MITCHELL: On the line is the Prime Minister, Mr Rudd good morning.
PM: Good morning Neil.
MITCHELL: Do you now accept that a world recession is a possibility?
PM: I think the global economy is in real trouble and that's because of the global financial crisis. A recession is defined as two quarters of consecutive negative growth and if you look across the top seven industrial economies in the world, five of those seven have already generated either zero growth or negative growth in the last quarter. So it's difficult.
MITCHELL: So it is a possibility?
PM: Well if you look at that last quarter's worth of growth it was not encouraging. The key thing is to make sure that we have a strategy to see this economy through and because we are not an island to do so in concert with the other major economies and banking and financial systems around the world. That's what we have been hard at work on.
MITCHELL: George Bush has cancelled his trip, will you also stay home?
PM: Part of the reason for being in the United States next week Neil is to speak again with the US economic regulators and financial regulators. One of the people I will be meeting is the Chairman of the New York Federal Reserve - one of the three principal decision makers on deciding what future interventions the Americans make in the US financial market. And we have a direct interest in that because Australian financial institutions also have exposure to different US financial institutions and as much foreknowledge as we have got about what the Americans may be doing in their own market is of direct relevance to Australians, to be helpful to Australian financial system.
MITCHELL: But what do you say to Australians listening now who are panicking a bit, worried about their superannuation, worried about their job, worried about the banks, worried about the future. What do you say to them?
PM: The key thing at a very difficult time like this Neil is to recognise what the objective problems are and to implement a clear strategy to see Australia through these challenging global financial circumstances.
MITCHELL: So you are saying you have got a clear strategy?
PM: We have. Let me go to the detail of it. The first thing right now that we have unlike most other major economies in the world is a very large financial buffer delivered through the Budget surplus that we have. If you look at the economies that I ran through before who are currently experiencing negative growth, most of them are running very substantial Budget deficits as well. So their flexibility to operate if things get more and more difficult is very, very limited and ours is not. We are in a strong position on that score and it was one of the reasons we delivered a $22 billion surplus.
MITCHELL: Surplus one, Number two?
PM: Number two means ensuring that through our financial regulators in the Australian banking system headed by the Reserve Bank, also by the Australian Prudential and Regulatory Authority and by ASIC that they are day-by-day examining the balance sheets of all critical Australian financial institutions and are in direct consultation with their international partners to make sure we have forward planning.
Now we have done that and have been doing it assiduously in direct cooperation with the Australian commercial banks, that's part of the strategy number two.
MITCHELL: Yep, part three?
PM: Part three means that in terms of the long-term strength of the Australian economy, part of confidence lies in ensuring we implement a focussed nation building program which in our case is based on a $76 billion infrastructure program.
That deals with long-term capacity constraints in the economy, but it also does this: it also demonstrates that this government will be engaged directly in economic activity across the economy to provide strong leadership into the future. That is also part of our strategy and I have got to say those things take up the largest part of our day.
MITCHELL: Ok so those three things you think should maintain confidence in Australia?
PM: I think the other thing that's necessary Neil is as follows and that is that our public commentary about the state of the Australian economy has to be very careful and measured because there are objective problems out there. For example in the United States you have got real problems when this crisis began 12 months ago about what's called bad loans in the mortgage market, that's part of the problem. You know the other part of the problem is that you have not had enough transparency in financial markets so that institutions know what problems other institutions have got.
That's what I described as the subjective problem, that leads to a confidence crisis within the financial system. So you want to know the other thing that we are doing? Through an international body called the Financial Stability Forum, Australia is one of six or seven countries which has been out there pumping out new transparency measures in the financial markets to try and restore health to the system underpinning the financial markets.
MITCHELL: But Mr Rudd, if I am sitting here about to retire and those four propositions are put to me, that doesn't reassure me at all about seeing my superannuation go out the door.
PM: Well obviously Neil if you look at what's happened with stock markets in response to the global financial crisis and they have gone down and gone down a lot. And that directly affect people's superannuation, you are absolutely right to say that. What I am saying however is that this is a strong credible robust economic strategy to see Australia through. And if you are in the middle of facing a global financial crisis at present we are better placed than most economies around the world to see our way through this. Others are in a far more difficult situation.
MITCHELL: Do you accept that although the problems with the financial markets at the moment, that flows through to the whole economy eventually and that means jobs doesn't it, that means jobs at threat?
