SPEERS:
Prime Minister thanks for your time. You spoke a lot in the build up to this Budget about the need to produce a strong surplus, to keep downward pressure on interest rates, why then the decision to spend almost $22 billion dollars on tax cuts?
PRIME MINISTER:
We have a strong surplus. We have a surplus of 1% of GDP, and roughly equivalent surpluses in the out- years and on top of that because we are going to re-invest the income from the Future Fund back into that fund and not bring it into the Budget, we are actually tightening fiscal policy. There's no way that this Budget is going to exert upward pressure on interest rates. I mean we would not have given the tax cuts if we hadn't had such a strong surplus after allowing for those tax cuts and this Budget is right in line with the philosophy which I had explained over the years and the Treasurer's explained; you provide necessary expenditure for health, education, Defence and the like, you have a strong surplus and if you have anything left over, you return it to the people who own it and that is the Australian taxpayer and that is exactly what we have done. This Budget is precisely a product of the philosophy that we have brought to the management of this country over the last nine years.
SPEERS:
So you can give that guarantee that these tax cuts won't disappear in the form of interest rate rises?
PRIME MINISTER:
David what I have said is that I don't believe that the Budget will exert upward pressure on interest rates. I am not making myself a hostage to other developments of which I am unaware that could influence the level of interest rates. What I am saying, very deliberately, is that this Budget will not exert upward pressure on interest rates for the reasons that I have explained.
SPEERS:
Looking at the tax cuts, the so called Howard battlers get about $6.00 a week, yet those earning a six figure salary get $40.00 a week, is that fair?
PRIME MINISTER:
I think it's very fair because the battlers have been in previous Budgets, very strongly supported through the generosity of family tax benefits. They will get a tax cut. The important thing to remember is that people on higher incomes pay a lot more tax and whenever you cut their rate, whenever you alter the threshold, you inevitably are talking about larger dollar amounts because they are paying a lot more. People on higher incomes still end up paying a lot more tax than people on middle incomes but lets preserve a sense of perspective. There are a lot of people who you wouldn't regard as high income earners who are in high tax brackets. For example, Bill Shorten, the National Secretary of the AWU complained that he knew steel workers who stopped working overtime because their income would push them into the .47 cent tax bracket. He actually wrote this in the Australian on the 3rd May - a week ago. He said they simply refuse to work any overtime that pushed them above the limit and the limit that he was referring to was the threshold for the introduction of the .47 cent rate. So in many respects this is a Budget for Bill Shorten steel workers. It's not a Budget for the rich, but a Budget for the hard working steel workers and other people who don't regard themselves as rich. Because they work hard, they work a lot of overtime, they get pushed into a higher bracket, and that is exactly the thing that we have addressed and that is undeniably and unapologetically good for Australia. We have got to encourage people to work harder - not penalise them if they do so.
SPEERS:
Plus they get another round of tax relief next year yet those on $65,000 or less don't get any extra relief.
PRIME MINISTER:
Well the people on $65,000 - everybody benefits from the cut in the .17 cent to .15 cent rate, and the announcements that were made last year by the Treasurer have lifted the thresholds in relation to people in the middle brackets but you need to have all areas of the income tax range benefit from tax relief. You need to look after people on lower incomes which we have done but you also have to reward people in the middle and higher brackets so that they continue to have the incentive to work harder because that's the future of this country.
SPEERS:
There are some sweeping welfare changes in this Budget, particularly for the disabled and single parents, if you can just look at the single mums in particular, they're being told to get back into work once their youngest child turns six.
PRIME MINISTER:
Get back into part time work.
SPEERS:
Fifteen hours a week.
PRIME MINISTER:
Yes after their youngest child has gone to school. So let's keep a sense of perspective here. We are not talking about taking mothers away from their babies - we are not talking about that - we are talking about saying to people, it's in your interest, once your youngest child has reached the age of six and is off your hands for most of the day while they are at school, that you might do part time work - not full time work, part time work. Now I think that is a reasonable balance and it is good for them. They are going to be given effectively a whole year after this thing comes into operation, to find that part time work. They are not in any event going to lose their sole parent benefit if they're now on it, but they will be if they don't find work, they will be subject to the mutual obligation mechanisms of the unemployment benefit.
SPEERS:
What about comparing them though to stay-at-home mums, often in wealthy families, who last year were given an increase in their family tax benefit? There's no obligations on them for that money...
