disappointed with the changes and cuts to what was an excellent program.