HOST: Can we start with Pakistan Prime Minister. There is something especially nasty when sport is hit in this way. Can we expect to see more of this do you think?
PM: I think this one hits us all in the guts in a particular way. It's, we like the cricket and so many people around the world love their cricket, they love their sport. And then for terrorism to be brought into the heartland of sport and the heartland of cricket is just you know a whole new, a whole new experience. It's ugly.
Obviously we together with the rest of the world have condemned this, but the critical thing is this, it reminds us that terrorism is alive and well. It reminds us of the absolute importance of vigilance in preparing for terrorist contingencies in the future and we the Government together with other Governments around the world are actively engaged in looking at the downstream consequences of these recent atrocities in Pakistan.
HOST: Does it suggest to you that Pakistan really does not have this under control? We know Osama Bin Laden is living somewhere in those border territories, it seems to be almost free reign for terrorism in Pakistan, does it not?
PM: Well Pakistan of course is next door to Afghanistan itself and a lot of Taliban and we assume some Al Qaeda have found their way across the border over time. This is a huge challenge for the world, remember in Australia a lot of those who have represented terrorist threats to us have been trained in Afghanistan. And their support bases are in that wider area.
So when we're talking about acting on terrorism it's not just ensuring that we are working as effectively as possible in Afghanistan but increasingly our focus has got to be in the wider region as well because it all comes back to home here as well in Australia.
HOST: Let's talk about the economy then Prime Minister. You'll hate this word but do you accept that we are in recession now?
PM: Well when we put out our economic data only a month ago, we said that all the risk was on the downside and since then there has been further bad economic news from around the world. Japan, our largest export market produced figures the other day of a three point three percent collapse in growth in the December quarter.
You know, with seventeen of the world's advanced economies already in recession and twenty seven of the world's most advanced economies either in recession or with a quarter of negative economic growth, it gets harder and harder for Australia to swim against the global economic tide. That's just the truth of it.
HOST: All the economists seem to agree that we are in recession, I mean I suppose who can haggle over technical definitions till we're black in the face but we are in trouble aren't we?
PM: Well this is, what we're dealing with here is a global cyclone.
HOST: Yes.
PM: It's like a global economic cyclone. Remember it begins in America, sweeps to Europe, then engulfs the rest of the world and we're part of the rest of the world. The key question though is this, you can look at this thing and make sure that your defences are as strong as possible, you can make sure that your preparation is as good as possible but at the end of the day you can't go out there and say to the public ‘I can stop a cyclone from coming', what you can say is we're making the preparations as good as possible to reduce the impact of the storm as it hits.
That's what the Government has been on about rather than just throwing the windows open as others have suggested and letting the free market sort it out for itself. Well that didn't work so well in recent times.
HOST: Do you think the stimulus package then cushioned the fall somewhat, or are you disappointed that more people did not spend?
HOST: The pre-Christmas one.
HOST: Or are you disappointed that more people didn't go out and spend?
PM: It is absolutely clear cut that had we not begun the Economic Stimulus Strategy last year that the impact now on the Australian economy and jobs would be much, much worse. It's not just us asserting that. Let me give you two pieces of evidence:
Retail sales in Australia in the December quarter were up three point eight percent. In the rest of the major economies around the world, retail sales collapsed. Do you know how many people are employed in retail around Australia? This is of huge consequence.
The second thing is that when you look at bodies like the Australian Chamber of Commerce and Industry and last time I looked they weren't a sub-branch of the Australian Labor Party.
The Australian Chamber of Commerce and Industry, who campaigned actively against us at the last election announced in fact yesterday after the economic data came out, that were it not for the Economic Stimulus Strategy that these results would have been much worse for jobs, for employment and for the real economy.
They're the two big points about the impact of our strategy and had we produced the negative growth numbers that we've seen elsewhere in the world, then you'd have a result for Australia somewhere between one and one point five percent worse. Do you know what that translates into? If we'd done the same sort of numbers in the December quarter as other economies. You'd have up to 100,000 more Australians losing their jobs over the next financial year than would otherwise be the case.
HOST: Now I see that the next Leader of the Opposition, Peter Costello, is doing the rounds this morning accusing you of failure, saying you should have spent on infrastructure and the fact that that big bang before Christmas simply didn't work?
PM: Well I haven't actually seen what he's had to say but look.
HOST: Well that's the guts of it. He's saying that you failed, that the money was wasted it was saved instead of spent.
PM: But what's all this saying? In the midst of a global economic crisis, rather than the Liberals fighting on the question of jobs and the economy, they're fighting only for one thing alone and that's the Liberal Party and who gets to run it.
This is, this is a rolling civil war between Mr Turnbull and Mr Costello and inevitably the Liberals are going to go back to the past to Mr Costello and Work Choices, that's what is happening. They may not declare that publically but the key thing is this; the nation is now faced with a global economic crisis. We are focused on how you reduce the impact of that crisis and what the Liberals are focused on only is themselves.
HOST: I think what he said about the economy too was, he would have brought forward infrastructure spending and subsidised business to create jobs. What do you say to that?
PM: Well as part of the rolling civil war within the Liberal Party you've got one group saying let's invest in infrastructure, another group saying let's not. I mean it's very hard to get a handle on whether this is a real alternative, or simply a tool in the internal Liberal party struggle.
All I know is in the midst of a crisis for the country and for the economy and for families and for jobs, it should be all hands to the pump by everybody. Instead what you've got is the Liberal Party tearing themselves apart yet again.
HOST: Do you think Costello still wants to be Leader of the Opposition and eventually Prime Minister?
PM: I think Mike it's inevitable that in this rolling sort of fight over the Liberal Party leadership that the Liberals are going to go back to Mr Costello and to Work Choices and everything which was associated with Work Choices in the past.