PRIME MINISTER:
No, but that is a recognition that through the tax system we should acknowledge the cost of raising children. I mean surely nobody is against that. I mean, do we want a tax system that says if you're single and on $100,000, you're in exactly the same position as a person who's on $100,000 a year or $60,000 with four children and a wife to support. I mean, heavens above, we don't want to a tax system that does that.
SPEERS:
But can you see the point that it's perhaps discriminating against single mums if they're being obliged to...
PRIME MINISTER:
Well that is the equivalent of saying the present system discriminates against single mums because at the age of 16 they automatically go off the sole parent benefit and onto the unemployment benefit. And yet everybody knows that when you're youngest child turns 16 he or she doesn't automatically stop costing you anything.
SPEERS:
And what about the disabled? Why quarantine those who are already in the pension?
PRIME MINISTER:
Well, because we thought that was the most practical and sensible way of dealing with the cohort or group of people where inevitably there would be arguments about whether we've been fair or unfair - I think the new system is very fair. Anybody who genuinely can't work because of a disability in the common understanding of that term, as you and I know it, won't be affected at all by these changes.
SPEERS:
But do you get a two-tiered system where two people, the same injury...
PRIME MINISTER:
Yes, you get that in a lot of situations in life. The argument being that once a person has been led to believe that a particular situation will apply to them, you shouldn't in the future alter that. Whereas if the person is told in advance, well, if you apply for a Disability Support Pension these are the rules of the game, that is fair, and that is essentially what we're doing. If you're on it, you stay there, but, as from last night, if you apply for it you go onto it as of now, but you are subject to review in the future, and in a year's time, when the new system is fully operational, you go on then when you're subject to the new rules straight away.
SPEERS:
You mentioned earlier the Future Fund which all the surpluses are going to go into. This is to pay for public sector superannuation. What about the proceeds of selling Telstra. The Treasurer said that he wanted all of those proceeds to go into this Future Fund as well. Is that your position also?
PRIME MINISTER:
Well, we've always said that the proceeds of the sale of Telstra is not something that can finance recurrent expenditure. That's the point the Treasurer was making.
SPEERS:
So, does it go into the Future Fund though?
PRIME MINISTER:
Well, you've got to do something with it, and that's a logical thing to do with it. But the problem with the understanding about the proceeds of the sale of Telstra is that too many people think that it's something that just comes into the revenue side of the Budget. It only comes in once. But some people have said to me that you've got use that to finance tax cuts, so we'll cut. But you can only finance them one year.
SPEERS:
But certainly the National Party colleagues say it should be financing infrastructure projects. Have they lost that battle now?
PRIME MINISTER:
Well, look. I'm not getting into who's battling about this, that, or the other. What I'm arguing is that you've got to manage the proceeds of the sale of Telstra in an intelligent way. I think one of the great advantages of the Future Fund is that we'll be able to invest in a whole lot of financial instruments going right across the board. But people who know a bit more about the Future Fund and what it can do, when the details of its mandate are released, it will have an independence of operation within the terms of reference of the mandate we give it, and that could cover quite a number of things.
SPEERS:
You warmly congratulated Peter Costello after he handed down the Budget last night. Was it his best Budget?
PRIME MINISTER:
Well, I think he's delivered a lot of very good Budgets. In many respects I think our best Budget was our first one because we faced an enormous challenge and we tackled it head-on. I think this is a very, very good Budget. I don't want to condemn other Budgets, but certainly there was on display last night the fruits of the Government's good economic management - a strong surplus, looking to the future, rewarding effort, tackling reform. Now, that's a very important quadrella.
SPEERS:
You did indicate that this was your sixteenth Budget, putting together the ones you've overseen as Treasurer and Prime Minister. Peter Costello is being asked whether he has an eleventh. Do you have a seventeenth?
PRIME MINISTER:
Ah David, I'm not going down any of those paths.
SPEERS:
But obviously putting together a Budget, on a day like today you'd enjoy being able to spruik the tax cuts. Is it something you look forward to doing again?
PRIME MINISTER:
David, I always enjoy explaining policy decisions that I believe in.
SPEERS:
Let me put it to you this way then Prime Minister. The Treasurer's tenth. Big question mark over whether he will do an eleventh. The combination that you two have as Prime Minister and Treasurer in putting together these Budgets - can Australian people expect that to continue?
PRIME MINISTER:
David, I know where you're trying to go. I cannot assist you.
SPEERS:
Alright. Prime Minister, thanks for your time.
PRIME MINISTER:
Thank you
[Ends]