CAREY: Prime Minister good morning and welcome.
PM: Good morning Greg thanks for having me on the program.
CAREY: It's a great pleasure and it's good to talk to you. Are you enjoying it?
PM: Well it's a year of challenges. Lots going on. On the economy, we have of course been working hard in education and industrial relations and most recently in the week just passed, we've been dealing with the apology to the stolen generations. So it has been a very busy start to the year.
CAREY: Plenty on. Can I just ask you - they are very big ticket items and they are all very complex issues. How do you deal with them in a way that they get done without getting overwhelmed by the entirety of it all?
PM: One, don't sleep too much. Two, have very good staff. And three, read your briefs.
CAREY: In that order?
PM: Yeah, basically. Because, well, there is a lot going on but I have a good staff and there are good public servants and they make sure I have got a steady flow of briefings. But it is very important to remain abreast of the challenges, but more importantly on just what the challenges are, but what is an appropriate response and long term solution to those things that we can act on.
CAREY: I would like to talk about all of those things that you have just identified there. But maybe, my opening concern about this culture of alcohol abuse amongst our young people. Not just amongst our young people but mostly amongst them. Are you concerned about that and I am just wondering what you think about it?
PM: Greg I don't have any hard data in front of me, I am sure many of your listeners would be in possession of it and they could let us know. But look I am just a father with kids and I have observed what's happened over the years with school friends and friends and just the general community.
I am concerned about what I would describe as an epidemic of binge drinking across the country. I think it is not good. It is not good for young people's health and it is certainly not good in terms of coping with addictions in general. But the key question is, what do you do about it? Moaning and groaning about it is one thing, and observing that it is a social problem. How do we act effectively on these?
I have already begun to have some discussions with the Federal Health Minister Nicola Roxon about what we might do on this front. It can only be done in partnership with colleagues in the States and Territories but frankly I think it is starting to get somewhat out of control.
Speaking for example to some of the police around the country. Their concern is that alcoholism - not alcoholism, alcohol abuse - lies at the core of increasing spates of urban violence around the country. Again I don't have the data to hand and I am sure people could perhaps dispute that. But I have got to say I think we are dealing with a growing problem, not a static problem, and therefore I think we have got to sit down and Governments and work out an appropriate response.
CAREY: Ok, so that too on the agenda. Word is that the next interest rate rise could be half a per cent. The first time that would have happened since February 2000 I think. Now I know that the Reserve Bank is independent but would you consider such a rise justified at this time?
PM: We believe firmly and fundamentally in the independence of the Reserve Bank and they set monetary policy settings and that is all about interest rates. Our job as the Government is to make sure that we have got the best policy in place through what is called fiscal policy or Budget policy to make the job of the Reserve Bank as easy as possible and keep as much downward pressure on interest rates as possible.
Big problem we have got is the inflation problem we inherited from our predecessors. As of the March quarter last year when we won the election, inflation was running at 16 year highs and the Reserve Bank, literally in the last few weeks, projecting ahead, has said that inflation is likely to be ahead of the, what is called the Reserve Bank margin, or tolerance margin, of 3 per cent, out to ‘08, ‘09 and into 2010.
Now that's big inflation problem. What does that mean in terms of interest rates? If you have got inflation going up and it puts upward pressure on interest rates. So our job is to do whatever we can through Government policy to lessen the inflationary fires and as well as that, therefore, make the job of the Reserve Bank easier to keep interest rates as low as possible.
CAREY: Related to that then, Bernie Fraser, former head of the Reserve Bank, says that you should be holding off on the $31 billion worth of tax cuts because they will only feed the inflation you are trying to fight. Or if you are not going to do that, at least find a more creative way of using that money. Maybe putting it into to superannuation, money that could be used further down the road. Is he wrong?
PM: Well Greg, working families right across Australia are under financial pressure and whether it is coping with the mortgage, or as it currently stands, quite apart from cost of petrol, cost of groceries, all sorts of costs which families have to bear. These are big costs. Therefore, when we framed before the election our commitment to working families to deliver on tax cuts, we intend to honour that commitment.
But in doing that, there are other ways in which we can help take the pressure of Government spending off the overall level of what is called demand in the economy and that means, spending cuts elsewhere. That's why we have got a razor gang in place to cut hard into unnecessary Government expenditure and some places which will be politically painful.
But we intend to honour our pre-election commitments to working families to deliver them tax cuts. We think that is important. But we also are very open minded on how we further encourage private savings by families as well. And well have more to say on that in due course.
CAREY: Given all of that though and given that equation that we all understand, if it is economically responsible to say to the Australian people ‘look, we promised you $31 billion but we have inherited, in your words, an inflation rate that is much higher than what we though it would be, so in terms of fiscal responsibility, we need to hold back for now.' Wouldn't you trust the Australian people to accept that?
