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Transcript 16575

Interview with Matt and Dave ABC 891 - Adelaide

Photo of Rudd, Kevin

Rudd, Kevin

Period of Service: 03/12/2007 to 24/06/2010

More information about Rudd, Kevin on The National Archive website.

Release Date: 20/05/2009

Release Type: Interview

Transcript ID: 16575

HOST: Kevin Rudd joins us. Welcome to Adelaide Prime Minister.

PM: Good to be back, I've been back here a few times the last year and a half I've been Prime Minister, visit number 10 I am told. But today it is to be with Mike Rann to formalise our commitment of $228 million to the Adelaide desalination plant.

HOST: Prime Minister that project, a big infrastructure project, also rail lines will be able to go ahead now and be modernised in a north and a new rail line running to Seaford. The, the question though is that somebody has to pay for that. Do you have any sleepless nights over running up debt for these sorts of projects?

PM: Well the important thing is to realise where we are in terms of the global economic recession. What's our strategy for dealing with the global economic recession, the worst economic downturn in 75 years worldwide? It's a strategy of investing in nation building infrastructure for tomorrow and therefore creating the jobs and the support for small business and apprenticeships we need for today. That's the right thing to do. It's responsible to do that.

In fact, it's irresponsible for Government at these times of economic crisis to step back and simply to allow the recession to get even deeper and for the recovery to take even longer and for unemployment to be even higher. That's why we're acting in the way in which we're acting and secondly we're doing so in partnership with governments right around the world who are undertaking similar actions. The last thing I'd say on the question of debt and deficit is this, is that Australia's net debt when it reaches its peak under this current program will not only be the lowest of all the major advanced economies around the world, it will be seven times lower.

We therefore have taken a responsible strategy to support the economy now because of this global recession but also an equally responsible strategy in the medium term to return the Budget to surplus. It's the right way to go and it's also delivering infrastructure and jobs here in South Australia.

HOST: In simple dollar terms what will our net debt peak at?

PM: Well our net debt of course will peak at, in 2013, 2014 at around about 200. Our gross debt at about 300, the net debt figure is 13.8 per cent of GDP at that time and as I said that's something like six or seven times less that of the average of the major advanced economies around the world.

Importantly what we have decided to do is embrace a strategy also of tough savings, some of which are politically unpopular, in order to return the Budget to surplus. That's what we're doing and therefore our strategy is to provide support for the economy now, infrastructure we need for tomorrow, jobs we need for today and then returning the Budget to surplus in the medium term.

It's the right strategy, it's also the responsible strategy. The alternative would be to bring about a level of unemployment the likes of which the country has never seen before and I'm not prepared to do that.

HOST: Prime Minister 200 what and 300 what?

PM: These are billion figures.

HOST: So 200 billion dollars?

PM: That's correct,yeah, and as I said the normal way which it is expressed as a net debt figure, as a percentage of gross domestic product because that then gives you a comparison between ourselves and the other major advanced economies. For example in countries in North America, in the United States for example you will have net debt as a percentage of GDP very, very high indeed. As I said our figure will be something like one seventh or one sixth that of the other major advanced economies.

Those other economies have a different set of circumstance to us but the overall strategy is, given that we have this unprecedented global economic downturn, this unprecedented global economic downturn since the Depression, it is very important that we act now.

Those other economies for example, a net debt figure Japan 103 per cent, The United Kingdom 56 per cent, the US 61 per cent, then we have Canada at 26.2, France 65, Germany 51, Italy 111. These are the figures as they exist in 2009, and what I've described before is where our figures would be when our net debt peaks at 2013.

HOST: And Paul Keating had a problem with the R word. Do you have a problem with the B word, billion, I notice and this was on Lateline, you wouldn't say $200 billion and you still haven't said it. You say 200 and 300.

PM: That's exactly right, $200 billion, $300 billion, all I was explaining to you is the actual comparisons which exist between it and the performance of other relevant economies around the world.

But the other side to this equation, if I could just say this to your listeners this morning, is investing in infrastructure is also necessary to support jobs and to do that we of course also must make provision for our long term economic recovery. For example if we're going to invest $291 million towards the Noarlunga to Seaford Rail extension, that requires injection from the federal Government. $294 million towards the Gawler Line modernisation, that's an injection from the federal Government, $61 million for the O-Bahn extension, that's from the federal Government and $228 million for the Adelaide desalination plant to double its capacity up to 100 gigalitres and provide Adelaide with long term water security.

These are necessary investments in this State's and this city's long term economic infrastructure. Now I am prepared to take those hard decisions despite the fact that in the debate about debt and deficit we have an absolute degree of dishonesty on the part of Mr Turnbull and the Liberals. Because when if you listen carefully to the Budget reply, what does it say? They were saying that their net debt will not be one dollar less than that of the Government's. It will not be repaid one day earlier than the Government's. This is all a political scare campaign mounted by them.

Remember they did the same with the debt truck a decade or so on foreign debt. What happened with foreign debt under the Liberals at that stage? Foreign debt increased from some $200 billion to $600 billion with Mr Costello as Treasurer. Let's put all of this into some political context too.

HOST: Prime Minister what does the Budget tell us about when this country will be out of recession? What are the forecasts?

PM: Well when it comes to the economic forecasts for the future, we obviously are going to have a challenge in terms of the year ahead. We've already indicated that there will be a difficult period for economic growth, for the period of 09-10. We are projecting negative growth of minus a half. For 10-11, the Government projects that we will be back with positive growth of two and a quarter and then we have stronger growth in 11-12 and 12-13.