PM: Well Neil I just believe in levelling with people. I have been saying for some time we are facing a global financial crisis and Australia is not immune and you are right. Confidence problems which come out of the financial market as well as real problems in terms of the availability of credit have an effect on the real economy and that in turn affects employment.
It's one of the reasons why we have projected ahead that unemployment will increase to four and three quarter percent during the course of the next year. We are not immune, but I am saying given these global circumstances we have a clear cut strong economic strategy based on responsible economic management to see Australia through.
MITCHELL: So in simple terms, to the person who isn't spending every day reading the Financial Times or the Financial Review, what do you say, do you say sit tight, do you say don't panic, what do they do?
PM: Well Neil the worst thing that any political leader can do is provide individual financial advice to any individual Australian.
MITCHELL: Oh of course, but we are not talking individual here -
PM: No, no I am just being very cautious about that. I think the legitimate expectation of the community is that the government has a clear cut responsible economic strategy to see Australia through.
And secondly that it is as active internationally as we are nationally because, and this is where it goes back to the critical nature of us being totally engaged with the US financial institutions. When I was in the US in March this year, sitting down with the head of the IMF, the chairman of the US Federal Reserve, the Secretary of the United States Treasury and the chairman of the US Securities and Exchange Commission has been very necessary because maintaining those personal links with people who are the key decision makers each day, I have got to say in recent days, has been very important for us.
MITCHELL: This is going to be with us for some time isn't it? I mean, even if we are coming out of it now, who knows, but even if we are coming out of it now, this is going to affect this country for several years ahead.
PM: It is a very difficult set of circumstances Neil. I don't wish to mislead your listeners.
MITCHELL: But is that a fair comment, it is going to affect us for years ahead?
PM: I can't put a figure on that Neil. I do know that every time I speak to some of the individuals I have just referred to, they indicate that we have a long way to go yet. I notice however that -
MITCHELL: What term?
PM: Well let me just go back to one comment by Dominique Strauss-Kahn who is the head of the International Monetary Fund, he's a bloke I have been in contact with several times during the course of the last year. What he has said is that he expects to see economic growth recover in 2009.
He says that we are in for a difficult period this year and that is the statement now of the bleeding obvious but to give Strauss-Kahn his due, he was saying that much earlier than a lot of other people were this year.
But his projection, and he has been somewhat bearish on this, is that we will see a recovery in global economic growth numbers in the course of 2009. Whether it is middle or later 2009, remains to be seen.
MITCHELL: Okay that said, and you accept that analysis do you?
PM: Well the IMF is the global body that the entire global financial community entrusts with analysing the entire system. That is his projection and I simply put it to your listeners as a reasonable guide to the future and we, at a national level, will be harnessing every bit of Australian economic policy power and financial power to make sure we steer the economy through.
MITCHELL: But Mr Rudd you must have advice from your own bureaucrats and the Reserve Bank and everybody else. What is your view, how long is it with us?
I mean that is the quote of the IMF but how long is this, in the advice you're getting?
PM: We have our own director on the IMF board so it is a body owned by all of us. So it is a credible global institution. In terms of the Australian international institutions, I can just reflect back to you Neil that we are in for a rough time globally, at least through the course of 2008.
2009 is a more open question. But what I have just indicated to you from Strauss-Kahn has not been, from the bloke from the IMF, is not being disputed by our own national economic authorities.
MITCHELL: Hello Deano, go ahead please Deano.
DEANO: Good morning Prime Minister, how are you?
PM: G'day Deano.
DEANO: Look we have just got one question, before I have an accident.
PM: Mate, just make sure you have got both hands on the wheel.
DEANO: Oh definitely, I drive manual, so I have got one, only one. But I am a good driver, never had an accident. I was wanting to ask you, I have got a bank account, like how many other million people. Does the Australian government guarantee the money in that bank account?
PM: The first thing I would say to you Deano is this, and here I quote directly from the head of the main regulator of the Australian banking system and that's called the Australian Prudential Regulatory Authority. What he has said is as follows: Australians deposit taking and insurance companies supervised by the APRA, are well capitalised, profitable and well regulated and are weathering the turmoil well.
