MITCHELL: Good morning, Prime Minister.
PM: Good morning, Neil.
MITCHELL: Believe it or not we were just talking about the AFL drugs policy which has been released after consultation with your Government. Are you happy with it?
PM: They seem to be doing the right thing. I've only just got a full briefing on it. As I understand it it's based on a principle of three strikes and you're out. And we think that this is a positive advance on where things were before.
MITCHELL: Okay. But how is that an advance? It's always been three strikes and you're out?
PM: Well, the key thing is if you go to the content of it, it also deals with a consistent approach to how long a person can continue to defy drug testing standards - that's the first thing. Secondly, there is an equal emphasis on what you do on the part of those players in terms of education, player welfare and rehabilitation.
MITCHELL: You're happy for the names to be kept secret then, until three strikes?
PM: Well, on that part of it I've not seen the detail. So, I'll get my Sports Minister so call in to you.
But we've been, through the Sports Minister, working with the AFL. They're making progress on this. And, we would support them in sending a clear message that drugs in sport are unacceptable.
MITCHELL: Seems like the most dramatic thing here is hair testing out of season. They'll pluck a piece of your hair and see if you've taken drugs?
PM: Good that you've got some hair left to pluck, I suppose.
But, on the draconian nature of it, well, the AFL knows its family, its community, its culture. They can make those judgments in terms of how that's best done. But the key thing is to draw some clear lines in the land about drugs in sport. So I commend the AFL and the progress they've made.
MITCHELL: The problem I've got with the hair testing is that if it's a positive test, they don't do anything about it. They counsel you. They don't take any penalty against you.
PM: Well, that's a level of detail I'm not (inaudible)
MITCHELL: Do you accept that these are the worst economic times in 25 years?
PM: I think it's tough, very tough. I don't have benchmark or a year in mind. But you've got a combination of global and national economic factors at work. And I'd much rather be upfront about that with the Australian people, rather than pretending that it's any different.
MITCHELL: Is this a key problem for your Government?
PM: Oh, it's a big challenge. It's been a big challenge, frankly, since day one.
The sub-prime crisis in the United States started rolling from August last year. As of when we took over at the end of last year, the briefings that we began to get from the Treasury, were concerning. And (inaudible) my discussions with my counterparts in the United States, that challenge has got worse and worse.
Half a trillion dollars with of loans have been written down in the United States and other countries, and that has a wash on effect for everybody.
MITCHELL: Well you've got jobs going now on a regular basis in Australia. How long have we got to cop that for? How long before that turns around?
PM: Well, the Budget forecasts which we put out in May indicated that unemployment would rise to 4.75 per cent. We've been mindful of that, as there would be a slowing in economic growth.
Australia is not immune to what is going on around the world. The key thing is what you're doing about it. And, our plan in response to that is to, first of all, make sure we don't put further upward pressure on inflation and interest rates, that's out $22 billion surplus. Secondly, to make sure we're investing in the country's long term productivity growth, and that's what we're talking about with an education revolution and the investments were making there.
Thirdly, the industrial relations system. It's very important with changes to the industrial relations system that we've got fairness. Under WorkChoices, including the final version of WorkChoices, if you lost your job you also lost your automatic entitlement to redundancy pay.
MITCHELL: What's the short term answer? I mean, is there any short term hope you can offer the people? Businesses are very nervous, jobs are going, interest rates are still hurting - 20 per cent increase in household costs for people in the year that you've been there, 20 per cent up.
PM: Well, it's a really difficult time. I think if you go to the core driver of what's occurred in the economy in the last 12 months, it's come off the back of sustained periods of high interest rates. We have had 12 interest rate rises in a row. Ten prior to us taking office. Two in the last six months. And the effect of that on the cost of mortgages, and the flow through effect in terms of cost of finance for business, has been huge.
We've got to turn that around which is why the cornerstone of what we've been working on these last eight to nine months is to create a Budget position which makes it easier for the Reserve Bank to start putting interest rates down.
