SPEERS: Prime Minister good morning, you suffered your first big defeat in the Senate yesterday when the Coalition and Family First's Steve Fielding voted against your increase in the luxury car tax. Their concern is that this tax hike will also affect farmers and tourism operators who need four wheel drives. So will you make any changes to this bill before you put it back to the Senate in a couple of weeks?
PM: We don't plan to and let's go to the core of their opposition to this about four wheel drives. Of the five top selling makes of four wheel drive in the country 80% of the models would not be subject to this luxury car tax.
This is just an argument plucked out of space by the Liberals because at the end of the day they are serving the interests of people other than working families. Remember this is a half billion dollar tax break to people who buy Porsches and the like as opposed to a half billion dollars going into public transport projects across Australia.
SPEERS: Even if there is only say 20% of those Land Cruisers that are affected, is there room for compromise with Steve Fielding on this or are you going to put the bill up as it is?
PM: Our intention is to proceed with our legislation as it is and I think if people now focus on what is lost by way of investment elsewhere in the country on infrastructure in general and on public transport infrastructure in particular, I think there will be some pressure brought to bear on our good friends in the Liberal party.
Cause you put this together with the other measures they are blocking, some $6 billion plus. What's it cost to do a major revamp to urban rail in a city like Adelaide? $2-3 billion? What's it take to engineer some major public transport improvements in inner Brisbane? A couple of billion dollars? I mean these are the alternatives. So you can either take the side of those who are producing and selling luxury cars or take the side of those who are on the side of the private health insurance funds or the big oil companies or the big supermarket chains, or you can use that money for investment for working families, pensioners and carers and public transport's a big area of need.
SPEERS: Are any of these measures you mention there that do as you say add up to $6 billion worth going to a double dissolution election over?
PM: We intend to apply the blow torch to the Liberal Party in the Senate; they have got to answer to the Australian people...
SPEERS: What does that mean, what's the end point, is it a double dissolution?
PM: The end point is this, if the Liberal Party want to stand up and say to the Australian people that they think providing a tax break to Porsche buyers is more important than investing in the needs of urban rail across Australia, I would suggest that in time some pressure may be brought to bear on them.
It's the Liberal Party who have made this happen in the Senate.
SPEERS: But pressure how?
PM: Well of course there's the means of public political pressure. You know, these are choices which the community will become very familiar with. Either you sit in traffic jams and resolve that Government should do something about it by for example investing in urban rail.
What's the Liberals' approach as they sit in the traffic jam? Look next door and see how much the Porsche is going to cost with or without a luxury car tax.
SPEERS: You don't rule out going to an early election, double dissolution election over these measures?
PM: Nice try at verballing David, it's good on your part. We intend to prosecute our agenda in the Senate and if necessary in the Senate again because we believe we have a right strategy here - to invest in the nation's long term infrastructure including its public transport infrastructure. To do that we need money and to do that we need to be able to deploy the $6 billion which they want to give back to people who buy luxury cars, people who in the big distillers don't want to see this tax change when it comes to ready to mix drinks and others.
SPEERS: Moving on, your handpicked advisor Professor Ross Garnaut today hands down an important report. It will tell us the sort of targets short term that he thinks Australia should adopt to tackle climate change.
In Bali last year - this was your first trip as Prime Minister - you agreed that developed countries including Australia should adopt a goal of cutting emissions by between 25-40% by 2020.
What will it say about your credibility, Australia's credibility in negotiating a new global agreement if you don't stick to that sort of goal by 2020?
PM: Well first thing David the premise of your question isn't right. In Bali last year both Penny Wong the Minister and myself came under enormous pressure for not committing at that stage to interim targets and we had lots of screaming and shouting from our friends in the European Union because we weren't prepared to do that.
Now the reason we said that we weren't prepared to do that at that stage is that we want to see our own economic modelling first and work that through systematically, gradually, for Australia's own circumstances, so we intend to do that.
What Professor Garnaut will do today is produce some modelling in support of his own version of the emissions trading regime. What we will do ourselves when Treasury releases its own modelling is produce modelling which underpins or which guides what would unfold with our carbon pollution reduction scheme.
Both of these modelling exercises contribute to the public debate and we will only be framing our interim targets consequent or after we get all that information.
SPEERS: Yeah apparently Ross Garnaut will say that Australia stands to benefit more if we go for deep cuts rather than shallow cuts or are you more inclined of the view that we do need a soft start until the rest of the world gets on board?
PM: I think we have got to wait and see what Professor Garnaut says and he comes out today. The treasury modelling is still some way off. I think we have got to be calm, measured, careful in the way in which we do this. That is, to make sure the adjustment costs for the Australian economy are manageable, at the same time being absolutely resolved that we together with the rest of the world must act and we must act in a coherent way.
The Government's agenda on this is clear cut as opposed to the Leader of the Liberal Party this week who said that climate change had nothing to do with the state of the Murray-Darling basin. I find that remarkable.