Australian depositors and insurance policy holders can be confident in the soundness of Australian financial institutions, that is the first point. The second is this, Deano: what we have done since coming into office is put out there what is called a financial claim scheme, and a financial claim scheme, once it is legislated as it will be later this year, provides a basis for individual deposit holders to obtain their deposits back up to $20,000 in a short order of time.
This is part of the international -
MITCHELL: What does that mean Prime Minister?
PM: It means that in the unlikely event that you had a problem with a financial institution, that rather than wait as you have to under the existing laws of Australia, for the liquidation of that institution, by the you know, by the receivers and by the liquidators to get money back, that this actually provides up front access to cash on the part of the depositors. That is why we have acted on this, despite the fact, I have got to say, that the recommendation to do it came five years ago in Australia after the HIH implosion.
MITCHELL: But Deano's question is very direct, does the Australian government guarantee the banks?
PM: Well his question went to depositors and what I have said is that, what APRA has said, the regulator, which is that they have confidence in the (inaudible)
MITCHELL: That is not answering the question, Deano, your question is -
DEANO: I am telling you that I was on the RBA website yesterday and I was reading that, and as (inaudible) the RBA, the Australian Reserve Bank does not guarantee a (inaudible) which is approved deposit takers, is that what it is or?
MITCHELL: Okay, the direct question is does the government guarantee the banks?
PM: Under existing law, well he is asking, you are asking a question about the banks themselves -
MITCHELL: Ok, does it guarantee the depositors funds in the banks?
PM: Well under the existing law of Australia, what happens is that in the unlikely event that you had difficulty with an individual institution, you have a scheme in Australia which is called Depositors First, that is that if an institutions gets liquidated, then the depositors get first call.
We are trying to improve that, how are we going to improve it? Through this financial claims scheme which means that in a timely fashion, depositors get access to up to $20,000 of their cash before having to wait for liquidation process.
That legislation will be through very soon.
MITCHELL: So does the government guarantee depositors funds?
PM: Well the government, historically has not done so in Australia since, you know the federation of the country to the best of my knowledge. What I am saying is, what I have just referred to you Neil is the actual laws of Australia as they currently exist and how we are about to change it through this new financial claims scheme, for the benefit of people like Deano.
MITCHELL: Thank you Deano, thank you for calling. We will take a break, more from the Prime Minister in a moment.
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MITCHELL: Andrew, go ahead please, Andrew.
CALLER: Prime Minister, I'm an average Australian. I'm just wondering when you are going to start talking English and explain to the Australians where we stand today. None of us can understand the words that you're trying to get across. And I particularly mean the average Australian. Thank you.
PM: Well, can I just say in response to that, the global financial situation is really complex. And we're dealing with financial markets which are really complex, and some of the language in which we've got to deal in is very complex. My job is to make sure that we've got a credible, national economic strategy to respond to the global economic environment. We've got that anchored in a very strong Budget surplus. And I've got to say, my responsibility is to work hard with national financial institutions and international financial institutions to chart a course for Australia through. That's what I'm doing. Some people may not support it. I understand that. It's politics.
MITCHELL: It's an interesting point, Prime Minister. I was talking to Malcolm Turnbull about it this week. I asked him if he thought he was a good communicator. Do you think you're a good communicator?
PM: Oh, that's a matter for other people to judge. Obviously your last caller doesn't have that view. But -
MITCHELL: Do you think Malcolm Turnbull comes across as arrogant?
PM: Oh, mate, people will make their own judgments about me and Mr Turnbull. I'm much more concerned about the judgment that they make at the end of the day on the policy.
MITCHELL: I did see a report this week that you'd answered 50 questions in more than five minutes in the Parliament. Did you see that?
PM: No I didn't see that. But, I mean, it depends on the nature of the question. I mean, I think -
MITCHELL: Well, the previous government was running at about half of that rate?
PM: Well, can I just say that since I've been in I think the Opposition has probably asked me more than 300 questions in parliament. Some you answer in a short period of time, some take longer. It depends on the nature of the question.
MITCHELL: Wealth is also being discussed as an issue this week. How much are you worth?
PM: Well, my salary is on the public record. It's -
MITCHELL: How much is your wealth (inaudible)
PM: $300,000 plus is what the Prime Minister earns.
In terms of my wife, she is a successful businesswoman. I'm proud of what she has done. She gets a salary from her business. And she's built that up herself independent of me for the last 20 years.