MITCHELL: So when do you see some relief for the average person?
PM: Well, starting with the Budget as of 1 July, we delivered $44 billion in tax cuts to low and middle income earners. That has flowed as of 1 July. The second thing is an additional $10 billion in a Family Support Package which contains within it an increase in the childcare tax rebate from 30 per cent to 50 per cent. And for pensioners, $7.5 billion in additional payments starting from 1 July as well.
These are the beginning of our response. But I'm not going to mislead your listeners to say this solves all problems - it doesn't.
MITCHELL: So when do you see a turn around in the economy? When do you see things picking up?
PM: Well again if you go to the economic forecast, we believe that into the period of 2009, you'll start to see economic growth picking up. If you go to the forecasts which were released by the Reserve Bank in August, you see growth by the June quarter of 2009 improving to 2.25, and then by the end of next year to 2.5.
I would draw your listeners' attention to the fact that six of the seven major industrial economies around the world at present have generated zero or negative growth in the last one to two quarters. So the global impact of the slow down coming off the back of the US financial crisis has hit hard around the world.
MITCHELL: Do you think the Government is offering leadership on this? I mean, a number of people, including the union movement, have said that we need to really have economic leadership now. We need to have a sense - people need to have a sense - that not only does the Government understand, but it is leading them somewhere. That it is taking them somewhere. That it's in control of this.
PM: Well firstly, we're in a global economy that's faced facts on this, that's one point that everyone needs to understand.
Secondly within that, three core elements of economic strategy for the period ahead. One is the discipline of responsible economic management with the Budget surplus that I referred to. You need a buffer for the future.
Of course, our Liberal opponents want to white ant that away.
The second element in terms of economic strategy for the future is to build productivity growth. And that comes off the back of what we're doing with the investment in education, skills and training.
And the third is this - infrastructure. This is the huge gaping hole that we've inherited from our predecessors. A $20 billion Building Australia Fund to build large scale infrastructure projects necessary to deal with the country's economic future.
That's the third part of our economic strategy for the future but its going to be tough, I don't want to mislead people.
MITCHELL: On health does the buck still stop with you?
PM: Absolutely.
MITCHELL: Are you aware of the heart kids at the Royal Children hospital, are number of them are having their heart surgery delayed 7 and 8 times here in Melbourne?
PM: Yes I have seen those reports and I think they are appalling.
MITCHELL: Do you know why its happening?
PM: I understand the Health Minister has been speaking her Victorian counterpart. What we have done in terms of overall funding to the Victorian system is since the Government came in 8 or 9 months ago, we've made an additional billion dollar payment to the States.
MITCHELL: Well its not working is it?
PM: I am just going through what we have done and then we will go down to the specifics. A billion dollar payment to the States because Mr Howard Government had taken a billion out, that's the first thing.
The second is in terms of elective surgery, what we have done through our $600 million accelerated elective surgery fund is make an allocation of $150 million to the States straight up of which the Victorian allocation was some $34 million and that's designed to purchase an additional 6000 procedures as phase one of the plan.
On the detail concerning these poor kids and their heart operations the individual management of that in the hospitals concerned I am not familiar with that, because these are detailed management questions. But if there is anything further practical we can do by way of funding support then we will do so.
MITCHELL: Ok so the buck stops with you but you don't know why this is happening at the moment?
PM: Well Neil if you were to ask me what's happening in any one of Australia's seven, eight, nine hundred public hospitals across Australia today I couldn't tell you. What I can tell you is what I am doing to respond to a system wide crisis, whereby in part our predecessors pulled money out of the system. What we have tries to do in our first nine months in office is put money back into the system.
MITCHELL: But do you know why it is happening?
PM: Look on the individual details concerning these 400 cases I don't and I fully understand that the circumstances in each operating facility will be different. What I can do is provide the funds that we have, but look we have got to turn around the entire public hospital system in the country.