HOST: Well a large portion of your infrastructure spending won't happen for another one, two even three years and by that time based on what you've just said we should be well out of recession?

PM: In terms of the economic infrastructure in which we are investing already, can I simply underline a couple of points. Firstly, right now, we are investing, nationwide, some $30 billion across the nation in the, including the biggest school modernisation program Australia has ever seen.

HOST: Yes but a lot of this other infrastructure that you have just described such as the big rail projects, the desalination plant here in South Australia, a lot of that won't be built for another one, two, even three years. And by that time we should be well out of a recession. Is there a risk that you will be tying up labour and capital, just when the private sector needs it, and the public sector doesn't?

PM: I would think if you were to ask your listeners whether they would want to have their railway lines extended from Noarlunga to Seaford, or the electrification of the Gawler line, or the O-Bahn extension, wherever we are in the economic cycle, they would like to see those improvements.

HOST: I am sure they would but that's a reason for providing a service, it is not actually going to help us in terms of the recession. You have argued that much of this infrastructure spending is needed to help us get out of recession. By the time you are spending it, on your own figures, we should be out of recession.

PM: Well can I run through the sequence with which we have done these things. Firstly, with the implosion of the global economy in the third and fourth quarters of last year, the Government embarked upon a three-stage strategy of dealing with the challenge of the recession.

The first stage was in the economic stimulus strategy of last October, where we provided direct payments to pensioners, carers, veterans and others, and we also trebled the first home owners boost. Why was that necessary? To provide immediate stimulus to the economy at a time when other economies were falling through the floor.

If you want the evidence of the effectiveness of that, look to Australia's private residential construction figures and our retail sales figures against all other OECD economies, we have been stronger, they have been decidedly weak.

The second phase of our approach was in the nation building and jobs plan we produced in February. That contains within it short term infrastructure - 20,000 units of social housing, school modernisation across all of the country's primary schools and a large number of its secondary schools as well as an energy efficiency program for homes in terms of ceiling insulation.

That is to inject some three per cent of GDP in this period, that is this financial year, and the year beyond because this is when the economy is at its weakest. So we are building the schools we need for the future while injecting a large slice of economic activity now through this stimulus.

The third phase is what you have just pointed to. The measures outlined in the Budget, which create necessary long term infrastructure as well. A number of the projects that I have just referred to get going very soon.

So therefore, these things all dovetail with each other and the objective and the strategy is this: supporting jobs, small business, apprenticeships now, while investing in the nation building infrastructure we need for the future.

HOST: And Prime Minister just before you leave us, what is the latest on Annice Smoel, are you confident that you will be able to bring this Australian mum back to Australia soon or is it that she has really just got to work her way through the Thai legal system and there is not a lot that Australian authorities can do?

PM: What I would say is that whenever any Australian gets into trouble overseas, the Australian Government through the Department of Foreign Affairs takes each of those cases seriously and therefore, our staff at the embassy in Bangkok have been working directly with the individual, her family, as well as of course with the Thai authorities.

There is often a whole lot of complication associated with each of these cases and all our officials in Bangkok are working their way through this. What I could say to you and you listeners is that in this case as with any other case, we will spare no resources and no efforts to try and bring it to a satisfactory conclusion.

It will be difficult. The foreign minister has been dealing directly with our ambassador in Bangkok on this. But bear in mind, at any given time, we have about a million Australians who are offshore around the world, travelling or working, and this is a huge challenge when inevitably, people get themselves into trouble.

HOST: I mean you would have to think that if you locked up every Australian who knocked off a bar mat, half the country would be in prison.

PM: I think it is probably wise I don't comment on the specifics of the case, given that our objective is to bring it to a satisfactory conclusion. So people will make their own conclusions about that and the nature of the alleged offence.

What we are concerned about is to make sure that we provide maximum help and support to this individual and to her family in order to bring this to a very quick conclusion and we are working in that direction. But I don't want to underestimate the degree of difficulty.

HOST: Prime Minister, just finally, another Budget question, on the retirement age which will now be 67. What do you plan to be doing by the time you are 66?

PM: That is a terrific question. I wish I knew the answer to it. All I know is that for the next six months, I am focussing on doing everything I can to implement the economic strategy we have been discussing to try and lift Australia out of this global recession. And when it comes to my longer term future, people, other people other than myself will make those decisions.

My job is simply to do what I have been paid to do now which is to make some tough and at times unpopular decisions for the country's future.

HOST: We could assume though you won't be dragging insulation through ceilings or driving courier vans but many people are going to have to be doing that until they are 67, people who don't have any other means of retirement income.

PM: Well can I say that Governments around the world have been increasing the, when you, we are talking about the eligibility for the age pension here. And it is important to emphasise that is what we are discussing, increasing that from 65 to 67.

Governments around the world are taking these decisions to increase the eligibility age for age pension. And the reason is, long term financial sustainability of the age pension system. With the ageing of the Australian population, unless we make these changes for the long term, then its capacity to undermine the overall financial integrity of budgets in the long term, not just here but in other countries with ageing populations, is a serious problem.

The second thing we have done to make this fair is to give people lots and lots of warning. This does not start to be phased in until 2017. It doesn't obtain full effect until the year 2023.

And therefore, in terms of preparing for it, we think it's the right thing to do, particularly when the Australian Labor Government has just provided a very substantial increase in the single age pension by $32.50, and our predecessors sat around for 12 years and did nothing on this.

So we have increased the aged pension, but we have also taken a measure for the very long term, to ensure that we have got fiscal sustainability of the pension and retirement incomes policy in general.

HOST: Prime Minister thanks for talking with us.

PM: Good to be back in Adelaide.

Transcript 16575