PRESENTER:
The Prime Minister of Australia, the Honourable Tony Abbott joins us. Prime Minister, thanks for joining us. First up, do you feel as though the Premiers are ganging up on you a bit?
PRIME MINISTER:
Darren, look, I understand that the Premiers are fighting for what they see as their state interests and that’s perfectly fair and reasonable, but what I’ve got to do is ensure that at the Commonwealth level, we are not living beyond our means, we are not mortgaging our future and piling up never-ending debt for our children and grandchildren to pay. That’s what our Budget is all about: it’s about saying, look, the unsustainable spending is over, the debt and deficit stretching as far as the eye can see that the former government – the former Labor government – has left us has got to be fixed. As Joe Hockey and I have been saying over and over again since Budget night, we did not create this problem but we will take responsibility for fixing it.
PRESENTER:
Prime Minister, are you, as the Premiers believe you are, trying to paint them into a corner to make them be the first ones to say, “We want to raise the GST”? Because that’s what they believe, isn’t it?
PRIME MINISTER:
Well, we said pre-election that we would honour the Rudd/Gillard government’s commitments over the then forward estimates, but we refuse to be bound in the out years. What’s happened in this Budget is that the first of the out years have come into the forward estimates and we’ve said, look, sure we’ll increase spending on schools and hospitals, but we won’t increase it by the amount that the former government was promising. We said pre-election, we said it on Budget night, we think that they were pie in the sky promises that were never going to be delivered on and were only made by the former government because they knew they weren’t going to be around.
PRESENTER:
Ok, so the question was, are you trying to paint them into supporting the GST?
PRIME MINISTER:
No, no, we’re saying that we, the Commonwealth, are prepared to do our fair share to ensure that we have good public schools and public hospitals into the future. What we’re not going to do is promise to spend money that we just don’t have that can only be got by mortgaging our children’s future.
PRESENTER:
Well, it’s been reported that Australia’s addicted to public spending and in fact our debt growth is faster than Europe’s. It’s spiralling upwards at an almost uncontrollable rate. Now, that’s pretty frightening because it can get to the stage where our money’s not worth anything.
PRIME MINISTER:
It is pretty scary and while, thanks to the Hawke and Howard governments, Australia’s financial position was very, very strong six years ago, under Labor we did start spending like drunken sailors and yes, our debt deterioration has been the worst in the OECD over the last few years and given our fundamental economic strength, that’s pretty bad news. Just at the moment – just at the moment, John-Michael – we are borrowing a billion dollars a month – a billion dollars a month – just to pay the interest on the borrowings and anyone who’s had a credit card problem knows, this just can’t go on.
PRESENTER:
Well that’s what I’ve likened this to; a maxed-out credit card and all you can afford to do is pay off the interest. It seems to be a simple analogy and a lot of people don’t want to understand it or refuse to understand it.
PRIME MINISTER:
Well, that’s right, and sure, governments don’t make themselves very popular by saying to people that the good times can’t roll, or at least they can’t roll on the nation’s credit card, they’ve got to roll on the basis of what we can absolutely afford. I’m confident that the good times can again, probably quite soon, but we’ve got to get the debt and deficit situation under control first and that’s what this Budget does.
PRESENTER:
Well, Prime Minister, what do you then suggest that the Premiers do? They were counting on this $80 billion for education and health, they’re now not going to get it, so what do you suggest they do to get that money?
PRIME MINISTER:
Well, this extra money that the former government promised them on the never-never, it’s three years off and that gives us three years, it’s not that they’re losing money tomorrow or next week or next month or even next year, it’s three years off and what we said pre-election and what we’ve said since the election is that there will be this Federation white paper – a reform process – and so, we’re going to sit down and talk to the states and territories and I am confident that at the end of the process we will have more efficient and effective public schools and public hospitals, we will have good public schools and public hospitals, but we’ll have a more affordable system and a better Federation – a stronger Federation.
PRESENTER:
Mr Abbott, a new opinion poll out today, a Galaxy opinion poll, says that 75 per cent of people believe they’ll be worse off under your first Budget. Is that an accurate figure? Are 75 per cent of people worse off and are you accepting of that and do you think that’s appropriate?
PRIME MINISTER:
Look, a lot of people are not going to get the kind of unsustainable benefits in the future that might otherwise have been the case if Labor had kept borrowing. But, I think everyone is going to be better off in the medium and long-term, because a benefit with borrowed money is not really a benefit and that’s what we have to understand, that every dollar that government spends has got to be paid for either with today’s taxes or tomorrow’s taxes, and as long as we were spending money that we don’t have and have to borrow, we were just putting off the evil day and the longer you put it off, the worse it is when it comes and that’s why it was very important that we say on Budget night, “Enough is enough. We can’t do this anymore. We owe it to our children and grandchildren not to mortgage their futures”.
PRESENTER:
What sort of interest are we paying in terms of billions of dollars a year? I would imagine a lot of money.
