HOST: Prime Minister, good morning, welcome to AM.
PM: Good morning, Sabra.
HOST: We'll get to the economy is just a moment. But first this morning a lot of people are asking the question: Why did you give Four Corners an interview for its program last night?
PM: I was approached by Four Corners for an interview on what was described as the Government's progress since 2007.
And so in those circumstances of course I said yes. My job is to answer questions and to explain what the Government is doing. I'm not someone who runs away from questions and so I did agree to the Four Corners interview.
HOST: Kevin Rudd didn't. He maintained a silence. Do you think that you were misled about the terms under which the interview was going to be done?
PM: Well I've explained to you, Sabra, the terms that were put to me - that it was going to be an interview about the Government's progress since 2007, and of course outlooks for the future. And that's what I'm particularly focused on - the outlooks of the Government for the nation's future.
We're in a time of challenge - economic challenge and economic change - and that's my focus.
HOST: We'll get to that in just a moment.
The episode last night revealed that staff in your office had been working on a prime ministerial acceptance speech two weeks before the leadership change happened. That's pretty damaging. Did you know that speech was being written?
PM: Sabra, I'm happy to answer that question and I will. But I do want to say this: This is all focused on the past and that is not where my focus is.
People are reading today about job losses. They're looking at change in our economy. They're thinking about what we need to do have strength and prosperity in the future. That's where my focus is as Prime Minister.
But in answer to your question let me make two very simple points - I did not direct staff in my office to prepare a speech for me as Prime Minister. I wouldn't have seen the need for it.
I decided to challenge Kevin Rudd and to ask him for a ballot in the Labor Party on the day I asked him for that ballot-
HOST: -But did you know-
PM: -And no question- no question, no television program, nothing will ever change the facts that I made up my mind to ask Kevin Rudd for a ballot within the Labor Party for the Labor Party leadership on the day I walked into his office.
HOST: But did you know about this speech being written? You may not have asked for it but did you know that it was being written?
PM: Well I didn't direct it. And this was a tense few days for me and the Government. So I can't specifically say to you when I came to know about the speech. It could have been on the Wednesday night, it could have been before.
But the point here is I didn't direct the speech and the decision I made about seeking the Labor leadership was made on the day that I walked into Kevin Rudd's office and discussed with him having a ballot for the leadership.
HOST: The US Secretary of State Hillary Clinton knew about a possible leadership change two weeks before it happened. Did she know more than you?
PM: Well that's asserted in the program and the program directors will need to put forward the evidence of that.
HOST: The leadership question though is pre-eminent given people are asking these questions. Tony Abbott is now three points ahead of you as preferred prime minister. He's turned that rating around. Aren't people right to be talking about the leadership?
PM: Sabra, the economy is pre-eminent and the opportunity for working people to have a job today or to start a small business today, to provide for their families and get help with cost of living pressures and to know that we are doing today what we need to do to build an economy where they will have opportunity in the future.
What's pre-eminent is managing the economy in the interests of working people.
HOST: But you don't seem to be getting any credit from voters or the public in managing the economy. They're not rewarding you in the opinion polls for doing a good job.
PM: The reward for building a new economy is in job numbers. The reward for managing the economy properly today is that we see low unemployment even as we see stresses and strains in areas like manufacturing and tourism.
The reward for running the economy right is that we can say to ourselves as a nation that we are giving working people opportunity.
And all people have to do to get a sense of what that means is to cast their eyes overseas. They see riots in Europe as Greece passes its austerity package. They see people unemployed in the United States and across Europe - millions of them.
Here of course Alcoa workers and a number of others face challenges. But overall our economy is strong, offering people the benefit of jobs.
HOST: Do you believe the banks now, that they have funding pressures? The ANZ has announced now that it's cutting a thousand jobs. The banks have- various banks have announced staff cuts. That seems to underline their message about rising costs.
PM: I think what the banks need to be focused on is the deal for their consumers.
