ABC AM
HOST: Prime Minister good morning and welcome to the ABC.
PM: Thank you Sabra.HOST: Some newspaper headlines say this morning that this budget is Labor's last stand and it's the Prime Minister's swansong. They're not glowing reviews.PM: Well I don't worry about the newspaper headlines.
What I worry about is making a budget, the budget choices that are right for the nation, and what we've done in this budget is we have charted a path to surplus.
We have focused on jobs and growth - that's what we do as a Labor Government - and we are also making room for the wise investments our country needs for the future: making sure every child goes to a great school and making sure we better support people with disabilities because our nation has let them down for far too long.HOST: Even without the revenue writedown, you'd still be recording a deficit this year, not a surplus as promised.PM: The difference there is the movement of some spectrum sale, so it's not an increase in expenditure, it's the movement of some spectrum.
But Sabra, let's be clear, the big difference here has been the less tax money coming into the Government than what was expected.Over five years that is more than $60 billion less. In the past we've seen $170 billion of tax money come out of the Government's budget.
That's about the global financial crisis and its overhang. It's about the strong Australian dollar - indeed it's about a set of events that haven't happened before in our economy.HOST: But still it was something that you said: failure was not an option on the surplus question.PM: And we relied on the best possible advice - the same people who advised prime minister Howard and governments before that.
But Sabra, if you're going to chide us and chide the forecasters for not getting it right, then let's be clear, you're chiding us for not foreseeing something that's never happened before in Australia's economic history.HOST: Okay but you've just pointed all of that out then, so how can you be so confident then in your forward forecasts of a surplus in 2016-17?PM: Well understanding what has happened in this period, where growth in nominal GDP has been less than growth in real GDP - that's the technical explanation but it's really about the terms of trade coming off - but the dollar staying so strong, hitting into company profits, and therefore hitting into government revenues.We now understand that, we also can understand when those pressure are going to change and we're going to return to a more normal revenue environment. So Treasury, as it has guided governments in the past, is guiding us.HOST: And it's still guiding you in those papers. It says that commodity prices are still going to be a bit fickle. It even says that the path ahead is not going to be seamless.PM: Well absolutely, and the forecasts all deal with those questions, so that's not something that's going to change the forecasts. The forecasts have been based understanding those factors.And what does that mean? Not seamless? Well it means we're moving from the peak of the investment phase in the mining boom, which employs more people, going to the production phase, which employs less people.We therefore need other sections of the economy to step up and employ people and push growth, and that movement won't be seamless, which is why the budget, for example, has a slight drift up in the unemployment rate.HOST: But you're still relying on that forecast for commodity prices, so it's completely fickle.PM: Well those forecasts have been made understanding that transition in the economy.
Sabra, you seem to be creating an impression that we've got economic commentary here and forecasts over here. The forecasts have been done based on that economic commentary.We understand that transition isn't going to be seamless. We're also relying on the best possible forecasts of the terms of trade. Anyone sitting in this chair - Prime Minister Howard sitting in this chair - would be getting the same advice.The important thing is what do you do having received that information? Well in this budget we've made a set of important choices, wise spending for the future.
We are prepared to be judged by that. I want our nation to have better schools and every child to have a better education. I want us to support people with disabilities. We've made the choices to do that and people can judge that.HOST: All the major business groups have given this the thumbs down. They say that the document's confusing, it does nothing for confidence.PM: Well I don't accept that analysis. The budget documents are the budget documents, they're formatted as the budget has been in the past. What people have seen in these budget documents is $43 billion of savings.What that means is that we've had a very careful, very methodical, very thorough process.
And why have we done that? Because we are a Labor government, and even in these unusual economic times, we are always going to put jobs and growth first, and we are always going to make room for the wise investments of the future.HOST: But business helps you make that growth, they make this nation prosperous. They're saying that this budget does absolutely nothing for them.PM: Well do they want to see better schools, yes or no? I've met a lot of leading business identities who have said to me, please, please, please do the reforms that David Gonski outlined for the nation.
Well this budget delivers it, not only for the next four years, but shows how we are going to fund it for the next decade.I've met lots of business people who have said to me, we do need to price carbon, we want an internationally linked system. I don't want to pay more in Australia than a counterpart overseas. I want the international price.Well this budget shows that they will get the international price. I've met lots of business people who say I will be at a competitive disadvantage if my business doesn't have the NBN.