PM: I believe that we need to, first and foremost, show real discipline with Government expenditures elsewhere. In terms of the tax cuts for working families, and I would just add here that these are lesser tax cuts by billions of dollars compared with those which were offered by the previous coalition government, they are a more modest set of tax cuts -
CAREY: But they will fuel inflation.
PM: ...they are a modest set of tax cuts but the overall impact on demand in the economy will also be determined by what happens with Government expenditure generally. And that goes back to the other side of the equation. Not just what you do on tax, in putting more money into people's pockets, it's what you also do on the spend side of Government which also injects new money into the economy and therefore if you can pull back on that, it does have, it does have, an effective pulling back on the demand pressures of the economy which then in turn fuel inflation.
CAREY: So Bernie Fraser is wrong?
PM: Well, Bernie is entitled to his point of view. But I've got to say, Greg, I take pretty seriously what I said to the Australian people before the election. Whether it is on this, or whether it is on our commitment to introduce Trades Training Centres into every secondary school in the country, or computers for kids year 9 to 12. Now, we intend to get on with that and do it because that is what we said we'd do and I believe part of the cynicism about our politics lies in people saying something one day and forgetting about it after the election
CAREY: Prime Minister, if inflation continues to rise, I am just wondering how you could argue against a union push for an increase in wages to fight, as you say, the increased supermarket prices, increased petrol prices, prices up all around the board. How could you then say to the union movement, who are going to be wanting more money, that you can't have it? And that again will fuel inflation, surely?
PM: Well, it goes back to your first point about tax cuts. Part of the reason for tax cuts is that working families are under financial pressure. If you took the advice of some, which is to cancel them, then that would further fuel union demands in terms of a general wage call. That's, I think, very important to bear in mind.
The second thing is: we believe that everyone in the economy needs to exercise restraint. And, that means, CEO salaries, it means, of course, wage restraint more generally. And, for our own part, just as members of Parliament - and that's very modest, I simply suggested that we suspend, and it has now been supported by the Parliamentary Party and I think the Opposition - we'll suspend our own salary increases or salary adjustments right through until the middle of next year.
CAREY: We had the apology, moving on to the apology issue, last week. And it seems to have been well received. But, now, as you outlined, the hard work begins. And much of it involves education. There were some harrowing stories in the weekend press that I read, just heartbreaking stuff, and it just underlines the enormity of the task you and all of us confront.
But how can you insist that Aboriginal parents send their children to school? How are you going to be able to do that? And when are we going to have enough teachers and infrastructure for that to be able to take place?
PM: Well, I don't have a magic wand, but I think what's really important is to put all these things together. The reason for the apology was that it was unfinished business for the nation. But it also created a bridge of respect between ourselves and Aboriginal people.
With a clear objective which is to agree upon a set of fixed targets for closing the gap between Aboriginal and non-Aboriginal Australia. Education is one, health outcomes is another. And of course, infant mortality is a third.
When it comes to, for example, educational attainment on the part of Aboriginal young people, we want to set a target of within the next ten years halving the literacy and numeracy gap between Indigenous children and non-Indigenous children. That's a very important target.
In the speech I gave in Parliament last week, I said let's set ourselves a target in five years time of having every four year old little one in remote Aboriginal communities with the proper access to pre-school. Because you're not going to get your literacy and numeracy outcomes unless that starts at a very early age.
On teachers, we've already invested $60 million to provide an extra 200 teachers which would cover 2,000 Aboriginal children across the Northern Territory. $25 million to build three new secondary boarding colleges, providing opportunities for indigenous kids to finish school. These are practical steps in that direction. But it is just the start.
CAREY: How do you make them go though? Coming back to that initial question. You can provide all of that, but unless there's an attitude on behalf of those you want to go to school, to go to school and for their parents to insist that they do. How will you make them?
PM: Well that's where Greg you're right. I'm no bleeding heart on those questions, I'm very practical. There has to be a relationship of reciprocal obligation and mutual responsibility.
We the Government, on behalf of the Australian people are prepared to provide these resources against the fixed targets that I've just spoken about. The fixed targets which we've negotiated with Aboriginal leaders across the country.
But there must be buy-in by each of the 300-400 remote Aboriginal communities across the country. And, I don't believe it's going to be one size fits all. You travel around remote Aboriginal communities a bit, and I've done it a bit, people in the Cape are vastly different in their circumstances to those in the Central Desert to those in Arnhem Land to those in the Kimberleys to those in the Pitjantjatjara lands in South Australia. It's all vastly different.
