HOST: Prime Minister good morning and welcome to AM.
PM: Good morning.
HOST: First up, your reaction to the events in Libya; will - after the euphoria subsides this country will have to move from a dictatorship to a democracy, will Australia have a role in a post-Gaddafi Libya?
PM: The regime of a tyrant has come to an end and so we are seeing remarkable scenes on our television screens from Libya. But the fighting and risk of bloodshed is not yet over.
So we do call, as other international communities have, for Colonel Gaddafi's forces to lay down their arms, for fighting to cease, and then we will work with the international community to help Libya transition to being a peaceful, inclusive democracy without reprisals taking place for this era in Libya's history.
Now that's going to take a lot of hard work. There is an economy to be rebuilt, a society to be rebuilt, a democracy to be built.
These are all big challenges but we have already provided humanitarian assistance to the people of Libya and, of course, will stay engaged as a member of the international community as Libya moves to the next stage.
HOST: Turning to domestic issues now, BlueScope announced the axing of more than 1000 jobs yesterday. Manufacturing in Australia is in a pretty bad way, how many more jobs do you think will be lost in the months ahead; there are predictions that 1000, sorry 100,000 jobs will go by mid-next year?
PM: I think it's important here to understand the forces and pressures in the Australian economy. We believe that jobs will continue to grow in the Australian economy.
What we're seeing in our economy is the result of global economic weight moving from west to east, to our region of the world. That gives us huge opportunities, huge opportunities through our resources boom and through the provision of services to a growing Asian region and a growing middle class.
So there are great prospects for the Australian economy, but it's also true to say in these days of transition, there are sections of the Australian economy under great pressure.
Manufacturing is one sector of our economy that is feeling as a burden the high Australian dollar, even though the high Australian dollar does some good things in other parts of the economy and is good for consumers as it makes imports cheaper.
So we've been working with manufacturing through our Australian Procurement Statement; working to get manufacturing a fair go and a fair share in the big procurement decisions that are made by government and also by other businesses in this nation.
HOST: But thousands more jobs will go-
PM: Well look I'm not endorsing any of these projections that we're seeing in today's newspapers. We believe that we can work with manufacturing so that it's got a bright future in this country. We are working to modernise and strengthen our economy.
Our economy in the future is going to be different from the past. It's going to be a clean energy economy - that will be different. We'll have an even higher level of technology through the NBN - that will be different. People will have different skills and higher levels of skills - that will be different.
But as we move to that new economy we believe we can take traditional industries, like manufacturing, with us. Getting them the benefits of the clean energy future, which will require things to be manufactured, the benefits of higher level skills, the productive benefits that come from new technology, as well as the direct advocacy and assistance as procurement decisions are made.
HOST: Manufacturers want tax cuts and further IR reform to help them through this tough time, will you help them examine those things?
PM: We've worked hard with manufacturing. So when you look at our policies and plans over all, we have the 'Buy Australian At Home and Abroad' campaign; we have our Australian Industry Procurement Plans which have literally leveraged billions and billions of dollars into manufacturing. We'll continue to do that.
This week we will announce some new modest measures and then we'll stay strongly engaged with manufacturing, with employers, with unions, as manufacturing goes through this period of transition.
HOST: You're saying modest, not on the scale that you forked out yesterday?
PM: Well yesterday we wanted to respond to a situation about working people's jobs. There's nothing more important to me as Prime Minister than Australians having the benefits and dignity of work. I've spoken to the nation a lot about spreading opportunity and making sure no-one feels, or is at risk, of being left behind.
I know, in these days of transition in our economy, that there are some people and some regions feeling like they're being left behind or at risk of being left behind. We don't want to see that, we will always work with those people and those regions and that's what you saw us do yesterday.
HOST: With this package that you're flagging, will it help places like Cairns? I mean Cairns has got an unemployment rate that's double the national average at the moment, they're suffering because of the high dollar too.
