HOST: Let's see if we can find out some more answers to those questions, as I welcome to the program the Prime Minister, Julia Gillard. Good morning.
PM: Good morning Leon.
HOST: How very nice to have you on the program again.
PM: Good to be with you.
HOST: On time, as promised, is the bigger challenge actually writing a budget that delivers the surplus, or convincing Australians that it's for real?
PM: We're determined to deliver this surplus, we've been determined to make this a surplus budget and we have. And just to give you a feel of how determined we've been, in the forthcoming financial year 2012-13, since the last budget revenues into the Government have gone backwards by almost $10 billion.
So we could have said revenues have gone down by $10 billion, it's all too hard. But what we did instead was found savings so that we could still deliver a surplus. And across the four years of the budget, because you know, we publish the budget for next year and then the three years afterwards, across those four years we are saving $34 billion and that comes on top of $100 billion of savings that the Government's already delivered.
HOST: With that low tax revenue that you've just identified, which is of course a result of the Global Financial Crisis more than any other single factor, but with that low revenue along with the promised tax cuts for families, the cash payments for low income earners and a budget surplus at the same time, it seems to be something of a magic pudding. Where's the catch? Who's actually paying for the surplus?
PM: Well, it's the result of just working it through, doing the savings, $34 billion of them, and then making the choices we need to, to help families who are under a lot of pressure. I think one of the things in our economy now, you've just pointed to the global uncertainty and the Global Financial Crisis, that's certainly still having an impact and certainly still having an impact on revenues.
Another thing that's having an impact on revenues is we've got this big resources boom under way, that's fantastic, it means that there's a lot, indeed $450 billion of investment coming into the resources sector. But when mining's in the investment stage, then it's not paying a lot of company tax. So money's going in to building the new mines, but they're not actually mining and making profits yet.
So that's another thing that sort of has an impact on revenues. And then, you know, overall the economy's strong but there's this patchwork effect. Some sections of the economy are really feeling the pressure of a high Aussie dollar. So that all adds up to an economy where we do need the surplus, that's the right economic judgement, but around the nation many families are finding it pretty tough to make ends meet, and that's why we've got the package to spread the benefits of the boom and to help people with the costs of getting kids to school, the Schoolkids' Bonus.
Leon, there's one saving in here that people would have seen last night, and I want to be clear about. We were going to provide a company tax cut using the proceeds of the Minerals Resource Rent Tax, it's clear that that was not going to get through the Parliament, the Coalition led by Mr Abbott is opposed to it, the Greens are opposed to it, so we're using that money to spread to families so that they've got some relief, and we'll keep working on a company tax cut with the business community through a working group process that we've set up.
HOST: Alright. When you say you're going to keep working on a company tax cut, it's been reported as having been dropped altogether but is it really more as if it's been postponed?
PM: I'm very determined to cut company tax. I wanted to do it by giving people the benefits flowing from the Minerals Resource Rent Tax, and I haven't been able to do that because of the negativity in this Parliament. So I'm looking to work on it another way, which is through a process we've already got in train from the tax forum we set up last year.
HOST: Is there a distinction to be made between breaking a promise and being prevented from keeping a promise by a hostile Parliament?
PM: If I can't get the legislation through I can't do it, and I wasn't going to let the negativity of Mr Abbott and the Coalition get in the way of me being able to spread to the Australian community the benefits of the resources boom. I think we should all share in those benefits so we found a different way to do it.
HOST: The idea of spreading the benefits of the boom, the recurring theme during the Treasurer's speech last night, certainly sounds appealing but I guess the detail is a little bit complicated. Just exactly who will be better off and by how much?
PM: Okay, I can certainly talk you through that. First, before 30 June this year, families with school children, so primary school, secondary school, who get Family Tax Benefit A, will see a Schoolkids' Bonus. So they'll get an amount of money, around $410 for a primary school student, $820 for a secondary school student, and that will become an ongoing feature of the system.
It'll be paid half in January and half in July each year, so back to school and then all the stuff you need for the second half of the school year. So families will benefit from that money. Then families will also see additional family payments from 1 July 2013. If you've got two children, that's worth $600. So they're the benefits that people should expect to flow. In addition, we already had coming through the pipeline some increases in family payments and pensions, and a tax reduction from 1 July for people who earn less than $80,000 a year.
HOST: Yes, I had a phone caller already call up and ask what do we get as old-age pensioners. I haven't been able to see anything in the budget for old-age pensioners, what do old-age pensioners get out of this budget?
PM: Old-age pensioners had the benefits, and continue to have the benefits of the historic rise we put into the rate of the pension. So the biggest adjustment to the pension that the nation's seen.
We've already delivered and then that gets indexed and continues to build, and then between now and 30 June people will see some money upfront to help them with carbon pricing. But for old-age pensioners the amount of money they will receive will be more than what they need to deal with the average impact of carbon pricing, which is kind of a long way of saying Leon, that they'll come out in front.