Well this budget continues the roll-out of the NBN. And I've met lots of business people who say a big cost in my budget is the way in which people get held up coming to work. It's lost productivity, it's lost time.Well the historic investments in rail, in public transport in this budget, are right in there about how people move around our big cities.HOST: But infrastructure spending, that's $24 million over six years. Most of it is outside the forward estimates. That's being tricky.PM: No, of course not Sabra.
That is because we are moving from the Nation Building One program, which is already in the budget, roads under construction now, to heralding the Nation Building Two program, which will be the new projects that we're giving a tick to.HOST: The Newstart allowance for the unemployed, you've done nothing there to boost the Newstart allowance despite the fact that non-government agencies, business groups, have all been calling for it.If you can't deliver that in times where we've got a minerals resource boom, are you ever going to be able to deliver it?PM: Well Sabra, we've just been talking about where we are in the minerals boom, moving into the production phase.
But directly on the Newstart question, I value work. I think it is important that kids grow up in a household where someone works.Now I understand that it's incredibly difficult for someone who's raising a child by themselves, and when a child is young you want to be there and be available; it'd be very hard for people to work.
When a child is school age though, I am absolutely persuaded by the research that says it is better for a child to grow up in a household where someone works.And so what we have done in this budget is said, if you work, then you will be better rewarded for that work. I think that's the right change.HOST: The baby bonus. Why get rid of it now? If it was bad policy, why didn't you get rid of it when you introduced the paid parental leave scheme?PM: Well we have introduced paid parental leave-HOST: But why didn't you do this-PM: Well we've made the decision now because we want that money to go into our school funding reform.
We've made a values judgement and I'm happy to be judged by it myself.
I've made a values judgement that that money would be better spent making sure that that child, that new baby - indeed every Australian child - gets a world class education.
That's not just about every child reaching their full potential, it's about the future of our economy.We cannot have a strong economy in the future if we fall behind the standards of the world in school education.HOST: The cost of processing asylum seekers has now blown out by $3.2 billion. You've now signalled a comprehensive review of the refugee determination process. What does that all mean?PM: Well that means we do want to see our refugee status determination process work in line with international norms for acceptance rates of refugees. This was one of the recommendations of the expert panel guiding government.We've said we'd implement every recommendation. We of course have been stopped by the negativity of the Opposition from implementing some. They wanted to vote for more boats, but-HOST: You want to reject more would-be refugees?PM: Well there's a question here, which is: if acceptance rates around the world are different to Australian acceptance rates, why is that so? We want the refugee status determination review to address that question.HOST: When you became Prime Minister, you promised to fix three things. The mining tax, carbon pricing and asylum seekers.
The mining tax will only collect $200 million this year, despite original forecasts of $3 billion, the carbon price now has been revised down to $12.10 from 2015, half what companies are paying now, and the asylum seekers, well we've just touched on that.None of those things seem to be fixed, Prime Minister.PM: Well I'm happy to go through those, but when I became Prime Minister I spoke about my values.
I spoke about valuing hard work, I spoke about the transformation that education brings to lives, including my own, I talked about the way in which government needs to provide services and supports to people that only government can provide.
And here we are in this budget guided by those values, putting jobs first, putting schoolchildren first, and making sure that we support Australians with disability.On those three things, there is a Minerals Resource Rent Tax, it's a profit based tax, it goes up and down depending on profits, that's what it's designed to do.
On carbon pricing, again, it's the most vicious and hysterical campaign in Australia's history - we got this done.
And on asylum seekers, yes it's hard. We are guided by the best of expert advice and we run into the negativity of the Opposition that wants to see more boats.HOST: Prime Minister, you're in the polls, you're at the election in four months. If this doesn't turn voters around, what will?PM: This is about the nation's future. Voters will judge the Government and they'll choose the future on 14 September.When people walk into polling places on 14 September, I think what will be on their minds is, what next for my family?
They'll have a choice between two futures when they ask what next for their family: the clear plan I've laid out for the nation, a responsible path to surplus, a focus on jobs and growth, better education for children, a fairer nation; or the cutting to the bone that the Opposition is advocating, taking services away, cuts to education, cuts to health, cuts to jobs and people paying more tax.They'll make their choice on 14 September.HOST: Prime Minister, thanks for your time.PM: Thanks Sabra.