KERRY O'BRIEN: Kevin Rudd, in all the Budget fall out, probably the most wide spread voice of disaffection has come from pensioners and other seniors, many of whom are surviving on basic pension of about $270 per week. This is what you had to say about pensioners in March, ‘there is no way on God's earth that I intend to leave them in the lurch'. But that is exactly what many of them now feel you have done.
PM: Well I think there is a couple of things to say about that, Kerry. The first is, our overall challenge is to bring down a responsible, cautious, conservative budget, in terms of the overall size of the surplus. And that doesn't mean you can do everything in one hit. And it is very important that we are fighting the fight against inflation to put downward pressure on interest rates, because that affects everybody.
Specifically though on pensioners and carers, pensioners and carers in the case of pensioners, they will as a consequence of this budget receive an extra $900 a year. That is made up of a one off bonus, plus, an increase in the utilities allowance. And that represents some $400 more than Mr Howard delivered them in the previous Budget. When you go to carers, depending on whether they receive one or two of the one off bonuses we have offered, they will receive up to $2100 per year more and that is something like $500 a year more than Mr Howard delivered in the last budget.
Now I fully concede that this is still very difficult. And the reason we have ensured that those on income support from part of the overall Ken Henry commission into looking at the future of the tax system, income support and retirement income, is that we try and get these settings right for the long term future.
KERRY O'BRIEN: Well just on that review, to quote Mr Swan from Sydney radio today. Quote, ‘I understand how tough they are doing it and that is why we also announced on Budget night a review of pensions and retirement incomes.' But that is not what it sounded like on the night is it, because going through Wayne Swan's Budget speech, there was no reference whatever to pensioners when he announced the tax review. I have looked carefully through the terms of reference for the tax review, released by Mr Swan that night and once again, the word pensions or pensioners doesn't appear once. Retirement incomes, in the context of tax, gets a passing reference. Were you forced to increase the focus on pensions in the tax review as a result of the post budget backlash?
PM: Not at all Kerry, we have been thinking about this for a long, long time. You see, part of the challenge here, as I have said in previous interviews, is do you simply sustain a system, whereby, there are these one off annual bonuses. And I notice on that score, by the way, the Liberals have committed to nothing by way of more permanent arrangements than that. Or do you try and look more systemically at how you can deal with this in the long term. And so what we decided, quite some weeks ago, was that this, retirement incomes policy, needed to be wrapped into the overall review of tax. And that is the way to go. Because it's a very complex area. It is not just pensioners, it is self funded retirees, and how that overall impacts the total taxation system.
We want to get it right. It will take us a while, but I go back to the core point, that pensioners are receiving $400 a year more than they received as a consequence of Mr Howard's last Budget. In the case of carers, depending on the cocktail of bonuses they receive $500 a year more. But we have still got to make an improvement for the long term.
KERRY O'BRIEN: $400 a year, I think is less than $10 a week. It wasn't until -
PM: (inaudible) against a benchmark which was established by the previous government. I mean, let's put this into comparative context. There seems to be a view that in five months, we can redress problems of pensioners and carers payments, which have been building for the last decade. I can't do that. But what I have committed to is a system whereby we try and get this right for the long term.
KERRY O'BRIEN: But pensioners no doubt are seeing this in the context of those $31 billion of tax cuts for other Australians that you have talked about a lot. Can I just come back to the issue of this tax review and when the serious emphasis went on a review of pensions as a part of it. Because it wasn't until late Thursday in the Parliament that Families and Community Services Minister Jenny Macklin announced a review within the tax review in which her department head Dr Jeff Harmer, quote ‘will complete an investigation into measures that might be adopted to strengthen the financial security of carers and seniors'. Now, Dr Harmer is now to report to the Treasurer and Ms Macklin by the end of February next year. None of that was mentioned on the night. Which does sound suspiciously like pensioner damage control. Like actions that have followed a pensioner reaction.
PM: Kerry, I was in party to the discussions with the Treasurer and others way before the Budget about the need to have a mechanism which looked at this systematically. That is why the Henry commission was established. Ken Henry, the Secretary of the Treasury. Harmer, who you have just mentioned is one of the Commissioners. And at the time when the Treasurer, I recall, announced this Commission, which made explicit reference to retirement incomes policy, he also indicated that there would be staged reporting back. I presume the only thing that the Families Minister was doing was, ‘well, here is a stage and here are some sub-terms of reference and this will be reported back in due season'. But retirement incomes policy, as you know, includes pensions, includes self funded retirees, and these things can't be addressed in isolation from one another. We were explicit about this from the beginning.
KERRY O'BRIEN: If you look at the reference to retirement incomes, and ok, let's say pensions are within retirement, if you look at the reference to retirement incomes, it is two or three words in the context of a 15 point, a very detailed, 15 point review of taxation. I would suggest to you that that reference bears no comparison to what has followed since and in responding to that, can I ask you whether you will undertake to act on these recommendations within the next budget given that that review will report in February.
PM: Well we will act on those as soon as we are able to. But first of all, we have got to know what the landing point is and the responsible way to do that is to look at retirement incomes policy, which is, there is nothing cute about this, it includes pensions and it includes self-funded retirees, that's what happens when you retire, you either get a pension from the Government or you are self funded. And that is what it means and the term is there. We will act on it as soon as we are able.
By the way, the terms of reference that you have just referred to probably only have one reference to global tax competitiveness for business tax. Do you think therefore that is irrelevant to our considerations - no it is not. You have got to get it all right mate.
