HOST: Prime Minister, good morning.
PM: Good morning Neil. Thanks for having me on your program.
HOST: Well thanks for your time. Just before the Budget, have you spoken to the new Prime Minister in the UK yet?
PM: Ah, yes, just within the last hour I spoke with David Cameron, and I certainly congratulated him on being elected to the high office. I also suggested that he and his wife just take a moment of quiet time to enjoy it all because in about an hour's time it all starts. I've met him twice before in London, Neil. The thing about the Australia/UK relationship over many years is that it's always risen above party politics, goes back to the days, I suppose, of Curtin and Churchill. So I think this will be a good relationship between us for the future, a lot of work to do on the global economy. Big meeting, the G20, up in Canada at the end of next month, given that global financial markets are still jittery.
HOST: And have you commiserated with Gordon Brown?
PM: I haven't got through to Gordon yet but I will. I spoke with him just before the election. Gordon is a good man, and has made an extraordinary contribution to the global economy. That work, I may have mentioned this on your program at an earlier stage, that he did chairing a very critical meeting of the G20 last year, which frankly was so fundamental to preventing a global recession from heading into something much, much worse, so he should be honoured for that.
HOST: Prime Minister, the Budget - I'd like to say this is original, it isn't, it comes from David Koch - we're riding the rickshaw aren't we? What happens if the boom busts in China? What happens to Australia?
PM: Well, the Treasury's estimates of our commodity prices, Neil, is pretty conservative. See, what I believe in is making sure that we're running conservative economic management here and therefore that means getting this country back into surplus as quickly as possible and we're going to do that three years ahead of time. And of course that means ensuring that we are keeping a whole range of basic financial disciplines in place. Now on the commodity prices thing, with China, the Treasury's estimates against most market analysts are pretty, pretty conservative. The second thing though -
HOST: But if it does burst, we're still relying on a hell of a lot of extra money to come in in tax?
PM: Well can I say that it's not just China, we're talking about of course our huge markets in Japan, in the Republic of Korea and increasingly India as well.
HOST: Do you deny we're riding the rickshaw?
PM: I think the Chinese, well China is obviously our largest trading partner at present, but Japan is also huge, and so is India, increasingly so, Republic of Korea as well. But the other point I was going to make is this, Neil - the other part of why we are confident about being able to being able to bring back this Budget to surplus three years ahead of time, and in just three years' time, is because of our interventions in the economy last year. We've kept, you know, getting close to a quarter of a million people in jobs, that means they're still paying taxes. If that wasn't the case, and they were unemployed, which if you look at the unemployment rates around the world is what would have happened, then they would be also not just only not paying taxes, but we'd be paying them unemployment benefits. So these things together add up to our ability to bring the budget back to surplus.
HOST: The other element there, what if you don't get the super tax through the Senate? What happens?
PM: Well there are probably three consequences which flow from that, and maybe four. The first is -
HOST: - Is the surplus gone?
PM: No, the surplus is entirely funded within the Budget itself. The Resource Super Profits Tax is used to fund three or four other measures. One of them, of course, is bringing down the company tax rate, down to 28 cents, as well as particularly important changes for tax treatment of small business, a new tax break for small business.
HOST: So if it doesn't get through, you don't do what you said you would out of the Henry review?
PM: That's right -
HOST: - It doesn't affect the Budget?
PM: No, no, that's right. The two things are directly linked. The Resource Super Profits Tax on the one hand to give a fair share to all Australians, bring down the company tax rate, helping small business, boosting super for workers and also investing in infrastructure. These things are directly linked. On top of one other measure though, that's what I was getting to before, which was announced by the Treasurer last night, and that is that 50 per cent tax cut on people's bank savings interest, up to $1,000, that also is part of this package.
HOST: What's that worth to a person, a couple of hundred dollars is it?
PM: Look I don't overestimate it, Neil, but at present there's not a whole lot of tax incentive for people to have money in a bank account. Therefore we're trying to actually make it more advantageous for people, often older people who prefer to keep their money in bank accounts. It all contributes to national savings.
HOST: Obviously you're selling this around financial responsibility and return to surplus, will you therefore guarantee no big spending offers before the election?
PM: Absolutely.
HOST: What would you restrict yourself to?
PM: Well we've restricted ourselves to a two per cent spending cap, and we've adhered to that for this Budget . Remember the job of Government when the private economy is under stress is to expand the role of Government so that we keep people in jobs. But now that we've signs of recovery, despite what's happening around the world at the moment, it's time for the Government to pull back. That's why we are able to bring back the Budget into surplus, halve the peak debt, get the Budget back in the black in three years.
HOST: So how much is two per cent?
PM: Well two per cent is that -
HOST: You're limiting yourself to that, how much in dollars?
PM: Oh well, I don't have those specific figures in front of me, it would range, because we normally budget in four year cycles, it changes obviously one year to the next, but two per cent is a real limit, we've adhered to that, and these were the disciplines we outlined 12 months ago. And that's why we are confident we can bring back this surplus three years ahead of time, in a time when frankly, most other governments around the world will be swimming in deficit for many, many, many years to come.
HOST: Why have you dudded Victoria here on roads? $260 million Victoria gets, New South Wales $717 million, why is Victoria dudded?