The communities have some common problems, but I suspect that on your core question, which is, how do you get little ones, for example, to attend school? What we will end up developing is perhaps something like 200-300 different local solutions to making that possible. But, what are the two overarching, or two underlying conditions here, or undertakings?
First is a commonly agreed target. And that's the one I referred to before about literacy and numeracy attainment within a fixed period of time. So that everyone is focussed on the end point.
And then secondly, mutual responsibility between ourselves and local Aboriginal communities to agree on what works in that community to make it happen. It could go down to a combination of housing arrangements. It may come down to secondary boarding school arrangements. It may come down to, it may come down to, a series of health and nutrition related matters. It may come down to how you actually physically get kids out to a school. But it'll be different in each one.
But, I'm not going to impose a one size fits all solution from Canberra. I've discovered since living down here Greg, and having moved out of your part of the world a few months ago that all wisdom does not reside in Canberra. But that each community, and drawing on the expertise of local people and people who know these communities well, will then invariably come up with a different solution. But, it's got to be measured against the hard line measures and timelines that I mentioned before.
CAREY: Across Queensland, our guest is our Prime Minister, Kevin Rudd. Prime Minister, a couple of quick issues, I know your time is at hand as well. Poker machines, you've signalled that you're not happy with the number of machines and the dependence of State Governments on the revenue from those machines. What is your current thinking on what to do about them? What would you like to do about them?
PM: Well, point one is I don't have a magic wand and the other point is that I've always been consistent on my views and private views on this - I actually don't like them. And the reason I don't like them is that I am just concerned about gambling dependency in the economy, in our society more generally and the impact it has on family financial circumstances and family breakdown.
But what are the elements of this overall challenge? One is getting a clear handle on the social relationship and family finance impact of poker machines and get some science into that so we actually know the facts as opposed to everyone's theories including my own.
Secondly lets also examine carefully the extent to which this industry across the country, the gaming industry, is a major employer. There are about 77,000 Australians who are employed in one form or another in this industry and these are people out there whose own family incomes are dependant on this industry.
And the third thing is, so many clubs around the country, sporting clubs depend in part, some greater than others on poker machines in their clubs to keep their local club operations going.
So what do I want, I want all these things brought together into a comprehensive analysis on the part of the government in cooperation with state and territories, and that is the fourth part of the analysis the extent of current revenue dependencies by states and territories on gaming revenues.
Then, get all the facts on the table. Sort out what we might be able to do. I'm not promising the world here, but what might be the range of possibilities to reign this in a bit in the future.
CAREY: Prime Minister the figures I have seen range from, of problem gamblers 0.55% to 1.75% depending upon who you believe. So the vast majority of people are playing these things for fun, for entertaining, for whatever, without a problem in the world. I wonder if we run the risk of legislating against the vast majority because there's a tiny minority who are having a problem, how do you reconcile that?
PM: Well your right Greg I don't intend engaging in some sort of knee-jerk reaction on all of this. I would like to get a handle, as I said, on the actual measurable dimensions of the social family and economic problems and not just pull a theory out of the air. And I am, you know, I am no wowser on these things.
People should be free to have their own forms of entertainment, that's fine. But for us its always a relative cost benefit analysis. As I travel around the homelessness shelters in Australia I've been doing a bit of that in recent months, the number of people I come across in those shelters who have don't the lot, on the pokies and their families have broken up and they have ended up destitute and in homeless shelters, it's huge.
Now, does that add up to much by way of impact on our society and national economy, put in absolute numbers terms? I don't know yet. That's why we need to get all the facts on the table. So to be very blunt and specific with you, I not promising that which a can't deliver responsibly. What I am promising is that were going to get a handle on the facts and see what if anything can be done.
CAREY: You need to go. Final question we saw you throwing down a few little off breaks yesterday. You need to get that left arm up a little higher may I suggest, respectfully. The wider question is that -
PM: I didn't know I was being filmed I mean that was
CAREY: No it was pretty good there offering big money for that 2020 stuff over in India. You never know,
PM: Which station had that on?
CAREY: I think they all did, you'd be pleased to know.
PM: No I am actually now deeply concerned.
CAREY: Ok, but just before you go the wider question is.
PM: Did I get much turn?
CAREY: Ah not much but I don't think it was a spinning wicket you were playing on concrete. But the wider question is this, you've got a job of enormous responsibility. No body needs to tell you that. You are under extraordinary pressure, what are you doing to stay fit?
PM: I tend to walk a lot and, you know, at different times of each day depending on my schedule. I also swim several times a week and also I gym whenever I can. And so all in all, probably about three of four sessions a week. When I was in Brissy I used to haunt the fitness centre there at Morningside. But now I am down here, it's a bit harder to manage when your bouncing around the countryside
CAREY: I have Warnie be in touch enjoy your day
PM: Thanks very much.