SPEERS: Prime Minister, on the economy, we saw figures this week that show the economy has hit some road bumps. The growth more than halved in the last quarter, in NSW it's going backwards. Where is this headed, I wonder where you think the economy is headed. I mean, is it going to end in recession? Can you give us any guarantees on that?
PM: Well the challenge for us as you know is responsible economic management. Across the European Union as I indicated in the Parliament yesterday there has been data produced which says that in the last quarter that the economies across the Euro region had contracted. And 5 of the 7 leading industrial economies in the world have experienced negative growth in the last quarter, negative or zero growth. So this is tough going out there in the global economy.
But we believe we have a clear strategy to steer Australia through this and that means ensuring that we preserve our budget surplus to provide us with a buffer for the future. That secondly we also have a clear strategy for nation building through the three major investment funds that we have established and we think on the basis of a strong budget surplus, a commitment to productive investment through our nation building strategy that we can steer Australia through. But it's going to be tough and it's going to be bumpy.
SPEERS: But is a recession too alarmist?
PM: What I'm concerned about about those opposite, leading for example with Joe Hockey, is a consistent strategy - that's the Liberal party from the beginning of the year - to talk the Australian economy down. And I think that's just grossly irresponsible. What you are dealing with in the economy now are real and objective factors, that which is flowing in from overseas off the back of the global financial crisis, together with the domestic inflation and interest rate pressures that we inherited at the end of last year from the previous Government.
These are objective and real factors, then over here you've got confidence factors. And what I'd say to the Liberal party - Dr Nelson, Mr Hockey, Mr Turnbull - is, if they persist in their strategy, their political strategy of talking the Australian economy down, I don't think that is responsible.
SPEERS: But Prime Minister, you are the one controlling the leaders here on the economy, and just again, is recession too alarmist to be talking about when we look at...
PM: We believe that we have a clear strategy to see the Australian economy through. We believe we have a clear strategy to steer the Australian economy through and that means prosecuting a budget strategy of responsible economic management and having the capacity, the finance, to invest in long term productive investment.
And we intend to do that. That is a responsible course of action. The irresponsible course of action is to talk wildly about language or using language which talks the economy down. I don't intend to do that.
SPEERS: Just a few quick ones if I can. Belinda Neal, has she undergone enough of the counselling that you ordered to overcome the pattern of behaviour problems that you identified?
PM: Well Ms Neal, the Member for Robertson, has indicated that she has subjected herself to the counselling which I required of her some months ago.
SPEERS: Are you satisfied with that?
PM: And as I said before, all of us, all members of parliament, have to conduct ourselves and a type of behaviour which is acceptable to the community.
SPEERS: There is new allegations she was menacing towards Brendan Nelson.
PM: Well I will let Dr Nelson speak to that.
SPEERS: You're not worried about that?
PM: Well put it this way, that is a matter for Liberals to advance in whichever way they want to politically. I am sure it will be completely impartial in the way in which it is put into the debate. But as I have said to the member for Robertson and to other members of parliament, we are all required to adhere to high standards of behaviour. That goes for the member for Robertson, that goes for Belinda Neal.
SPEERS: On WA, voters head to the polls tomorrow. It's often easy for Prime Ministers to say after a state election whether federal factors were at play. So let me ask you on the eve of the WA election, do you think there are any implications that voters will be casting a verdict on your government or Brendan Nelson's opposition in WA?
PM: It is, I think it was about two or three days after the state election was called, I was in Perth and asked the same question by the West Australian media. My answer then is the same as now, as it will be after the WA state election - these
elections are fought on state matters.
What I can say though about the state of the WA economy is that it continues to register strong economic growth.
And I think that is in large part because you see a state Labor Government in Western Australia which has shown strong economic leadership and invested in the infrastructure needs of the WA economy.
SPEERS: So why are they in trouble? Of losing?
PM: That is a matter for the West Australian voters to resolve among themselves and there is a whole lot of state political factors at play. What I am saying however is that if you look at the Nationals Accounts data which came out just a few days ago, strong growth numbers from WA, part of the reason for that is because you have had strong investment in the infrastructure underpinning so much of the resource development of WA, by the West Australian Government.
SPEERS: Just finally Prime Minister, I can't let you go without a question on the most famous moose burger eater, Sarah Palin, do you think she has what it takes to be Vice President or indeed leader of the free world should anything happen to John McCain?
PM: The great thing about the great American democracy is they will make a properly informed choice between candidates both Democrat and Republican. I seem to think it was Mr Howard who said that a victory for the Democrats, let alone a victory for Barack Obama, would be a victory for Al Qaeda.
Mr Howard said that. I haven't heard Mr Nelson by the way repudiate that. Our attitude is whoever wins the US presidential election, Republican or Democrat, Senator McCain or Senator Obama and their respective running mates as Vice President, Australia will have a strong friend in the United States under an administration of either colour.
SPEERS: You look forward to a moose burger at the White House?
PM: You know something, I haven't tasted moose, and I am not sure I ever will.
SPEERS: Well read into that one what you will. Prime Minister thanks for your time.
PM: Good to be with you.