HOST: Alright, now your new stimulus package that I think kicks in from next week, this is the $42 billion. Is that going to make a difference?
PM: You know I have always said from the beginning of this thing, is that our job is to cushion the impact on Australia and I have said how that happened in the December quarter so far. If we were producing the same negative growth numbers as the major economies around the world did in the December quarter, let me tell you, you would be having up to 100,000 more Australians out of a job than would otherwise be the case, with the stimulus package.
Secondly, in terms of the measures which come through this year which includes a $30 billion investment in schools, in social housing and in energy efficiency within housing, this is all jobs on the ground, construction, in every community across Australia.
Again, we believe that this will cushion the impact but I am not going to mislead people and say that in cushioning the impact that you can eliminate this global cyclone.
HOST: Do you still think that we will look at seven per cent unemployed by say middle to late next year, late this year rather?
PM: I believe absolutely in being upfront with the Australian people about the real challenge we face, including on unemployment which will get worse, and upfront with the Australian people about the great strengths that we have and the strategy we have to steer Australia through and to cushion us from the worst impact -
HOST: (inaudible) will it be around seven per cent though?
PM: We have said in our most recent forecast that it will be tough, it will get bigger than it is at the moment. Right now, right now, we are among the top five performing economies of the industrial economies in the world. And that includes on where we are on growth and employment as well.
HOST: It sounds like you are shying away from that seven per cent figure (inaudible)
PM: No we have said that explicitly in the past. That is what is in our papers, that we would go from where we are to that number. But the key thing is this. You can talk about numbers all the time, the key thing is, are you taking everything you can by way of responsible action to reduce the impact on Australia and that is what we are seeking to do.
HOST: Can I toss this at you, we got a call yesterday from a union delegate at Bonds, you know, Pacific Brands. He says people losing their jobs there can't get the dole from Centrelink until they have spent their redundancy pay and entitlements. He wants you to scrap the, I guess you would say the Howard Government's miserable tight fisted rules to make it easier to obtain unemployment benefits. There are going to be a lot of people needing that. Can you do it?
PM: Well what we are now working on with Julia Gillard, the Deputy Prime Minister and she is responsible for employment as well, is working through every practical measure for those who lose their jobs through no fault of their own.
One of the things we have done, just last week is change the rules from the past, in terms of people's ability to have access to immediate employment assistance, that is, I have lost my job, do I have to wait three or six months to get assistance from the job network -
HOST: That is his point, that is what he wants.
PM: Well on that we changed this rule last week, so that at the point at which you obtain a redundancy, through no fault of your own, you can walk into a job network office and then get assistance in terms of what you need by way of any further training or retraining, what other assistance you need to try and find an alternative job because there still are areas of the economy which are not yet directly affected, directly affected by this global economic crisis.
ALOISI: Can I throw another one at you, also from our listeners, we get a lot of calls about what they describe as the obscene packages that CEO's of companies leave with. When a company is going down the drain, we put this to the Treasurer yesterday, I understand it is difficult, but is there not something you can do, for people who are losing their jobs, watching these people waltz off with in many cases -
CARLTON: Fat cat pay outs.
ALOISI: - millions of dollars?
PM: Working Australians, working families, seeing jobs lost have every right to be outraged by excessive executive pay outs.
CARLTON: So what are you going to do about it?
PM: The problem is, all these laws which made this possible were put in over the last decade or so and so you have got these laws which work now, but what we are working our way through now for finance sector executives, and more broadly, for executive remuneration, in other public corporations around the country, publicly listed corporations, is a new set of rules for the future.
But you know something you have got make sure that it is also consistent with what is happening in other countries. And one of the things on the agenda at the London meeting of the Group of 20, industrial economies in the world, which I will go to soon, is what do you do about the future of financial sector remuneration.
You have got to remember, it is unrestrained greed in financial markets, with unconstrained free markets, which caused this crisis, yet you see no effective action globally, on the question of their remuneration levels. This has to be acted on, not just because it is not fair, but because it is part of the cause of the cancer in the system. People are being remunerated at huge levels to take huge risks and who pays it? The worker who loses his job at the end of that economic cycle.
CARLTON: Is it time now, given the troubles we are in, is it time now to postpone an emissions trading scheme, businesses screaming they can't afford it, they want it delayed for at least two years?
PM: When we put forward the Carbon Pollution Reduction Scheme, we were very conscious of the fact that we had to get the balance right between the economy and jobs on the one hand and the long term interests we all have as citizens of the planet, to bring down carbon pollution levels. Because if you don't, the economic cost long term, of not acting on climate change, is far greater than the cost of acting.
Remember when we put forward our package we got attacked from a whole lot of people from the left and some people from the right, about it going too far in both directions.
We believe we have got the balance right. Because you know if you push this off into the future, and our scheme is not proposed to be introduced until the end of 2010, if you push this off permanently into the future, the political will necessary around the world to begin to put together the agreement necessary for all countries to act, just falls through the cracks.
HOST: Alright (inaudible) I think you have got to go and do something else. One last question, it is just the President of South Korea or something, make him wait.
PM: Actually, the President of Korea is in Australia today. I do have to go to Canberra and you know he is a very important friend and partner of Australia. Their economy is going through let me tell you, like everyone else, just real, real challenges.
HOST: Yeah, last question. Do you find it bizarre that the entire defence department can't work out a soldier's pay packet?
PM: This is very difficult. How someone in the front line cannot have their pay adjusted when the Minister, it was brought to his attention at the end of last year, said ‘fix this', said this last October ‘fix this', and several months later it hasn't been. It's been a very frustrating experience for everybody, I've got to say the people for whom this should not be a price and a cost is our men and women in uniform. It's got to be fixed.