KOCH: Kevin Rudd, Prime Minister is with us this morning. You have heard the editorials, we have heard what Wayne Swan has said. What do you think of the reaction so far?
PM: I think it is normal that you are going to have a complete mix of reactions across the country. If you listen to one of those newspapers, they are saying we were too tough. Others are saying we're not tough enough. I believe we have got the balance right.
You know why? Because we have got to deal with the reality of this recession now, pump as much into the economy right now, but provide a sustainable Budget over the period ahead.
That is what we have tried to do. I believe we got the balance right.
KOCH: It was a bit wimpy though wasn't it, there is all this talk of beer up, cigarettes up, all that sort of stuff (inaudible) and cutting welfare.
PM: I don't seem to remember us saying we were going to put beer up, cigarettes up. That was one of your colleagues in the newspapers who wrote that. Can I just say, our challenge is get the balance right.
I mean, there are a lot of families out there, pensioners who are doing it tough at the moment. We've increased the single aged pension. That had been squibbed by the previous Howard Government for 12 years. We've done that. But to make that sustainable, we have also got to build in a large number of structural savings for the future.
And when you say squibbing hard decisions, that is $22 billion worth of savings, built in over the next four years. That is what we have done.
KOCH: It is not much though. That is not a lot really.
PM: Well you offset that against the cost of the pension, that is in the ball park of what we need for the long term to make the pension sustainable. That's what people look at when you look at whether this Budget is there as a sustainable document for Australia's long-term future. But in the meantime, what are we on about with this recession, investing in the infrastructure we need for tomorrow to support up to 200,000 jobs which would otherwise be lost, next year and the year after. That is a big, big effect in terms of what would otherwise be the case.
KOCH: Pretty impressive figure, $22 billion on infrastructure, stuff like that. You've announced all that in the past. We knew that was coming. There was really nothing new in terms of extra money for infrastructure. This is always going to come along. You just filled in the details.
PM: You know something, filling in the details David, do you think people out there on the Pacific Highway want to know whether there is going to be the additions to the road at Kempsey? They want to know whether the F3 at Branxton is going to (inaudible) They want to know, they want to know whether there is going to be a metro rail link in Melbourne.
KOCH: It was dressed up as new money coming in. It is not really. It is not a third wave of stimulus, it was always there anyhow.
PM: David, that's absolutely wrong. And I think you know it. You know why? The money is now committed to individual projects. It flows. Prior to that, we had it in the bank, we saved it at the last Budget to invest in infrastructure. So your question is, is this new stimulus into the economy? You betcha.
Road, rail, port projects right across the country, as well as an investment in the national broadband corporation to lay out high speed broadband across the country. Port investments in Western Australia, investment in our universities, our hospitals, our research institutes, a whole new set of investments in terms of cancer treatment right across the country.
These are big capital investments, $22 billion, and where you are dead wrong is that was in the bank before. We have now committed to projects and the money now flows - to stimulate the economy and support those 200,000 jobs.
KOCH: You've tweaked -
PM: Have I convinced you?
KOCH: No, not really -
PM: It's true. You know that. You know that.
KOCH: You've tweaked a bit of the welfare coming through, sure you have increased pensions -
PM: Tweaked? (inaudible) for years. No one touched the pension.
KOCH: Hang on, but you have tightened up the tapering rules, you are changing the pension age, a long time into the future mind you -
PM: Something's been sqibbed for 12 years, two intergenerational reports, always been discussed in the past, no one has actually had the courage to do it. We have and we will cop political criticism for doing so.
KOCH: Ok, superannuation. The age based extra contributions, you have cut in half. Why? Does this undermine the confidence in super, a lot of people say, ‘I won't invest in super, can't trust the Government because they keep changing the rules'.
PM: You know the people who are affected by those changes to super, you know as well as I do, right at the very upper end. Average income levels I am advised, who are making access to those sort of payments now, are something in the order of $240,000 a year. With super in the bank, about $870,000 a year. These are current advantages built in by Mr Howard and Mr Costello to advantage people right at the upper end. We don't think that is sustainable. We want to help lower and middle income Australians.
KOCH: Put my business hat on. Nice little stuff in there for small business too, with extra tax write-offs in terms of new equipment, but cracking down on private companies that pay their shareholders or owners or get them to use business assets. So, a bit of pain but some good stuff there.
PM: Well I think this 50 per cent deduction, and to all the small business people watching your program this morning, this is really important. They are doing it tough at the moment, because of the global recession. So what we are trying to do is extend a helping hand, between now and the end of the year you have got a capital investment, the definition will be had from the tax office online, then we are going to provide you with a 50 per cent deduction.
That is a temporary investment allowance to give small business a help. I ran into a bloke the other day who had bought his bobcat for his building business, his construction business, $70,000 and he is going to get 30 per cent off that. That is one of the previous arrangements we had in place, and I think that is a practical help.
KOCH: Well you combine the two and basically buy equipment before the end of June and it is half price.
PM: Well I have got to say, these deductions are real. They are there to help. And also extending as we have done, the First Home Owners bonus for the next six months, keeping it as it is for three months after the middle of the year, and then staging it down until the end of the year. That helps the building industry.
All these measures add up Kochie, to providing stimulus to the economy now, building the infrastructure for tomorrow, supporting those extra 200,000 jobs in the meantime, when the rest of the world, frankly, is in all sorts of trouble.
KOCH: Yep, absolutely we are a lot better off than the rest of the world. Good to see you.
PM: Hey when you talk to Joe, ask him how much debt he supports. How much deficit he supports. He's a mate of you, you put it right on him.
KOCH: He is coming in at 8:00, I will put it to him. Good to see you.