NEIL MITCHELL:
Prime Minister, good morning.
PRIME MINISTER:
‘Morning, Neil.
NEIL MITCHELL:
You said in your speech last night it was time for an adult conversation around the country’s problems and who pays. I want to tell you something you said to me August 5 last year, before the election “So can you say it again, in the general sense, not the detail, there will be no tax rises? Prime Minister: Certainly. We are absolutely committed to avoiding taxes on individuals – extra taxes on individuals. We think that the people and the families of Australia pay quite enough tax already”. Does that promise stand?
PRIME MINISTER:
We do have a big problem as people know, Neil - because of the policies of the former government, because of the spending spree – the six year spending spree – that the former government was on, we’ve got $123 billion of deficits in prospect and we’ve got $667 billion of projected debt - $25,000 per man, woman and child. The problem with debt at a particular level is that you control it initially, but eventually the debt controls you and this is what we’ve got to avoid.
Now, I am committed to lower taxes – to lower, simpler, fairer taxes – but we do have a short term problem and we do need to deal with it.
NEIL MITCHELL:
Does that promise before the election stand?
PRIME MINISTER:
I am committed to lower, simpler, fairer taxes. Do I say that no charges will rise? No, I don’t.
NEIL MITCHELL:
Do you say no taxes will rise?
PRIME MINISTER:
Neil, I can see what is going to happen here. You’re going to put me on the spot about something that may or may not be in the Budget and I’m very happy to have a conversation with you and your listeners about the philosophy of the Budget, about the issues of the Budget we’ll be dealing with, but please, if you do try to pin me down on specific Budget detail, we are going to have a fairly unproductive conversation.
NEIL MITCHELL:
Ok, just in general, I don’t want specific detail. We want an adult conversation as you said and it’s a reasonably adult question to say will there be some change to taxation in the Budget?
PRIME MINISTER:
We are currently mulling over all of the various issues that we face. It’s still a couple of weeks until Budget day and we’re in the process of finalising things. We haven’t taken final decisions on every aspect of the Budget, but there is a very significant problem that needs to be addressed: governments, like families and businesses, have got to live within their means and for six years, we weren’t.
NEIL MITCHELL:
So again, without the specifics, is the type of option of a debt tax as outlined today a possibility? Is it an option you are considering?
PRIME MINISTER:
There’s been speculation, as you know, about a deficit reduction levy. Certainly, my intention is that people like myself – high income earners – should bear a significant quantum of the burden when it comes to sorting out our problems. We cannot just sort out our problems at the expense of people who are receiving government benefits, at the expense of people who are the recipients of programmes and so on.
NEIL MITCHELL:
So when you say there has been some discussion, you mean at a government level about this deficit levy as you call it?
PRIME MINISTER:
The point I’ve made all along, Neil, is that this is a Government which will deal fairly and squarely with our problems – we won’t shirk them, we won’t defer them, we will face them.
Now $123 billion worth of deficits and $667 billion worth of debt - $25,000 per man, woman and child – it cannot be ignored. The debts at that level, they control you.
NEIL MITCHELL:
Prime Minister, but we’re dancing around it. Is this on the table or not? You said decisions haven’t been made – I understand that. Is this sort of proposition on the table?
PRIME MINISTER:
Well, we are looking at a range of options that will enable us to sort our Labor’s debt mess, but we want to do it in ways which are fair to everyone so that no one section of society bears a disproportionate share of the burden of addressing this issue.
NEIL MITCHELL:
So is this type of proposition on the table?
PRIME MINISTER:
Well there’s a range of options that we’re dealing with, Neil. There is a range of options that we’re looking at, but we haven’t made final decisions.
NEIL MITCHELL:
Would you agree it would be a broken promise to increase taxation?
PRIME MINISTER:
I think if there was a permanent increase in taxation that would certainly be inconsistent with the sort of things that were said before the election.
NEIL MITCHELL:
So a temporary increase in taxation would not be a broken promise?
PRIME MINISTER:
Well Neil, look, there’ll be lots of argument about all sorts of things in the Budget, but I am determined to try to ensure as far as I humanly can, that we keep faith with the commitments that we made to the Australian people before the election.
NEIL MITCHELL:
And one of those commitments was no increased taxes.
PRIME MINISTER:
Well, one of those commitments was to be a Government of lower, simpler, fairer taxes, you’re absolutely right. We want taxes going down, not going up. But, when you’re in a difficult position, sometimes there needs to be some short-term pain for permanent and lasting gain and the point I tried to make last night is that the Budget, in a fortnight’s time, won’t be a Budget for the rich, it won’t be a Budget for the poor; it will be a Budget for the country, it will be a Budget for the future.