HOST: Are you and your government playing politics with Barry O'Farrell over funding for the Pacific Highway?
PM: Well I don't want to, I just want to get it done.
HOST: Because the budget has provided for around about $3.5 billion as a co-contribution amounting to 50 percent of the total funding, but the NSW Government is insisting the Commonwealth should pay more. If you can't come to an agreement what happens to the money?
PM: Well a deal on these roads is always a 50/50 deal. That's what the Minister for Transport has made clear and that's what the NSW Government should step up to.
HOST: You've been criticised for a lack of funding for other roads generally across NSW, is this one of the prices we have to pay in order to balance the budget?
PM: No, we are huge investors in infrastructure. We are continuing to deliver a $36 billion nation-building plan, and as a Government we've provided more into Sydney and more into New South Wales than was provided over the whole life of the Howard Government. So we're going to continue to be supporting infrastructure, supporting infrastructure in New South Wales. And I know how many problems there are there.
HOST: Absolutely. And of course one of the, or two of the items that might easily get overlooked in all of the discussion about a surplus and other features of the budget are two significant initiatives - the National Disability Insurance Scheme and also aged care reform. These are actually very large initiatives aren't they?
PM: Yes they are, and I thank you for asking me about them because I think, you know, snapshot out of last night, people see the surplus and they want to know what that's about, and of course that's about giving us a buffer for the future and making sure that the Reserve Bank has got the maximum room to move on interest rates should it choose to do so, and then people have looked about what's in it for families, so that's understandable.
But there's another big bit of the budget and you've just gone to it, which are big reforms that will make a difference for our nation's long-term future, a National Disability Insurance Scheme because we don't do as well as we should now for Australians with profound disabilities, people who need a lifetime of care, and we've put $1 billion into the budget to launch sites for the National Disability Insurance Scheme on 1 July next year. Now that's going to be sites where we launch, where we learn from, so that we can inform the rollout of what is a big, big reform and you need to get it right.
And then also in this budget is an aged care package which is all aimed at helping people stay in their homes for longer. And thirdly, there's a dental package too. We've got around 400,000 Australians on dental waiting lists and we're going to have a blitz to try and get through those waiting lists and to help people out.
HOST: As I understand it, that works through the existing state public dental systems, is that the way it works?
PM: That's right. That's right we'll be working with states to get that done, to get a blitz in place and we'll - there's also some measures in what is a package of a bit more than half a billion dollars to expand dental workforce because part of the problem, why are there waiting lists, well partly it's money and so we're going to put some more money in. Partly it's, you know, people who can do the work, who've got the skills to do the work.
HOST: And of course dental health could really be another area that should be considered for vast structural reform, shouldn't it, along the lines of disability and aged care. Dental health is something that's been under-resourced for far too long.
PM: I agree with that, and we want to keep working on it. We currently have a scheme called the Chronic Disease Dental Scheme, which this Government inherited, which is costing a lot of money, a lot more money than was originally thought when it was first created by the former government and isn't really meeting peoples' needs. We are trying to work on abolishing that scheme and using what is a large amount of money for a better provision of dental care. So we'll keep working on that, but as we do that work we're going to get stuck into the blitz.
HOST: You know, I know we're really pressed for time today but finally, this Government has really staked its reputation on achieving a surplus in this budget, but is it possible that we've rushed to a surplus too quickly, and the budget could exert a contractionary force on the economy as a result?
PM: No, no, I know some people think, you know, some people have raised that and maybe some people are worried about it, but with the budget coming to surplus we will still have an economy that is returning to trend growth, we'll have an economy that is growing, and that's why it is the right thing to return the budget to surplus. So we've got an economy that will be growing at more than 3 percent, now that means that we're in a very different position from nations around the world. You know, look at the US, look at Europe, we've got an economy that will be growing and so getting a surplus budget in a growing economy is the right thing to do.
HOST: Yes I'm fond of reminding people sometimes we forget how well off we are.
PM: I think, you know, when you do look around the world and you see some of the things in Europe, you know unemployment rates of more than 10 percent, more than 15 percent, young people who are never going to get that first job and never get a start in life, when you look over at our friends in the US struggling with an unemployment of more than 8 percent, it is pretty sobering, and we've all worked together hard to come out of the Global Financial Crisis as strong as we have.
Everybody's played their part. We did what we needed to do, through providing economic stimulus and supporting jobs, but so did lots of employers around the country and lots of trade unions worked well and worked cooperatively to save jobs. So I really think we should be very proud of what we've achieved together, and now's the time to build on it, and that's what the surplus budget's about.
HOST: And of course today must be the busiest day in your diary, so I'd better let you go. Thank you very much for your time today.
PM: Thanks Leon.