CURTIS: Mr Rudd, welcome to AM.
PM: Good morning.
CURTIS: If this was not an election year would you have been bolder in what you picked up from the tax review?
PM: When we commissioned Ken Henry's review it was to lay out a long-term blueprint for tax reform. What we've done with this first set of measures is to do what we believe is in the national interest now. We've also said that there is further work to be done and that's the way in which we've approached his various recommendations and, of course, we've ruled out some as well, but we cannot underestimate the significance of the reforms that we're proposing for superannuation.
Not only is this good for working families who are very concerned about the adequacy of their superannuation on retirement, but it is also good for Australia's overall pool of national savings. This, I believe, is the core part of the reforms that we announced yesterday.
CURTIS: You say the Henry Review is a blueprint for longer-term reform. Why didn't you take the chance to lay out your own roadmap based on what Dr Henry has recommended that you like, to say this is what we would like to do over the coming decade?
PM: We believe we've approached this responsibly: first, to indicate these core measures that we'll undertake now and these are significant measures; secondly, those which require further examination for subsequent reform, and; thirdly, those we will never do.
That, I think, is the right way to approach this - step-by-step. Remember, we've not had a comprehensive approach to taxation reform in this country for decades and that's the reason why we commissioned Ken Henry to do this work in the first place.
But, again, I go back to the core point - our objective here is to keep Government finances strong, protect the future of the Australian economy but also ensure that working families and small businesses get their fair share from the natural resources wealth of this country, which ultimately, of course, belongs to all Australians.
CURTIS: The Treasurer has said you don't have the money for some things you'd like to do now, and other things would need the states' agreement. Isn't that all just a question of time and your abilities of persuasion?
PM: The key thing is to do what is possible now within the financial disciplines we've set for the country and remember-
CURTIS: -But will you look to putting to the states, maybe through the COAG process, these are the things we'd like to be able to do and to start the conversation?
PM: The states have, of course, a number of recommendations which came out of Henry, which are for them to consider. My job as the Prime Minister - and the Treasurer as well - is to look at these big, national reforms which are on about firstly insuring that Australians get a proper return from the enormous minerals wealth of this country and that secondly we deliver some of that to working families through increased superannuation, we deliver some of that to the business community through bringing down the company tax rate, in particular helping out small business with the, by funding a one-off, instant write-off of up to $5,000 a year, but thirdly also investing in our country's future with a new $5.6 billion-plus infrastructure fund to build roads, rail and ports for the future.
These are big reforms right now. Of course there is more to be done.
CURTIS: One of the criticisms of the Howard Government is that it spent the proceeds of the mining boom. You are putting a bit away for infrastructure as you said, but also spending the rest. Aren't you in danger of facing the same criticism?
PM: If you look carefully at what we've proposed here these are all about boosting the long-term competitiveness of the economy. First of all, about one third of what we've proposed to derive from the revenues coming from this Super Profits Tax on the biggest miners in the country, one third of that goes to making all companies in this country more competitive - that's bringing down the company tax rate.
Secondly, what we're doing also is boosting our pool of national savings through this big reform to superannuation. We've talked about it for nearly 20 years, raising the superannuation guarantee level from 9 percent to 12 percent - now we're doing it, and over the course of the decade that will boost our overall national savings by something close to $100 billion.
And thirdly, by also putting about a third of the money into the direction of investment in the long-term needs of infrastructure in this country, we believe we're getting that balance right as well.
So, this is no giveaway. This, in fact, is about investing in national savings, investing also in our future infrastructure needs but critically helping the competitiveness of businesses on the way through and helping working families have a decent retirement income.
CURTIS: But the country also at the moment faces a large deficit and an even larger debt. Will you then be prepared to bank about $2 billion that you have left over after you've spent the money you say you will?
PM: Let's put this into very clear context - what the Australian Government has done through decisive action is protect the Australian economy, keep it out of the global recession, protect hundreds of thousands of jobs and to the extent that right now the Australian economy is one of the strongest economies among the advanced economies worldwide-
CURTIS: -But there comes a day where it has to be paid for, doesn't there?
PM: -But secondly, we have done so by keeping the economy out of recession with the fastest growth among the advanced economies, but here's the core point - with the lowest debt and the lowest deficit of all the major advanced economies and the second-lowest unemployment.
Mr Abbott will constantly run a fear campaign about debt and deficit. He can't answer one simple question, which is that we have achieved these things - that's keeping Australia out of recession, with the second-lowest employment of the major advanced industrial economies - while having the lowest debt and the lowest deficit of those major advanced economies.
Therefore, I think the key thing to do is to use this important reform for the taxation system to underpin the current strength of the Australian economy, bill for the future, keep our Government finances strong, protect the future of the Australian economy but also ensure that working families and small businesses get their fair share. This is the overall theme of the reform that we're putting forward today.
CURTIS: The mining industry says the new Super Profits Tax will hurt the industry. Are you absolutely sure this measure won't see jobs lost and investment go offshore?
PM: Well, I listened very carefully to what Mr Hooke had to say before. Of course there'll be threats of project closures and the rest. I also expect that the Mining Industry Council will try and put together a political campaign against the Government, they did so prior to the last election. Can I say, this though-
CURTIS: -Are you sure that their warnings won't come true?
PM: Well, let's just look at some basic figures here. Over the last decade the mining companies generated $80 billion in higher profits. At the same time governments, on behalf of the Australian people, received only an additional $9 billion over that period of time.
What we're saying is that the mining companies deserve a fair return on their investment - that's important - but we also believe the Australian people deserve a fair return on the resources which they themselves own, and remember, these companies- you mention in your introduction BHP and Rio. BHP's 40 percent foreign owned. Rio Tinto's more than 70 percent foreign owned. That means these massively increased profits, the $80 billion that I referred to before, built on Australian resources, are mostly in fact going overseas.
CURTIS: You've ruled out some options, as you say, from the Henry review. Were you surprised by some of the things that Dr Henry recommended?
PM: Well, when you commission Dr Henry, the Secretary of the Treasury and his independent panel to look right across, root and branch, at the entire tax system and they're commissioned independently, we mean that. They go out there and have an independent view and that's what they've done in putting together these recommendations.
Therefore, our response to it should be: here are the ones that we believe we can do now; here are others we can consider for later on; but also, here's a list that we will never, ever embrace - for example, the recommendation to include the family home in means testing, to introduce lands tax on the family home, to require parents to work when their youngest child turns four. These are recommendations which the independent panel has come up with but those and others of a similar type we've said that we would reject both now and into the future as well.
CURTIS: Mr Rudd, thank you very much for joining us.
PM: Thanks for having me on the program.