NEIL MITCHELL:
Well you’re clearly leaving the door open for this sort of thing.
PRIME MINISTER:
I’m not going to play the game of ruling things in and ruling things out, Neil.
NEIL MITCHELL:
Fair enough. Do you need Clive Palmer’s support to get this sort of thing through the Senate?
PRIME MINISTER:
We need the support of a majority in the Senate and you can assemble a majority from any number of Senators from any particular party. I dare say that there’ll be some things that will go through the Senate with the support of the Labor Party, some things with the support of The Greens, other things with the support of Independents and minor parties.
NEIL MITCHELL:
Do you accept if we’re at a stage of, if not breaking promises, at least altering them, that it’s time to rethink the paid parental leave scheme, that we can’t justify spending the sort of money on paid parental leave when we’re going to ask people everywhere to carry extra pain?
PRIME MINISTER:
Well the important thing about paid parental leave is that it’s not a welfare entitlement, it’s a workplace entitlement and if we get paid sick leave and holiday pay and long service leave at our wage, why shouldn’t we also be paid parental leave at our wage? Now that’s a fundamental principle, Neil, and this Government is absolutely committed to it.
NEIL MITCHELL:
That’s a fundamental principle in good times – you’re telling us these are not good times. Will you rethink the paid parental leave scheme?
PRIME MINISTER:
Well if I was to turn up here and say, “Well because these are tough times everyone’s going to have to give up 10 per cent of their holiday pay or they’re only going to be paid the rate of $900 a week rather than $1,000 a week for their sick leave”, you’d say this was pretty outrageous.
NEIL MITCHELL:
You are introducing something different here and it’s very generous – up to $150,000 a year payment.
PRIME MINISTER:
Ok Neil, but if I’m a public servant in Canberra earning $300,000 a year and I go on parental leave, I get paid at the rate of $300,000 a year. Now if it’s fair for taxpayers to fund that kind of thing with public servants, why shouldn’t the average person – the average woman in a factory or a shop – who is going on parental leave be paid at her wage?
NEIL MITCHELL:
Can we afford it, Prime Minister, at the moment?
PRIME MINISTER:
Well it’s fully funded. It’s fully funded through a modest levy on the incomes of companies earning over $5 million a year. So it’s fully funded in that sense and we’ve taken it to two elections.
NEIL MITCHELL:
Why have you not yet prepared a draft Exposure Bill?
PRIME MINISTER:
Well we want to bring it into effect in the middle of next year, so there’s plenty of time for it, Neil.
NEIL MITCHELL:
Have you got the numbers to get this through the Senate?
PRIME MINISTER:
Well, we often have to do a fair bit of negotiating.
NEIL MITCHELL:
Is it correct that you’ve been assessing the numbers on paid parental leave?
PRIME MINISTER:
It is correct that I am constantly arguing for this good policy whose time has come.
NEIL MITCHELL:
Is it correct that some of your own Members are threatening in the Senate to vote against it?
PRIME MINISTER:
Well Neil, the short answer is I’ve read speculation in the paper, but no one has come up to me and made that kind of statement.
NEIL MITCHELL:
You would have your people doing some work on it, I’d assume?
PRIME MINISTER:
Look Neil, we’re focussed on the Budget. We want to bring the best possible Budget down in a fortnight’s time and that’s what we are absolutely focussed on and this is a Budget with many components, some that people won’t like, some that I think people will like, like the extra money for the East West Link which will mean that this vital – vital – transport artery is delivered to Melbourne and to Victoria.
NEIL MITCHELL:
I’d like to get to that in a moment, but are you saying we can afford the paid parental leave scheme and if you axed it or delayed it, it would make no difference to the Budget situation?
PRIME MINISTER:
Well, because only about 2 per cent of incomes over $100,000 are earned by women under 50, changing the eligibility thresholds or changing the maximum rate of paid parental leave would be very modest in terms of Budget savings.
NEIL MITCHELL:
How much?
PRIME MINISTER:
Well, I’m not going to pull out the calculator and try to do the figures here, but the average weekly earnings for women are something like $65,000 a year, so the vast majority of women who will benefit from the Government’s paid parental leave scheme are actually earning below average weekly earnings.
NEIL MITCHELL:
We’ll take a call. Nick, go ahead please Nick.