What I said last year is we need to end the blame game and part of that means someone ultimately accepting responsibility for its proper funding. That's what we are proposing to do.
MITCHELL: Alcopops, if this legislation is frustrated there could be $300 million, will you give it back?
PM: Well as I understand it from the legislation, if the Liberals proceed with blocking this in the Senate which they seem to be doing., the that $300 million then gets anchored into the back pocket of the distillers because thats what happens.
MITCHELL: So it would go back to the distillers?
PM: A question best put to the Liberal party Neil.
MITCHELL: No, no, no we know they are blocking it but is that your understanding of the tax law?
PM: My understanding, I stand to be corrected on this, is that once that occurs then basically the distillers obtain for themselves a windfall. Now I've got to say why do you think the distillery companies have been jumping up and down so much about this.
And if you look at what we could use that money on, that revenue. We have just been talking in dollar terms about the amount of money we are putting out to elective surgery $600 million for this year to assist the States to accelerate the number of cases that they are performing.
This $300 million so far that we've collected by way of additional tax on this category of drinks goes straight back into the hands of distillers rather than going to programs like that.
MITCHELL: So the tax was partly as raised money?
PM: Well all taxes raise money Neil.
MITCHELL: Yeah but you have been putting this as a health initiative?
PM: Yeah but Neil I mean your saying its either or. The truth is we had to act in relation to, well your question before to me fair cop was about the revenue implications of it
MITCHELL: Yeah
PM: Now you are talking about the public policy justification for it, based on the reports from the relevant health authorities across the country and what the police commissioners have been saying around the country.
We had to act to close a tax loophole on a particular category of drinks were you saw this explosion in drinking on the part of teenagers in general and teenage girls in particular.
MICTHELL: Are you getting a bit frustrated by the Senate already?
PM: Oh I'm getting a bit frustrated with the Liberal party in the Senate. I mean we've got a bit economic challenge which is the first part of your discussion with me today. And a big economic challenge lies first and foremost in making sure through a strong Budget surplus you are not putting further upwards pressure on interest rates.
The Libs have committed themselves to a raid on that surplus of six to seven billion dollars, that has one consequence. Less money for the Budget to spend on proper purposes and secondly it has the effect of putting further upward pressure on rates.
I thought everyone in the country wanted downward pressure on interest rates.
MITCHELL: Prime Minister, we talk a lot about education this week. What do you think of the situation where you have discovered yesterday where a school nurse provides a 14 year old child with a contraceptive pill without approval or the telling of the parents?
PM: Not knowing the individual details of the case Neil but if what you have described to me is accurate it sounds really off.
MITCHELL: Its a policy, it happens regularly.
PM: Well it just sounds off, but I am just saying I am not familiar with the details of the case.
MITCHELL: Fair enough, Peter Costello why is he an assassin. You have called him an assassin?
PM: I don't know if I used that term. I think I said in Parliament, well Parliament is pretty ferocious encounter as you would have observed from time to time yourself Neil.
MITCHELL: I think he's coming back isn't he?
PM: Well thats a matter for him. Get him on your program and I'm sure he will let you know.
In the case of Mr Costello though he does prefer to be handed things on a platter. One thing about Brendan is he took over the job straight after the election loss although thats a matter for the Liberal party. But what I was talking about the other day was the state of the economy and in particular the fact that when we took over office Mr Costello who was Treasurer for the previous 12 years gave us the biggest inflation in 16 years, 10 interest rate rises in a row and the second highest interest rates in the developed world.
MITCHELL: Thank you for your time. Do you ever shed a tear?
PM: Yeah a lot.
MITCHELL: Do you really?
PM: Yeah.
MITCHELL: I noticed your wife crying in public this week, which I thought was a lovely human moment. What makes you cry?
PM: I think we all just run into cases of just human tragedy and Therese wasn't planning on the other day. She was reading a poem handed to her by an Aboriginal girl about her mother's death and there you go.
MITCHELL: Thank you very much for talking to us.