Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Wong. Congratulations on your appointment as Deputy Leader in the Senate. I refer the minister to legislation that passed the US Congress last week in which the US government debt ceiling was suspended until 18 May 2013. Given that the Treasurer stated on budget night last year:

The surplus years are here.

…   …   …

Surpluses that provide a buffer against global uncertainty and continue to give the Reserve Bank room to cut interest rates …

can the minister explain why, given the government's own logic, the government will not take active steps to meet the surplus commitment, given the ongoing uncertainty in the global economy?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank Senator Sinodinos for his words and also for his question which, unlike one of the ones earlier, I can actually understand. The senator refers to the US Congress decisions. It is true that that is one of the issues on the global economy's horizon which has caused uncertainty and volatility. As the senator would know, as the US last year headed towards the so-called fiscal cliff, that certainly created some concern and uncertainty in global markets. Obviously, there are still a lot of matters on the fiscal front that the US needs to resolve in terms of their medium-term fiscal settings, and the debt cap issue is not yet resolved. The senator is right to ask the question which has at its heart: what is the right thing for the Australian economy to ensure its resilience at a time of global uncertainty? The government took a decision in December, faced with very substantial revenue downgrades, that it would not be in the interests of jobs and growth for us to continue to cut spending to offset revenue downgrades. We have done so. We have done that in the past. If you look at our last budgets and the mid-year review you will see that the government has not only offset all new expenditure from policy decision since mid-2009; we have also taken savings to deal with revenue reductions. Those reductions in revenue are across all—particularly all profit based—revenue heads. The government took the decision it did because we do have, front and centre, Australian jobs and growth in the economy in our minds, and the resilience of the economy, we believe, required the government to take the approach that the Treasurer announced, which is that we would not continue to cut expenditure to reflect revenue downgrades because that would affect jobs. (Time expired)

Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Mr President, I ask my first supplementary question. Given that the Australian government budget is due to be delivered just days before the US debt ceiling deadline on 14 May 2013, what contingency steps will the government take to ensure that the government's budget numbers presented to the parliament are not materially irrelevant if the US Congress is unable to resolve its structural budget issues?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Mr President, that is one—a very important one—amongst a number of uncertainties in the global outlook with which the government has to contend. It is the case that we have seen a lot of movement in the global economy and a lot of uncertainty. We have seen as a result of this and also the global financial crisis an impact particularly on government revenues; and, as the senator would know, growth in the nominal economy has been substantially less than its long-term average despite real GDP holding up, and that reflects in government revenues. So the economic question is: what in those circumstances is best for Australians and what is best for Australian jobs? I would make the point that under this government, as a result of the fiscal policy settings the government as put in place, the Reserve Bank has had the room to move and that interest rates are lower than they were under the Howard government. As a result, families with mortgages are certainly better off. (Time expired)

Arthur Sinodinos (NSW, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. In the event of an economic shock resulting from the US or elsewhere, can the minister confirm whether the government would implement a discretionary fiscal stimulus package involving new spending ahead of the federal election on 14 September?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I do not think that it is very good for anybody to be talking in hypotheticals about what might occur in the global economy and in the domestic economy—and I do not put Senator Sinodinos necessarily into this category; he is certainly not at the extreme end. I note that the opposition are very happy to talk down the Australian economy even though that is not a good thing for jobs and for confidence. The question for the government is always: how do you ensure and build the resilience of the economy in circumstances which are volatile? We took decisions during the global financial crisis which were absolutely motivated by and centred upon the objective of ensuring that we supported jobs and growth. I note that the opposition opposed that stimulus and the decision that the government made in December, and the decisions that the government will make in this upcoming budget will be guided by the same Labor values and the imperatives of ensuring jobs and growth.