KELLY: The Prime Minister Kevin Rudd joins us on his car phone on the way to Newcastle. Prime Minister thanks for being with us.
PM: Good to be with you Fran.
KELLY: Prime Minister, you've got your Budget on the table. What's the challenge now for the Opposition Leader Malcolm Turnbull in his Budget Reply speech tonight?
PM: Well very, in one simply sentence it's this Fran: if Mr Turnbull doesn't nominate any extra savings tonight in his Budget Reply, then he's therefore personally endorsing every single cent of temporary borrowing and temporary deficit contained in the current Budget. You cannot have it both ways. You cannot criticise the current Budget for borrowing too much unless you identify exactly that amount of savings that you're going to put forward or alternative taxes that you're going to raise. It's as basic as that.
KELLY: It's a bit rough though isn't it? I mean an Opposition doesn't have access to all the Treasury modelling and all the policy detail the Government has. Why should the Opposition have to say what it's policies would cost exactly? It's not in Government - you are.
PM: The Opposition for a considerable period of time have engaged in an entirely false attack in relation to temporary deficit and temporary borrowing. We have suffered a $210 billion revenue collapse, we have put forward specific investments in addition to provide stimulus to the economy. Mr Hockey the Shadow Treasurer yesterday said that the Liberal Party was committed to $25 billion less by way of temporary borrowing and temporary deficit than the Government. The challenge therefore is to identify that amount. That's the requirement in (inaudible)
KELLY: Prime Minister we're having a bit of trouble with your car phone. Oh - we're having a lot of trouble with that car phone. We'll try and get the Prime Minister back on the line.
....
KELLY: Thanks very much we've got you back.
PM: We're live on air now I presume now Fran?
KELLY: We are live on air.
PM: Okay that's good.
KELLY: The dangers of car phones. Prime Minister, the growth forecasts in your budget have been under serious question since they were released the other night. Described as heroic, miraculous even. Do you have a say in the growth forecasts the Treasury delivers? Is there one figure you get from Treasury or do you get a series of figures?
PM: These are independently nominated by the Treasury. It would be foolhardy for any Government to reject the independent advice of the Treasury on something as fundamental as the forward growth forecasts, whether they are on the upside or on the downside. I mean the Treasury -
KELLY: So you get one figure from Treasury?
PM: Treasury provide independent advice to the Government and it is the responsibility therefore of the elected Government to work within those parameters. That's the right way in which you do public policy.
I noticed that Mr Turnbull for example when any time he dislikes the numbers put forward independently, whether they are by the Treasury, or by the Australian statistician through the ABS or elsewhere, what then happens is the Liberal Party attacks those independent statutory office holders. It's quite wrong.
We work within the parameters that we're given by the professional and independent economists. That's the right way to do things.
KELLY: Can you understand why Australians though might be sceptical or confused by these optimistic forecasts because you've been describing the downturn in catastrophic terms for months, as driving a wrecking ball through government revenues. But now you're telling us that Australia's recession will be relatively mild and in two years we're going to zoom back to four and a half per cent growth?
PM: Can I say this Fran, first of all the impact of the Government's investments through its investment in short term, medium term, long term stimulus, medium term infrastructure, long term infrastructure, obviously that has a material effect on our economic performance in the economic, in the years immediately ahead, that is this year and next year.
However when we go to the outer years, of course it will be a different set of circumstances. Let us simply go to the basic fact here. First of all, when it comes to the period of which Australia will be engaged in below trend growth, in the previous recessions that was essentially a period of about one year to two years.
Now what we're projecting ahead is three years because three years is of course a conservative estimate in relation to the debt and intensity of the current recession. That's the right way to go. Therefore, Treasury's assumptions on that basis are conservative. It's the right way to approach it.
KELLY: Okay our panel of experts yesterday said that the budget parameters were pretty right for the first year, can't cut too sharply in the first year but there will need to be stronger cuts made later on. If growth starts to improve towards the end of the year, if things start picking up, do you have a list a list of savings (inaudible) and cuts ready to go when the budget can sustain it? Can we expect perhaps a tougher mini budget towards the end of the year, November-December.
