KOCH:Prime Minister, welcome.
PM:Good Morning, Kochie. Good to see you have got a coat on.
KOCH:I am not as tough as you.
PM:I am not prepared for this.
KOCH:Now, the Budget last night. The papers called it a light Budget but then economists are saying the cuts were a lot deeper than they expected and gave it a bit of a tick. You would have to be happy with that?
PM:Yeah I think, look there is always be mixed reviews, on the day following a budget, because, free country, people express their point of view. But the bottom line is, in January we committed to bringing in a robust big surplus of about $18.5 billion.
And when we crunched the numbers we thought we could actually land a Budget, produce an outcome which was better than that in terms of a surplus. And that actually brings us into about $22 billion. So we have worked hard to do that, primarily through cutting Government programs. And we think that is the right thing to do to put downward pressure on inflation.
Of course, others would want us not to have implemented tax cuts at all for working families. But when we look at people right across the country, they are doing tough. They are under financial pressure. They deserve their tax cuts.
KOCH:Ok, you talked about inflation then. You forecast the inflation to come down. This Budget and your forecast is it enough to bring interest rates down? Do you think this is going to please the Reserve Bank?
PM: Well, fiscal policy or budget policy has to play it's role. Part of the problem in the past, is you've had too much of a galloping increase in government spending. As of when we took over office it was running 4.5 per cent per year, real increase. That is a very big increase.
We have brought this down to 1.1 per cent increase. About a quarter of what it was. We think that it is a step in the right direction. Ultimately, as you know, rates are determined by the Reserve Bank itself, but Budget policy has got to play it's role.
KOCH:Ok, do you reckon you have done your bit to bring rates down?
PM:We have, through budget policy, done as much as we can now to help the bank do its thing. But beyond that, you know the other thing you got to do with inflationary pressures over time is also invest in skills and in infrastructure. And that is the other part of the future message of this Budget.
KOCH:Yep, and those big funds that you have set up. Let's put some questions from our viewers to you that have come in on the soapbox. A thirty year old woman has written about the baby bonus, the means testing of the baby bonus, she says is divisive, a slap in the face to all young women who try to better themselves. Steve in New South Wales said he always thought it was an incentive payment, not a welfare payment. What do you say to that?
PM:Well payments of this nature I think would always be categorised as payments from Government to families and therefore falling within a broader category of social security support of one form or another. I mean it's right, there is a particular added element to this which is to encourage families to have kids.
But at the end of the day, we have to make a tough judgment here. And do people earning more than $150,000 a year actually need this as much as other people who are on much more modest levels of income. We have taken a hard decision and said this is probably where the line lies. I know that is going to upset some people, on baby bonus, on Family Tax Benefit B and in other areas, but we think this is a reasonable line for the future and of course it will be indexed.
KOCH:Ok, now Kylie from New South Wales was confused about how the means test will work. Will you assess her income before the baby arrives, when she and her husband are earning more than $150,00 or after she has the baby and goes on maternity leave?
PM:Well this, this arrangement kicks in as of 1 January next year and therefore what we will - people who are obviously pregnant now we don't wish to upset the apple cart there but we think that is a reasonable compromise.
And of course, you know, we understand that people juggling for the arrival of a bub are going to find it pretty tough but we think this is a fair and reasonable way forward. It is not magic. We know there are some people who are going to be disappointed by this but let's face it, again I go back to lower income earners needing all the support that they get.
KOCH:Ok, Australia's pensioners and seniors will receive an increased allowance of $500 but we are getting a lot of emails from pensioners saying, ‘where are we in this?'
PM: Well I understand pensioners concerns because they are finding it really tough in terms of balancing their budgets. But what we got in this Budget package are three particular measures, one is, a one-off bonus for pensioners which is $500.
PM:Secondly
KOCH:Only one-off?
PM:Sure. Secondly, you have got though, this is a big change, an increase in utilities allowance from something not much more than $100 to $500 a year and that continues into the future. And that is important for all of Australia's two million plus pensioners.
And thirdly, there is a thing called the telephone allowance, so we are increasing by several tens of dollars and the reason for that is to assist people, particularly at home, who are pensioners, getting on with their internet connection. Because internet now, is often a way in which older Australians are keeping in contact with their far flung families. Three measures, all together those come to some billions dollars.
KOCH:Ok. Terrific to see the 19,000 carers of disabled children being brought into the net which is a great move forward. But the carers payment instituted again this year still dubbed as a one-off. It is not going to be ongoing?
PM:We are looking very carefully at where carers payments goes into the future. Everywhere we go in Australia we meet carers and the situation in which they find themselves in is very, very hard and they do a fantastic job.
One of the things, as you have just mentioned, we have changed is to increase some of the definitions or expand them to make more people eligible. On the other hand we are also making sure that we get the system right for the future.
Can I say, one of the things we have been confronted with as we run around the country is not enough accommodation, supported accommodation for older carers with older disabled children, which is why there is another $100 million investment for people in those categories.
We need to work more for carers in the future. And let me tell you that when we look more broadly at the reform of tax and welfare through this mega review that we have now announced for the next year plus, that will form part of the review as well.
KOCH:Ok, before we let you go, two quick things, reaction to the St George/Westpac merger?
PM:Well let's see how all that unfolds. You know these things are, a complex business when it comes to the marketplace. I don't wish to make any statements which would be seen to be inappropriate. The key thing for us is to make sure that we have got enough competition in the Australian banking industry.
Everyone wants to make sure that when it comes to the delivery of banking services, they are competitive, what people are charged, that banks are held accountable to one another - because we made it easier for people to switch their accounts.
So we will watch this one carefully but I don't want to issue any edict about what market should do at this stage.
KOCH:And just finally, the earthquake in China. The numbers are just horrendous and keep rising. What sort of assistance will you be offering for China?
PM: I wrote to the Chinese Prime Minister yesterday in the midst of our Budget preparations and sent it to him straight away by cable, basically saying if there is anything we can do by way of Emergency Management Australia, that is the emergency response team, to go in and quickly identify people in rubble and in buildings, then we are happy to provide.
Those discussions are being advanced with the Chinese Embassy here again today. And of course, our people are ready to move should they be required. This is an appalling loss of life in Sichuan Province.
I have been up to Chengdu myself a couple of times. It is a huge city. Of course, the centre is outside that part of that provincial capital but the province has a population of but the province has a population of about 90 or 100 million people. It's huge.
Let's just see, let's just hope that this is not as bad in terms of overall loss of life as it looks right now but we will be watching it very carefully.
KOCH:Terrific. Prime Minister, thank you for joining us this morning.
PM:Thank you. I am glad you are warm.