NICK (CALLER):
Yeah, thanks for taking my call Mr Prime Minister. Look, with this change in your promise you’ve said that we’ve got a short-term problem. Does that mean your proposal for increased taxes for certain taxpayers is also going to short-term and can you give an outline of how long you envisage that period to be?
PRIME MINISTER:
Well look, thanks Nick.
There’s a lot of Budget speculation around and obviously Neil and I are talking about some speculation which has been reported in the papers, but I do want to give you this assurance: that if you’ve got a short-term problem, the measures to deal with it should be short-term, if they’re difficult measures. If they’re long-term structural reforms, well that’s a different story. But, when the former government had a difficulty, yes, they brought in levies of one sort or another, often temporary levies.
NEIL MITCHELL:
This isn’t a very adult conversation, is it?
PRIME MINISTER:
Well we’re doing our best – we’re doing our best, see what inevitably, Neil, is happening here is that newspapers are running around trying to hoover up bits of …
NEIL MITCHELL:
This is very detailed, one of your people’s behind that, now whether it’s deliberate or not, whether it’s part of a softening up process, there’s too much detail in that not to have come out of somewhere. I mean how many people are aware?
PRIME MINISTER:
There are lots of different proposals that get looked at in the pre-Budget context. That doesn’t mean that any one of them is going to be adopted.
NEIL MITCHELL:
We need to take a break. We’ll get to the welfare issues in a moment, but in a general sense, I mean it’s ok to say, “We’ll get more tax and we’ll take away that bit of pension or that bit of benefit or whatever”, but on the other side, you’ve got to cut your cloth as well. Are you going to reduce the entitlements of politicians? Are you going to stop the public service pay rises? Are you going to cut the size of government? Are you going to cut your cloths as well?
PRIME MINISTER:
The short answer is yes and the point I’m trying to make is that everyone, starting with Government, is going to be involved in getting the Labor debt mess under control.
NEIL MITCHELL:
So what percentage is new revenue and what percentage is saving?
PRIME MINISTER:
Well, we are determined to ensure that government spending is consistently going down, because that’s the problem. The problem is that under the former government, spending went up and up and up and up. They used to talk about the percentage of tax not being as high as all that. Well, that just means that future generations of taxpayers are paying for present spending which is fundamentally unfair. It’s intergenerational theft, that’s what it is. That’s what we were getting under the former government: intergenerational theft.
NEIL MITCHELL:
Some public servants are getting pay rises up to $42,000. Will they go through?
PRIME MINISTER:
Well, I don’t know which public servants you’re referring to…
NEIL MITCHELL:
In your Department.
PRIME MINISTER:
But the public service pay is obviously under enormous scrutiny at the moment.
NEIL MITCHELL:
So, I think the head of your Department’s in line for $42,000 extra.
PRIME MINISTER:
Well I’m not going to comment on individuals and I’m not aware of that Neil, but obviously, if you are in a situation where you’ve got to reduce the size of the public service, where you’ve got to reduce spending, a higher pay rise means fewer people are employed and I don’t think we should be in a situation where one person’s pay rise costs another person his or her job.
NEIL MITCHELL:
What’s rich? What’s a rich income?
PRIME MINISTER:
Well, I certainly don’t think that people on $100,000, or even necessarily $150,000, are on easy street. If you’re on $100,000 a year and you’re a single person, you are probably reasonably comfortable. If you’re on $100,000 a year and you’ve got a wife, children, a mortgage to support, you’re doing it very tough indeed.
NEIL MITCHELL:
Will politicians feel the pain?
PRIME MINISTER:
They sure will.
NEIL MITCHELL:
How?
PRIME MINISTER:
Well, watch this space, Neil.
NEIL MITCHELL:
Mr Abbott before the election you said that any change to the pension would be delayed until after the next election. So I assume you’ll go to the next election with propositions to change the pension?
PRIME MINISTER:
I think that’s a pretty fair assessment.
NEIL MITCHELL:
So there’ll be no change in the indexation system before that?
PRIME MINISTER:
We said before the election there’d be no change to pensions and we’ll honour that commitment.
NEIL MITCHELL:
Will people lose other benefits?
PRIME MINISTER:
Well the thing we’ve got to do, Neil, is address the Labor debt mess – the Labor debt and deficit stretching out as far as the eye can see and we will tackle this very substantially in the Budget. It won’t be the final instalment, but it will be a very, very strong first instalment of the reforms and the changes that we need to get back to fiscal health.
NEIL MITCHELL:
Is superannuation on the table?
PRIME MINISTER:
We said before the election that there’d be no adverse changes to superannuation in this term.
NEIL MITCHELL:
GST – will that also be reconsidered before the next election?
