Canberra
JOSH FUNDER, EVENT HOST: We now have the opportunity for questions and answers from the floor. So put your hand up and we will come to you in turn. Are there questions?
I will start with one while we are waiting and it is on the automatic stabilisers that you highlighted at the start of the speech.
How will they function given the revised estimates for revenue in the economy and on the way down and on the way up?
PM: We expect the automatic stabilisers to perform their traditional function but we're in a different context.
So what we had reasonably expected in revenue won't be there and so the journey from where we are now to a surplus budget is obviously a different one than one that was predicted at the time of the last budget or at the time of MYEFO.
It does put on us a real discipline about ensuring new spends are matched with saves.
That is a very tough discipline, let me assure you, as we work our way through the budget and we have ministers who have good ideas and good plans and have to actually jettison some of the things that they currently do in their portfolio area or that are done across government in order to back in those new spending plans.
But that is the discipline that we intend to accept for this budget. What of course we won't do is we won't artificially chase these revenue downgrades in a way that jeopardises jobs and growth.
QUESTION: I just have a question about productivity. It was a big word in the 2007 election. How are you trying to boost productivity in the coming budget, balancing that with the cuts that you are planning to make?
PM: That is a very good question and there have been some emerging good signs on productivity growth.
Now necessarily, this is a statistic you want to see for the long term so you don't want to make too much of some of the most recent evidence, you want to see the trend continuing, but there has been recently some good news on productivity growth.
And the elements that go into productivity growth are ones we are very committed to and we will continue to be committed to.
It includes our agenda for human capital, what we are doing in schools particularly, what we are doing in early childhood education, more apprenticeships than ever before and our continued historically high investments in universities.
It includes what we're doing with traditional infrastructure, the investments we have made in roads and rail and ports and for the first time ever, into public transport infrastructure.
It includes the investment we are making in the National Broadband Network and that is continuing to roll out around the country.
It also includes the focus on innovation and jobs that you saw in our Australian plan for jobs that Minister Combet and I announced a few short months ago.
And it includes our seamless national economy work. We are still an economy that is too fettered by differences between regulation in different parts of the country and we have tried to make a difference to that.
It is work for the patient, let me assure you, but we have through COAG managed to make differences on that seamless national economy agenda.
So the underlying drivers of productivity are ones that we will continue to support and nourish because we understand their long term importance for their long term importance for the economy.
So a bit like the decision that I have outlined today on improving school education, we wouldn't jeopardise a decision like that because it will make us stronger and wealthier in the future.
So that is why it is so important to us and even with what you have seen in terms of the tax money reduction coming to the Government, the revenue downgrades that I have talked about today, we will continue to fund those important priorities, particularly the work in schools.
QUESTION: Thank you Prime Minister, for your really clear discussion. I was concerned about your comment that these savings or contributions will be shared right across the community.
Will you clarify whether that applies to people who are already financially disadvantaged?
PM: I can't announce all of the budget here today. Wayne wouldn't forgive me so we need to do that on budget night and there is still some work to do.
What I can assure you is that we will take a Labor approach to the burden-sharing that I have described in the speech today.
A Labor approach which understands that people come with different capacities to the task, but also a Labor approach that understands that if we look right across our society and ask everyone to make some contribution then it lightens the load for everyone.
QUESTION: I just wanted to ask you how we could address the difference between facts and perception. I know you're focused on the facts.
There seems to be so much misperception and I just hope that Australians realise that there is so much misperception from so many factors in our society and I wondered how we might deal with that given the great work that you've done.
PM: I think it is important, even though it is complex, to try and get out the details of what I have described here today for you.
If you step back from the hurly-burly of day-to-day reporting, I actually think Australians do recognise that we came out of the global financial crisis differently to the rest of the world.
I think they see enough reporting from Europe, indeed from the US, to know that we came out differently. We need to get that fact across.
Sometimes people will say ‘Well we came out differently because we're an economy with resources,' but even in this speech I have explained to you the differential position of Canada.
Our economy's grown by 13 per cent since 2007, an economy like Canada's which is also resource-rich has grown by 5 per cent.
So you can't just say "Well, it is a world where resource-rich economies necessarily did well." We did so much better than a comparable economy like Canada's.
I think it needs to be very clearly understood that in framing this budget, we are talking about a problem posed because the amount of tax money that government was reasonably predicted to get is less.
That is why the analogy with John and his income - because I think it is easier for people to get hold of - if you reasonably planned for an income increase of 5 per cent each year and then were told very late it wouldn't happen, what would you do?
How would you deal with that as an individual?
I do think whilst there is a limit to analogies, it does help people understand the nature of the problem.
Spending is controlled, and for those who say this is all about spending, and I do note for example, the Shadow Treasurer has been out today saying this is all about spending.
Well, one, he would need to explain how he dismisses the big revenue downgrades chart that you saw, they are facts.