PM: Well Fran -
KELLY: Some of these cuts that the experts are calling for.
PM: Well Fran the truth is the Government in embracing this Budget has two challenges. One, to provide stimulus to the economy at a time of global economic recession now and into the short term and secondly then to return the Budget to surplus in the medium term. They are our two challenges.
Therefore what we have done is already embrace $22 billion worth of savings, added to the ones we did last year of some $33 billion worth of savings. $55 billion worth of savings compared with that achieved by Mr Costello in his last two Budgets of only 7.5 billion.
We take saving seriously. This will be an ongoing challenge for the Government. We've set ourselves a fundamental discipline in terms of maintaining real expenditure growth once the recovery comes to, within two per cent real expenditure growth, that's the right way to go. It's a discipline for Government, we intend to adhere to it.
KELLY: It sure is a discipline. Let's go to the politics -
PM: Well Fran, we are in difficult times and if you're required to act in the national interest, in these extraordinary economic circumstances, the complexity of the budget task is great. As I said it's to provide stimulus in order to save and support jobs now and our measures are designed to support 200,000 jobs which would otherwise be thrown onto the unemployment pile for the following year and the one after that. That's why we're doing this in the short term, in the medium term the discipline we have to then have through the Budget is to restore the Budget to surplus. These are our two challenges, that's what we're addressing.
KELLY: Well you left the option of a double dissolution election open if the Senate blocks this Budget but yesterday the Treasurer Wayne Swan said the very last thing the economy in this country needs right now is an election. Do you agree with that? And will you rule out going early in the interests of the economy?
PM: Fran, I was absolutely clear cut about this in my interview with Kerry O'Brien on the ABC last night. First of all the fact is that the Australian Labor Party does not control the numbers in the Senate. The Liberal Party and the National Party together have a far greater number of seats than the Government in the Senate, that's simply a political fact.
Secondly, as I said last night, my instincts on these questions are always conservative and that is that it's important for the Government to serve its full term. In fact I said my instincts on these questions are very similar to my predecessor.
The bottom line is this - nobody in this country wants to see a double dissolution election. It is not in the interests of the economy for that to occur, it is not in the interests of the country for that to occur. I don't want that to occur.
But at the end of the day let us be very clear about the fact that the Government does not control the numbers in the Senate. These are effectively controlled by the Liberal and the National Party. That's why it comes back to the question you asked me before which is what attitude will Mr Turnbull and the Liberal Party and Mr Costello who will soon replace Mr Turnbull take on the key question of whether they support or oppose every element contained within the Budget because if they fail to do so they must identify how they would alternatively fund the public finances of the Commonwealth.
KELLY: But Prime Minister, your line in the sand surely cannot be that you expect your Budget to go through in toto as it is. No Government gets that.
PM: Can I say to you Fran that the Budget is an integrated financial document. We have put forward in it as I mentioned to you before some $22 billion worth of structural savings which go out over quite a large number of years.
The objective is to return the Budget to surplus for the medium term and that's why it is an integrated document. It is important therefore that the Senate in its deliberations on the Budget document understands the financial integrity of what we are putting forward and secondly understands the absolute imperative of returning the Budget to surplus in the medium term.
That is the right thing to, just as it is the right thing to do now to borrow temporarily in order to provide stimulus to the economy and to offset this extraordinary $210 billion collapse in public revenues because of the change in the taxation receipts coming into the Australian Taxation Office.
KELLY: Sure, and every government always says that, you know this has got to be passed in total, it's an integrated document but every Budget gets changed. Is, what's your bottom line, what would have to happen for you to throw it all up in the air and say okay we're going to go early?
PM: Well can I just say it's a very onerous responsibility which Mr Turnbull and Mr Costello when he replaces him have, which is to be mindful of the responsibilities in the Senate in ensuring that we have a proper fiscal strategy going forward to the medium term to returning the Budget to surplus.
As I said, we have a strategy clearly outlined for doing so within the Budget papers which is entirely geared to where we are in the economy now. Stimulus now, returning the Budget to surplus in the medium term. That strategy is there. If you start and pick and choose and undermine it, then of course you begin to threaten that overall strategy.