PRIME MINISTER:
We’ve got a tax reform white paper coming up. We haven’t done what the former government did and rule this out and that out. Everything is potentially on the table, but this Government has no plans to change GST. As you know Neil, GST is a tax that goes to the states, all the proceeds of the GST goes to the states. The states would all need to agree on any changes to the GST before we could even begin to contemplate them.
NEIL MITCHELL:
Healthcare cards for self-funded retirees – are they under examination? They’re pretty generous aren’t they?
PRIME MINISTER:
Look, yes, but nevertheless self-funded retirees are doing the right thing by our country. They are people who have put enough aside in their working life to not be calling upon the taxpayer in their retirement. So I don’t begrudge self-funded retirees at all their healthcare card and one of the things that the Government did promise to do pre-election was to index the eligibility thresholds and that’s certainly going to happen.
NEIL MITCHELL:
Will anybody not be touched by this Budget?
PRIME MINISTER:
When you’ve got a big, national problem you’ve got to deal with it as a nation and I suspect that on Budget night if you are looking for something to complain about you will certainly be able to find something to be unhappy with, but this has got to be a Budget where everyone does his or her bit so that the whole nation will be better off in the years to come.
NEIL MITCHELL:
But are there any no go areas?
PRIME MINISTER:
We are going to do our absolute damndest, Neil, not to break faith with the people. Now there were some things that we clearly ruled out pre-election, we will honour those undertakings, but there was an enormous area where no commitments were given and we are looking at all of that to see what we can best do to address as quickly as we can, as reasonably as we can and as fairly as we can this fundamental problem that we’ve inherited.
NEIL MITCHELL:
Will you break promises if necessary?
PRIME MINISTER:
Well I don’t want to break faith with the people.
NEIL MITCHELL:
Senator John Williams – Nationals Senator just on news radio saying the paid parental leave scheme is unaffordable and should be put on ice until the economy’s stronger.
PRIME MINISTER:
Well, look, John has been an internal dissident – if you like – on this issue, but twice now we’ve gone to the election, John Williams has gone to the election, making commitments on this subject and look, there are a whole range of discussions that we’ll be having at the appropriate time inside our party room.
NEIL MITCHELL:
$1.5 billion for the East West Link – any strings?
PRIME MINISTER:
Well the Victorian government has got to give us a business case; it’s got to satisfy a cost benefit analysis study, I’m confident that that will in fact be doable, and they need to start work on it by the end of next year. Now, the Victorian government wants to get cracking on this, they’re about to start work on East West Link stage one, shortly, I hope, certainly by the end of next year we can actually get work underway on East West Link stage two.
NEIL MITCHELL:
Bu the money’s going to be there – the money’s promised?
PRIME MINISTER:
The money is there. Subject only to the cost-benefit analysis that I’m sure will work for this project and subject to a commitment from the Government that they will get cracking on this before the end of next year.
NEIL MITCHELL:
Are you aware of the Crime Commission report on ice? Ice has developed – there’s a billion dollar growth in illicit drugs last year. Ice has developed into a pandemic it’s described as in this country.
PRIME MINISTER:
Look, there is no doubt that Australia’s drug culture is changing all the time and we’ve got to be equally responsive in terms of dealing with it. Now, we’ve got new anti-gang strike teams in every state, I think, certainly in Victoria we established one a few months ago to work against the gangs that are promoting this evil trade. We’re spending $88 million more on surveillance and detection at our borders. So we are ensuring, Neil, that the war on drugs is fought as fiercely as we humanly can. It’s not a war we will ever finally win; the war on drugs is a war you can lose, you may not ever win it, but you’ve always got to fight it.
NEIL MITCHELL:
And just finally, having face to face meetings with Barack Obama – June, correct?
PRIME MINISTER:
Look, I am planning to go to the United States in the middle of the year and I’d certainly expect to have a meeting with the President.
NEIL MITCHELL:
What will you give him? Not another football?
PRIME MINISTER:
I haven’t thought that far ahead, but we will try to ensure that he gets a gift from the Australian people which is tasteful and thoughtful.
NEIL MITCHELL:
Where else are you going on that trip?
PRIME MINISTER:
Well as you probably know Neil, the 6 June marks a big D-Day anniversary. There will be a very large international gathering in Normandy to mark the 70th Anniversary of D-Day and I guess having gone that far I’d like to capitalise on the trip to make some important further talks.
NEIL MITCHELL:
Thank you so much for coming in.
PRIME MINISTER:
Thank you.
[ends]