PM: When I've spoken about the patchwork economy, one of the areas I've often pointed to as I've tried to explain this to people, is Cairns because, yes, it does have a high unemployment rate, and tourism there has suffered from the high Australian dollar. We've got to be strongly engaged with those industries that are feeling pressures and are in transition. Manufacturing's one, tourism's one, international education's one.
But I'm an optimist for the Australian economy. We are here in the region of the world that is growing, our fundamentals are strong, the growth in our region gives us huge opportunities, not just in resources but in services too, and in food production. Yes, there are pressures on other parts of the economy, but they too can play a strong part in Australia's economic future.
But we've got to keep strengthening, we've got to keep modernising and that does mean we've got to keep taking the hard decisions now, which will pay dividends tomorrow.
HOST: Turning to the Manus Island Memorandum of Understanding. In 2007 you said that Labor would end the so-called Pacific solution, and to quote you, you said "we would not have off-shore processing in Manus Island and Nauru". Why are you breaking that promise?
PM: We've determined at this stage to act hard to break the people smuggler's business model. That's what the Malaysian arrangement is about, that is before the High Court at the moment, and of course there's a strict limit to what I can say about a court case that's in progress.
HOST: But sure, on Manus Island, you broke a promise.
PM: Well we've decided that it's appropriate, with the Malaysia arrangement and it's very, very tough message to people smugglers, to also have a centre in PNG.
But it is a different model from the model of the Howard government. That was strictly a model that Australia engaged in as a one-out set of decisions under a great deal of pressure with the Tampa. What we've done instead is worked regionally to get the Bali Framework. We will have a bilateral arrangement with PNG now, but we will stay engaged with our region on the question of a regional assessment centre.
So we've taken a regional approach because we've always understood that this is an issue for our whole region; whereas the Howard government dealt with this just one out in Australia without that kind of overarching approach.
HOST: The Human Rights Commission says the Government, your government, shouldn't proceed with this because this sounds like the Pacific Solution. A policy, it says, was expensive and it caused significant hardship and mental harm to the people that ended up there.
PM: Well I'm going to have to take a different view. We've worked through the Bali process to get a regional framework. Then under that framework we've negotiated the transfer agreement with Malaysia. And, under that framework, we are looking to a bilateral arrangement with PNG now.
But as we look to that bilateral arrangement, we will continue to work with the region for regional solutions, including, as auspiced by the Bali process, regional assessment centres.
HOST: To Craig Thomson now. Tony Abbott says he's a protected species, the Shadow Finance Minister, Andrew Robb, used Parliamentary privilege last night to describe him, Craig Thomson, as a thief and a liar. Why did the New South Wales branch of the Labor Party pay his legal bills?
PM: Look, this is a question for the New South Wales branch of the Labor Party.
HOST: We've rung them, we're not getting calls back.
PM: Well that is as it may be Sabra, but decisions by the New South Wales branch of the Labor Party are their decisions. But more broadly can I say, in relation to the Opposition here, I don't think people appreciate hypocrisy.
As Prime Minister, what I've said about the Member for Dobell is that there is an investigation in train by Fair Work Australia, and we should await the outcome of that investigation.
There is only one Member of Parliament who's been charged with a criminal offence, it's not a member of my team.
HOST: Well Fairfax has revealed this morning that the mobile phone used to call escort agencies was also used to call Stephen Smith and Mark Arbib. This casts doubt on Mr Thomson's denials - he's previously said that the credit card used to pay for these things was used by someone else, and the implication too was that his phone was used by someone else, have you sought an explanation from him?
PM: There's an investigation by Fair Work Australia in train-
HOST: But have you sought it?
PM: I've certainly spoken to Craig Thomson, of course I have, but there is an investigation in train by Fair Work Australia, and I believe that it's appropriate that that investigation work its way through.
Let's remember here in this very Parliament we've had members of Parliament, members of the Howard government investigated by the Australian Federal Police and ultimately the police found that they had no case to answer.
So, Fair Work Australia will work its way through, we'll await the outcome of that investigation. In the meantime the Member for Dobell is doing his job as the local member in this Parliament.
HOST: Prime Minister, thanks for your time.
PM: Thank you.