I therefore would suggest to Mr Turnbull as he approaches his Budget Reply tonight - again, if he doesn't nominate any extra savings tonight that he is personally endorsing every single cent of temporary borrowing or temporary deficit in the current Budget. You can't have this both ways.
KELLY: Prime Minister you've admitted in the past that you couldn't live on the single pension. When NewStart is now $100 a week less after the boost to the pension in the budget, $100 a week less for the unemployed than aged pensioners, could you live on the dole?
PM: Well as I've said in multiple interviews yesterday Fran, this is very, very difficult and it is very, very tough. One of the things the Government has done is to provide a temporary training supplement for various categories of people in terms of obtaining further training given the circumstances in which they find themselves through unemployment.
I understand that, I accept that and the other thing that the Deputy Prime Minister has done is provide a very large number of additional productivity training places for the economy as well.
We've also of course made the eligibility for NewStart easier than it was before. We've also changed the eligibility criteria for access Job Services Australia to assist people in finding alternative employment. These are all measures designed to help but the bottom line fact is absolutely as you describe it, it is very, very tough.
KELLY: It's ten to eight on Breakfast, the Prime Minister joins us this morning. The Prime Minister the emissions trading scheme, the ETS goes into the parliament today, the omens you'd have to say aren't good. Senator Xenophon says your model is unfixable, the Greens want a much higher target, possibly as high as 40 per cent, your only option is to cut a deal with Malcolm Turnbull. You're the Prime Minister. Why don't you sit down with him and make this happen?
PM: First and foremost Mr Turnbull has had about six different positions on the question of the response to climate change and in particular the contents of the Carbon Pollution Reduction Scheme. First of all he said that they would wait to form their policy until the Government released its Green Paper, we've done that, then our White Paper, we've done that, our draft legislation, we've done that, the Treasury modelling, we've done that. Then they said they'd commission their own independent examination through someone called Mr Pearce, they've done that. Now, once we've produced draft legislation on the eve of putting it into the parliament, what he then says is it now must be sent off to the Productivity Commission for a further examination.
The bottom line is Mr Turnbull is not serious. What are the politics here? He's frightened of the right wing of his party, led by Mr Costello who have always been climate change sceptics and therefore he is simply caught like a rabbit in the spotlight.
So you ask about the content of negotiations. Senator Wong, the Climate Change Minister is currently negotiating with all parties, both the minor parties as well as the Liberal and the National Party. But when you're dealing with the Libs and Nats you're dealing with three different spokesmen who have three different ideas.
KELLY: And Prime Minister just finally on another matter. Rugby League is again in the headlines over another sex scandal, this time focused on Matthew Johns. Does more have to be done in our sporting team culture when it comes to empathy and respect for women?
PM: It's very important for all leaders of sporting organisations, all sporting clubs and all sporting teams in everything they do to show proper respect for women.
This is a very difficult matter, it is a very sensitive matter but the bottom line concern here is to ensure that through players' behaviour, through sporting coaches' behaviour, through sporting teams' behaviour we take every reasonable and practical step to underline the absolute importance of treating women with respect.
KELLY: And just very briefly, does more need to be done on the school level at that? You're already looking at teen drinking, what about this issue?
PM: Well the challenge of treating women with respect and more broadly when it comes to something that I have spoken about a lot in recent times which is the challenge of violence against women and violence against children, we have a deep responsibility as a nation to ensure that the best possible attitudes are instilled into our young people and young men in particular at the earliest stages of their school education.
We are actively engaged through work led by Tanya Plibersek, the Minister for the Status of Women, in doing what we can with the school systems in this country on this question more broadly. Also through other programs and some of which of course will involve sporting organisations across the country as well.
This will be a long process, a difficult process but I think it's very important that as a country and as a community we seek to change deep level attitudes on these questions which have been a problem for our country going back for a long time.
I'm talking here about the undeclared levels of violence in our community towards women and we need to turn the corner on this. It is important that we do so as a nation. We cannot tolerate some of the statistics that we continue to be provided with about what is happening out there to women and children. It's time we actually turn the corner.
KELLY: Prime Minister thank you for joining us on Breakfast.
PM: Thanks very much.