PM: I don't have the breakdown on the roads figures around the country, but I will ask Anthony Albanese to come on your program to answer that specific question.
HOST: But the principle, why did Victoria get significantly less?
PM: Well let me also just add from my broader knowledge about the investments we've made in Victoria during the course of the last Budget -
HOST: Yeah but what about New South Wales as well -
PM: No, no, no I'm just about to go to that. In the last Budget you'll recall that our investment in Victorian transport infrastructure was huge, including from memory a $3.1 billion investment in the Regional Rail Express, first time frankly the Australian Government's invested anywhere in the country in urban rail. So Victoria did very, very well out of the Budget investments last year. On the Budget allocations this year, I'd rather have the Transport Minister answer your specific questions.
HOST: Fair enough. I'll ask you about the batts, you know I've been a critic of the insulation system, the batts. You've put aside $339 million to check 150,000 homes. That's $2,260 each house, how does that happen, to go and check them? $2,260 each.
PM: In terms of the spread of that over the number of houses, again I'll have Minister Combet come on that, but remember we are looking at not just inspections for that group that you're speaking of but also those with foil insulation.
HOST: No, this is the batts, it's reported as $339 million for 150,000 homes with batts to be checked, not replaced, $2,260 each.
PM: Well in terms of those figures I'm sure they are based on the best analysis of what it takes to do this job properly. As I've said multiple times on your program before Neil, there have obviously been real problems with the implementation of this. Our responsibility as a Government is to get it right, these are the figures which have been presented by Minister Combet.
HOST: The, ah, $1 billion on asylum seekers, do you accept that if we could get a policy right that they didn't come here, we could save a lot of money?
PM: Well you know one of the key things on border protection, Neil, is to keep investing in our forces, and that means also replacing our Customs vessels when it becomes time to replace them. These are expensive items, they have to be done when it becomes due. Therefore that's part of the expenditure we're talking about there.
Generally, on border protection, our view is that we must make sure that we've got the best assets deployed out there, protecting Australia's waters. But as far as overall flows in people movements are concerned, for the last 10 to 15 years, it have always been driven by peaks and troughs in global and regional security conditions. With the war in Sri Lanka last year, civil war, you have lots of people leaving for Canada, here and elsewhere.
HOST: But you know how much it irritates people, the private jets, the four star hotels, are we stuck with that?
PM: Well the challenge that we have is to deal with all the practical problems that present themselves. That means, initial processing of course on Christmas Island, it means also using other facilities as determined by the immigration authorities. Remember the use of private hotels is not something which is unique to this Government. It was used extensively by the previous Government as well, depending on the circumstances and whether people are exiting a country, on their way to an airport, all those sorts of things.
HOST: Professor McGorry, the Australian of the Year, I was just talking to him a moment ago, he says that you've as good as ignored mental health and it will cost lives. Now why is mental health, well he says people with mental illness will wake up today and say why has the Government forgotten us?
PM: Well let me go specifically to that criticism. Professor McGorry, I recall, runs a very important service called Head Space around the country. At present the Australian Government, I think for the first time, has funded I think 30 of those around Australia -
HOST: - Yep, $78.8 million -
PM: - Yeah, and my recollection is we're now increasing the number that we are funding as well.
HOST: A drop in the ocean he said. He said well you've got six per cent of your spending, health spending, on mental health, New Zealand has 12 per cent.
PM: I was about to come to that as well. There's a second part which I'd draw to your listeners' attention as well. Remember we are investing hugely in the health and hospital system in this budget. Part of is an increase in the number of hospital beds, some 1,300. Part of those beds can also be made available in hospitals for psychiatric patients. But let me go to the broader criticism of Professor McGorry. I accept fully that when it comes to mental health there is much, much more work to be done, as there is in aged care. I said this at the time that we produced the agreement with the States and Territories on the Health and Hospitals Network - these are two areas that still require a whole lot of work, I don't even pretend that that work has been done.
HOST: Meanwhile he says preventable deaths aren't prevented, people die.
PM: Right across the health system, whether I'm talking about chronic diseases such as type 2 diabetes, cardiovascular et cetera, each set of medical experts will present often the same graphic point of view. I can't dispute any of them. What I can do is try and produce a system-wide reform and what you've got in this Budget is a $7.2 billion investment which produces 1,300 more hospital beds, 6,000 plus more doctors, more nurses as well as more GP services in the community. There's more to be done.
HOST: I know you need to, he doesn't dispute that either, but I know you need to get away. Just one thing, are you aware you're spending $30 million advertising, on propaganda to convince us on climate change? $30 million over two years.
PM: My understanding is that the public advertising campaign concerned, Neil, also deals specifically about how households get engaged in their own emissions reduction tasks. I don't have the detail in front of me, but things like household rebates et cetera. More broadly, it's important that the community is aware of the sorts of programs which they can access or get behind and support. On the detail of the actual ad itself, I've not seen it.
HOST: Thank you for your time, will interest rates stay down because of this?
PM: Well we've taken the cue that we've really got to make sure we stick to budget discipline here, and I've said bringing this Budget back to surplus helps keep pressure off rates. But it's going to be still a tough year ahead and as you know the Reserve Bank makes up its own decision.
HOST: Thank you very much for your time, the Prime Minister Kevin Rudd, sorry I kept you a little bit too long.