We've created a competitive market where people can shop around for their mortgages and their banking products.
That's a world away from what the past used to be when people would put on a suit and go to the bank manager and hope that the bank manager would do something for them. Now banking customers have power in their hands and they can say to their bank manager or the person at the counter 'If I don't get the deal I want I'm going down the road'.
HOST: What about the workers though? A thousand workers are losing their jobs at the ANZ bank. Other banks are cutting staff as well. You don't believe them on their claims that their costs are too high and these are the sorts of things they have to do to cut costs?
PM: Well I would say that banks need to take responsibility for their own decisions and the ANZ Bank needs to take responsibility for its decisions. It's determined to put interest rates up and to cut staff, so in my view something that consumers have got a right to be pretty angry about.
And of course for those people who are now at risk of losing their jobs, they too will be very upset.
It's for the ANZ to explain why it is doing that.
HOST: Have you sought assurances from the banks that they're not offshoring these jobs?
PM: Well, to all of the banks we have been very clear that they have benefited from government support during some dark days during the global financial crisis.
Now that was appropriate. We needed to make sure that our banking system stayed strong during those days.
In these days I believe banks do have a responsibility to look to their customers, to look to their employees and to do the right thing by both.
HOST: So shareholders shouldn't be their first priority?
PM: Well shareholders have got a right to get a return on their investment. Our banks are very profitable, Sabra.
HOST You just mentioned the global financial crisis. If the banks came cap in hand to you now and said 'We need help again' would you be prepared to give them help?
PM: Well they're not going to Sabra so I'm not going to answer that hypothetical question. What we know is-
HOST: - You gave the banks a hand in 2008.
PM: Well let's deal with the facts in our economy and the facts in our economy are we've got a strong banking system; we've got low public debt; we've got low unemployment; we've got economic growth. Our economy is the envy of the world.
Now our economy is also in a time of change. And I know people hear us say that - the envy of the world - and then they see ANZ announcing job losses or Alcoa under pressure. What's driving that is a structural change in our economy - high Aussie dollar driving change.
But this is also an era of opportunities - opportunities for higher skilled jobs. What we know about the workforce of the future is we'll need two and a half times as many people in skilled jobs as unskilled jobs.
Or put another way, for every unskilled job that's created in the future, two and a half skilled jobs will be created. We're getting ready for that.
Our future will be one of better technology, we're getting ready for that with the NBN. Our future will be one of clean energy, we're getting ready for that with carbon pricing.
HOST: Sleep City has also announced that it's going into voluntary administration, putting 400 jobs at risk. Earlier this week Kell and Rigby, construction company, said 500 jobs are in danger. You've got trouble at Alcoa, a thousand jobs at the ANZ Bank.
This is not just jobs being lost in manufacturing. It's spread to retail, the financial services and construction. Is the economy really as healthy as you and Wayne Swan say it is?
PM: The economy's fundamentals are strong but many sectors of our economy are undergoing change. A lot of that change is driven by the strong Australian dollar. Some of that change is driven by industries getting ready themselves for the future and being under change.
So when we look at retail, we've got pressure there. Obviously when we look at retail, some dynamics in the retailing sector are changing - online retailing, different consumer expectations about how they're going to go and buy their goods. And so that is driving changes in retail.
There are changes in banking but we do know that the financial services sector overall will be strong in Australia and will employ more Australians.
Manufacturing is showing the stresses of the high Aussie dollar.
So this is a time of significant structural change in our economy.
Now you can take your hands off and say 'Well let all of that happen and who wins, wins and who loses, loses'.
My point of view is we look at that change and say 'Let's bend it to our purposes. Let's make sure that it serves the interests of working Australians so that they know that they can get a job and have a good job'.
It won't always be the same job. There's not going to be jobs for life in the new economy. But people will have the skills and capacities they need to get jobs in this time of change.
HOST: Prime Minister thanks for your time this morning.
PM: Thanks Sabra.