PRIME MINISTER:
Well, the interest bill at the moment is $12 billion a year and if we hadn’t cut back on the Labor cash splash, within a decade the interest bill would have been over $30 billion a year and sooner or later, as we saw in Europe with countries like Greece and Italy and Spain and Ireland, sooner or later people wake up to the fact that you are living beyond your means and they won’t give you any more money. It’s much better to solve these problems before they hit you.
PRESENTER:
$12 billion a year – we could have had half a dozen more myki ticket systems with that money!
PRIME MINISTER:
Well, $12 billion a year will fully fund, or pretty close to fully fund, the East West Link. It would build you 12 major new hospitals. It would more than fund the duplication of the Pacific Highway from Newcastle to the Queensland border. There’s a vast amount that we could do with that $12 billion which is just going offshore to the people we’re borrowing from and that’s what we’ve got to get under control.
PRESENTER:
Well I have two things about this – I think we forget that we live in a huge continent and people expect the best of everything. 23 million people in a huge continent whereas a lot of countries in Europe, you know they’d fit in the Botanical Gardens. So, one of the things a lot of people moan and groan about things that are not running properly, they don’t understand that they have to be paid for.
PRIME MINISTER:
Well, everything does have to paid for and this is the fundamental truth that underpins our Budget: you cannot spend what you haven’t got and you cannot borrow what you can’t repay and if government spends money today, it’s got to be paid for either by today’s taxes or tomorrow’s taxes. This is the fundamental, elemental economic truth that the former government tried to wish away and which we are facing up to.
PRESENTER:
And Mr Abbott, you very successfully as Opposition Leader campaigned against Julia Gillard because she clearly broke a promise. Did you not expect the same backlash when you in fact did the same thing?
PRIME MINISTER:
Well, I don’t want to plead the fine print, but I do believe that we have fundamentally kept faith with people because one of the things that I said over and over again before the election, you might remember I had this mantra that I repeated over and over again – it was we’d stop the boats, we’d scrap the carbon tax, we’d build the roads of the 21st century and we’d get the Budget back under control. This was the mantra, if you like, that I repeated over and over again pre-election and sure the order was sometimes different, but there was this constant element that we would get the Budget back under control and that’s exactly what was done. Now, I know there’s a deficit levy on the top 3 per cent of taxpayers, there’s a freeze on politicians’ pay, there’s the fuel excise indexation that everyone will pay, so I accept that there are things in this Budget that people won’t like and will say, “Oh you didn’t say anything about that”, but we have to face up to the tough decisions…
PRESENTER:
And I understand that, Mr Prime Minister, but you and your Treasurer said time and time again no new taxes and I know we can argue about words, but certainly there are new taxes and I think you open yourself up to the same criticism that you so successfully used against Julia Gillard.
PRIME MINISTER:
And look, I’m not going to say that there aren’t increased taxes here – I’m not going to say that. I mean, obviously, the top marginal rate of tax has gone up for three years and the fuel excise is going up thanks to indexation…
PRESENTER:
So you did break an election promise?
PRIME MINISTER:
Well, as I said, we can go back and pour over the fine print and argue about whether something is a new tax or an old tax, argue about whether indexing a tax is a new tax. We could do all of that, but I think the important thing is to say, what was the problem that needed to be solved, how has it been addressed, is this a Government which seems to be fair dinkum about solving our nation’s problems? And look, I’m happy to submit myself to the peoples’ judgment on this score.
PRESENTER:
Well the money going into the fuel tax – excise – that’s going to go into roads, you’ve promised that, it’s going to go into roads. Well, I would say that’s a good thing because God knows we need better roads everywhere.
PRIME MINISTER:
We sure do, and in Melbourne you’ve got East West Link which we need to get cracking on and which the Napthine Government, to its credit, is doing. In Sydney, we’ve got WestConnex which the Baird Government is getting cracking on. The Newman Government in Queensland wants to get cracking on the Bruce Highway. And thanks to decisions that this Government has made in Canberra, all that will happen a lot more quickly.
The interesting thing about this Budget is sure it’s a Budget of savings, but it’s also a Budget of building. We’re spending less on short-term consumption and more on long-term investment and again, I think that is something which is going to be very good for our country in the years and decades ahead.
PRESENTER:
Alright, Mr Prime Minister, thanks for joining us and one final one, are you wearing your RM Williams Craftsman as we speak?
PRIME MINISTER:
Yes, I’ve got the RM Williams Craftsman on. The great thing about those boots, you can wear them on the farm or you can wear them to a black-tie dinner…
PRESENTER:
Or sticking the boot in, too!
And they look lovely with a thin-cut jean too, don’t forget that.
PRESENTER:
Now you were a boxer in your younger days. Are you wearing your boxing gloves today?
PRIME MINISTER:
No boxing gloves, no, no. I’m a man of peace!
PRESENTER:
A lover, not a fighter!
PRESENTER:
Thanks for joining us.
PRIME MINISTER:
Thank you.
[ends]