KERRY O'BRIEN:Ok, retirement incomes comes at point fifteen and it is a passing reference.
PM: Well I don't have the terms of reference in front of me.
KERRY O'BRIEN: Ok.
PM: But the key thing is, I know from the discussions that we had, it had to form part of the overall commission of inquiry. It also had to deal with business taxation, it had to deal with personal income taxation, it also had to do with income support, including retirement income.
KERRY O'BRIEN: One other bone of contention is the screening from the solar industry and from environmentalists who say after your budget means test on the previous Government's solar panel subsidy, at I think, $8000, that you can't be serious about climate change. Because people were responding too enthusiastically it seems, to the rallying call on climate change and taking up the subsidy, and installing solar energy in their homes. You seem to have cut it back with a means test because it has been too successful?
PM: I think what we have got to deal with here, Kerry, is where do you start to broadly draw the line in terms of payments from Government. And you know, this is a difficult thing. I mean we have been through this debate with the baby bonus, we've been through this debate in terms of Family Tax Benefit B. Obviously there is a parallel debate when it comes to solar panel rebates etcetera. I understand this is not popular. I said before the budget, that there would be a lot of people who were going to be complaining about it and guess what, there are. Understand that. But on this one, you have actually got to start to draw the line somewhere. I mean, at the end of the day, you know do we want millionaires getting the baby bonus, millionaires getting the solar panel rebate.
KERRY O'BRIEN: This isn't millionaires Mr Rudd, this is people on incomes of more than $100,000. Let me put the question in reverse, why would you put the brakes on a scheme which is designed to make more homes solar efficient, more climate change friendly after all the noise and the profile that you cut and the headway that you made politically, around all these climate change issues coming into the last election?
PM: Well I think it is important to put the climate change debate in its wider context. How do you actually achieve, you know, big impact on the overall question of emissions reductions on the one hand, as well as adaptation measures on climate change as well. An emissions trading regime, we're powering on, on that question after 12 years of dithering by our predecessors. Mandatory renewable energy target, we are moving strongly in that direction as well. Energy efficiency policies, moving in that direction as well. I take the criticism that people don't like it when you means test some of these measures, but you do have to draw the line somewhere.
This is a huge new area of policy activity for the Government. We have got a way to go yet before it is introduced, that's emissions trading, 2010. But we have got to get all these things right. And I am sure these policy settings will change on the way through.
KERRY O'BRIEN: On immigration, the Budget reveals an extra 31,000 skilled migrants coming into Australia in the next year. 190,000 migrants all together. That's permanent. And another 100,000 a year on temporary work visas. Nearly 300,000 people to process and to settle within a year. Your Immigration Minister Chris Evans has flagged, ‘a great national debate' on immigration over the next few years, he says the system is creaking at the moment, needs an urgent, serious overhaul, because it is based on a model that is out of date. Does Senator Evans reflect your thinking on this issue?
PM: Well Senator Evans' conclusion, including the increase in the skilled migration component by some 30,000 plus, comes obviously out of the Cabinet deliberation. We have had this matter through cabinet on many occasions. And what are we are responding to, the fact that our predecessors didn't have a skills policy. We arrived in Government with the highest inflation rate in 16 years, a skills shortage and infrastructure bottlenecks. What do you do about it?
Well, you produce a responsible budget for the long term to deal with the inflation challenge. Secondly, on skills policy, you invest in education, skills and training. But that doesn't deal with the immediate challenge, so you up your skilled migration. And thirdly, as we have done today with the announcement on Infrastructure Australia, you begin to act on infrastructure bottlenecks. We have a systematic response to the problems that we have been given.
KERRY O'BRIEN: Yeah. But the issue I am talking about, isn't so much the 31,000. I am talking about his comments that the system is creaking at the moment, needs an urgent, this is the whole immigration system, needs an urgent serious overhaul because it is based on a model that is out of date. Does he reflect your thinking on that?
PM: Well, when we are trying to deal with, this is where I am sure Chris is coming from, when we are trying to deal with the overall skills demands of the economy, I think what he is saying and certainly what we are saying as a Government is, it has been a long, long time since a Government nationally has projected ahead and said, in a years time, two years time, three years time, ten years time, what will be the aggregate skills demands for the economy, and broadly and what sectors. And, how do we actually mesh our education, skills and training system with that on the one hand, with our migration program on the other. It has not been done in a sufficiently long term, structured, planned way up until now. And we think it is time it was highly done that way. Is the immigration department up to that task at present? That's where he is probably saying it is creaking and groaning at the seams because a lot is being asked of it, including answering questions which haven't been put to it for quite some time.
KERRY O'BRIEN: Well just on that point, the department, as we will all remember, that will be overseeing nearly 300,000 migrants coming through just next year. It is not so long ago that the department was shredded by the Palmer report as dysfunctional after all those refugee scandals. Are you confident that the department is up to managing those sorts of numbers?
PM: Well, it takes a while to turn around the Queen Mary. As I said in five months you can't fix the problems of more than a decade, but we know that the economy needs this sort of support. Therefore, we'll do the best we can with the machinery of state that we have been handed. It is going to be tough. But I have looked at the response from the industry groups across the country. In WA, right across the Master Builders Association and the Australian Industry Group and others, they have applauded the measure that we have introduced.
I notice also, immigration numbers have increased quite significantly under the previous government. That has occurred of course, with our bipartisan support, as I assume this expansion would occur with their bipartisan support as well.
KERRY O'BRIEN: Kevin Rudd, thanks for talking with us.
PM: Thanks Kerry.