HOST: The Prime Minister is in Canberra and has been out selling the budget since dawn. Prime Minister you've had a massive day today, are you as sick of the word "surplus" as we are?
PM: No I'm not. I'm never going to get sick of the word "surplus".
HOST: Now Prime Minister it's not all about surplus though is it. You have spent some money. The average family is going to get some cash handouts. Some people are saying that's a bribe, but it's only a bribe if it works. Do you think people will change their vote over this?
PM: Hughesy, there is good news in the budget for people with families, people with kids. Particularly the Schoolkids Bonus, which we've been dealing with in Parliament today and believe it or not, the Opposition voted against it. So we want to get through to people before 30 June the first of their Schoolkids Bonus.
So around $410 if you have a child in primary school, $820 if you have got a child in high school and then it's going to become a regular feature of the system and you will get some in January and some in July each year to help you with those school costs, you know, the uniforms, the excursions, the school shoes, on and on the list goes. So we think that is some good news for families.
HOST: Could you put a clause in there that they only get the money if they vote for you?
PM: No Hughesy, we couldn't. That wouldn't be the right thing to do but I reckon it's the right thing to do to help look after some kids. You should try politics one of these days, Hughesy, you're wasted.
HOST: That's scary for all of us. Prime Minister, you have made some major cuts to foreign aid and to defence. Did you do that because you thought that would have the least impact on voters?
PM: Well I'm going to disagree with you about the word "cut", Todd. Foreign aid each and every year of this budget is going to go up. So have a look at the budget figures and you will see more and more and more money spent each year on foreign aid.
We are currently the 10th most generous nation in the OECD and we are going to end up the 6th most generous nation. So Australia I think can hold its head high.
We're doing great work around the world in, you know, child nutrition, in disaster relief. Right around the world we're making a difference.
We delayed by one year reaching our Millennium Development Goals. But more and more money is going into foreign aid under this budget and in Defence we made clear that there has been a whole range of changes in capability acquisition - when Joint Strike Fighters, for example, are going to become available and so that has led to some movement in our defence budget.
Yes, Defence had to make some contributions to savings in the budget too. But more is going on in Defence with capability acquisition than simply a budget question. There is a whole set of issues there we're working through.
HOST: So Prime Minister, why make savings in those two specific areas?
PM: Well we've made savings in those two areas but we've made savings right around the budget. So, there have been some additional imposts for higher income earners. We thought that's the right thing to do to be able to direct more money to people on low and middle incomes. And we have decided to not proceed with a company tax cut we wanted to give.
We're simply not going to get it through the Parliament because Mr Abbott is going to say no, you know, as usual. And the Greens were opposed to it in part as well. So some of that money has been redirected to spread the benefits of the boom to families through additional family payments.
And that's really to respond to the fact, you know, that our economy is strong, we're the envy of the world. You know, a lot of nations are in very difficult economic circumstances whereas here we have got a strong economy, we've got relatively low unemployment.
But many families, even in those circumstances are saying it's still pretty hard for me and I'm not seeing much benefit out of this resources boom. And so we want to make sure the benefits get spread fairly.
HOST: Now Prime Minister the budget is not the only thing that's been taking up your time over the last few weeks. After the Craig Thomson and Peter Slipper affairs have you just called everyone into your office and gone, "Ok guys, now's the time. Is there anything else I need to know about? Any more skeletons in the closet? I won't be angry but I want to know."
PM: No, I haven't used those words. I'm not sure I would have added the words, "I won't be angry" at the end of that sentence either.
HOST: Prime Minister obviously Mr Thomson and Mr Slipper have a right to the presumption of innocence but I will ask you a slightly different question about them. Your dog Reuben, if you were going away and you had to give your dog to one of them to look after for the weekend, which one would you trust?
PM: Well thank you for that question. Maybe I better go home and vox pop Reuben the dog and I'll come back to you with the answer next time I'm on the show. It's a bit like that, the octopus they use during the election campaigns, I could get two pictures and see which one walks towards.
HOST: That octopus is dead right now.
HOST: That's a cheerful note to end on I think Dave, well done, that's great.
HOST: Well Prime Minister, we still know you've got lots more to do tonight. So we'll let you go and try to fit some sleep in there somewhere. But thank you so much for your time tonight.
PM: Thank you.