Two, if it is so easy to resolve this through spending, then presumably he and the Leader of the Opposition will have no difficulty on Thursday night of budget week identifying every spending program that they would stop to resolve all of this through spending reductions.
If that is truly what they believe it is about, then it is quite a simple matter for them to nominate how much is coming out of health, how much is coming out of education, how much is coming out of defence, how much is coming out of the pension, and the list goes on and publish it either before the budget or on budget reply night.
I think if they do not do that, people will be entitled to conclude that it is a little bit more complicated than the simple sloganeering has led people to believe.
QUESTION: Thank you Prime Minister, Steve Bloom from the Australian Solar Energy Council.
More of a comment, I am glad it is you not me making the decisions over the budget. They are very tough decisions.
One thing that is more of a statement than a comment that could be taken on by Government.
Solar energy internationally has grown 14 per cent over the last few years since 2008.
In the US it has more employees than the coal industry in total, and the same in Australia, so I suggest we could keep on exporting energy and not just coal energy but renewable energy.
PM: I certainly accept that comment and with the work that we are doing transforming our economy through carbon pricing and the renewable energy target, we are seeing a big growth in the use of renewable energy and we are seeing a reduction as we wanted to see of the carbon pollution in our atmosphere.
QUESTION: Given the challenges you have outlined in our speech today, can the Government still forecast a surplus even though a small one in the years 2015-16. And just a second part to my question, you said today in your speech that there might be other measures on the table when you look at budget savings that previously weren't. Does this mean that you are looking at possible changes to GST or perhaps even changes surrounding the level of the baby bonus?
PM: This is, for those in the audience who aren't as familiar with it as I am, this is the budget guessing game we play with the media. We are all very experienced participants in it. For the details of the budget, you will obviously have to see those on budget night.
Specifically on the GST, let's be clear about that, no change in the GST is being contemplated. We will not change the GST. The GST is a revenue flow which goes to state governments.
What I have outlined here today for you is changes in the amount of tax money that was expected to go to the Federal Government and the Federal Government budget problem that that therefore poses.
GST, absolutely no change and that is about money going into state government budgets, not in our budget.
On other measures, any measure, I know how this guessing game works and if I start with one, then you'll have tomorrow's list of 10 and tomorrow's list of 10 and tomorrow's list of 10 and I have joked in earlier budget seasons that by Sunday before budget, you will be asking me to rule out the sale of the Sydney Harbour Bridge and on and on it will go.
I think the best thing is if we don't play the game and we do deal with the facts and the facts are the ones I have outlined for you today.
QUESTION: My question is the bad news that we're potentially going to be experiencing with the upcoming budget. Is that also a situation that we can anticipate will be shared more broadly across Australia given the two-speed economy, the patch work economy? So is this something we need to brace ourselves for as a community, more broadly than just one tier of government?
PM: I think for people in their day-to-day experience, how do they experience the economy, how do they experience the government's budget? Well, the most important thing is that people have got jobs and got the opportunity to work.
That is the most important for every family, for every individual that they can get that all important work opportunity and that they can look over time to getting a better work opportunity to creating their own business if that is what they want to do.
The way in which they are experiencing the real economy matters to them and when we look there, we have got, by the standards of the world, low unemployment rates, we have got economic growth, we have got this conundrum that matters for the Federal Government's budget between real GDP and nominal GDP but we have got economic growth and so much of the rest of the world is not seeing economic growth.
This is an economy still with plenty of opportunities for people to share. It is an economy that is feeling differential pressures. It is much harder if you're in a trade exposed sector and the strong dollar is costing you a lot than in some other parts of the economy.
We have lived with those pressures for a while and our responses ever included the plan for Australian jobs that we put out which is a direct response to these patch work pressures arising from the high Australian dollar.
People then look to government to make the right decisions so that they can continue to see jobs and growth and as we put this budget together, that will be upper most in our minds, jobs and economic growth.
People look to government to make sure that the things they want for their families will be there for the long term, no important desire for parents than making sure their children get to go to a great school and consequently have the foundation stone of a life full of opportunity and for so many nothing more important than making sure that a family member with a disability is cared for properly or if the next family member, the next child born into your family, is born with a profound disability that they will get the supports for a decent life.
We will deliberately make the space for those things in this budget because of how highly prized they are by the community and rightly so.
In terms of education, that is not just about making sure that children can reach their full potential and the sense of emotional connection we feel with that. It is beyond that sense of emotional connection.
It is also a sense of economic connection because if we aren't educating our children well today then we cannot be that strong economy tomorrow which is why that is so precious to us as well.
My sense would be people should absorb the news about where the forecasts for tax money coming into the government take us.
They should absorb that news, but they should also absorb the full suite of economic data available to people: jobs continuing to be created, economic growth continuing to be there, us making the wise investments to set us up for a stronger and a smarter and a fairer future, us making responsible savings and asking people to share in the task of putting those savings together.