MITCHELL: Do you know what the family wealth is?
PM: Well, the question of what Therese's individual investments have been since we've got into government, that's gone obviously into a blind trust. So, our income, that is, my income, is out there on the public record.
Her income is a private matter, always has been. She's built up the company herself. But the key question about debates about wealth, this goes to Mr Turnbull as well, is that his wealth is completely irrelevant to the debate about the future because the debate about the future is the policies we represent. And the policies we put forward, for example on WorkChoices, we oppose it, he supports it - those sort of things.
MITCHELL: He said you're the richest Prime Minister in history and you're more wealthy than him. So he's sort of turned it into a political issue. Are you wealthier than him?
PM: I have no idea what Mr Turnbull's personal wealth is -
MITCHELL: Do you know what you're worth yourself?
PM: On the question of our own financial arrangements, I know exactly what income I get, I know how much I've got in the bank myself. But can I say, my wife's individual income arrangements are a matter for her, they always have been. As they should be. I mean, she's built up her business off her own back over the last 20 years. That's a matter for her. I'm accountable for what the taxpayer pays me. And frankly, to go back to the overall question about wealth and personal wealth, this is not relevant to the debate about the future of the nation.
MITCHELL: You're quite right. But I must say, I think if my wife had built up a business worth $100 million, I'd know about it. I think I'd be spending it.
PM: Well, you know something Neil, I'm very proud of what she's done -
MITCHELL: Oh, of course.
PM: Hang on, let's just put it on the table. She started with nothing, and put the house on the line 20 years ago to get a sufficient loan from the bank, initially it was a private loan and then she had to put the house on the line later on, in order to build up the business -
MITCHELL: Good on her.
PM: So, she started from scratch. Built it up. Good on her. And she's done that, I've got to say, without any help from me, which is probably why she succeeded.
MITCHELL: You just get the feeling that it's a political negative to be wealthy. And that's silly.
PM: Well, I have not said anything about Mr Turnbull's financial circumstances -
MITCHELL: Well no, but your party has been after him.
PM: Well, you know, it's a pretty free and fierce exchange in the parliament, mate. And you can't control what either all of they say, all of the other side say about the likes of me, or for that matter, what all of our mob have got to say about some of them.
But from my point of view, I'm the Prime Minister, I'm the leader of the Labor Party, questions of Mr Turnbull's wealth are not relevant to the debate.
MITCHELL: Unions say you've dudded them on WorkChoices. Now, why haven't you? How is it really significantly different from what John Howard was doing?
PM: Well the first thing is that we've abolished the right to make AWAs into the future. And those AWAs have stripped everything effectively away -
MITCHELL: What about unfair dismissal laws?
PM: Well, the unfair dismissal laws are quite clear cut. What we've said is - and we said this before the election and we've honoured everything that we've said - if you're in a small business with less than 15 employees, it follows that for the first 12 months that unfair dismissal laws do not apply. After that, what we're putting out is a very simple six -
MITCHELL: Doesn't that mean that in a small company that you can unfairly sacked and there is nothing you can do about it?
PM: Well, we've got to balance this with the rights of small businesses -
MITCHELL: Oh, I agree.
PM: And get the balance right. (inaudible) We obviously will apply the full range of the unfair dismissal code. The thing is to get it right. And what we have done is, I believe, given small businesses 12 months flexibility. After that, a fair dismissal code applies, which is very simple and straightforward. If someone gets caught tickling the till, they'll be out the door straight away. Other than that, it's a very simple process to go through.
MITCHELL: The unions should cop it?
PM: Well, I think we've got to get the balance right. And you know something, if you have people whinge about what we do from both sides, you're probably getting the balance about right.
MITCHELL: (inaudible) tell John Howard that about WorkChoices.
Now, can I please -
PM: I don't think he got it right from both sides.
MITCHELL: Well he got whinges from both sides.
PM: I don't think there are many people saying from the employees' side ‘go harder John, go harder'.
MITCHELL: If I can just finish on something personal. Are you a shooter?
PM: I have been, yeah. I shoot, well I have shot sporting clays, yes.
MITCHELL: Do you still do it?
PM: I haven't done it for a couple of years now. But yeah, I used to be patron of one of the shooting clubs in my electorate in Brisbane, the Belmont Rifle Range.
MITCHELL: Pretty good at it, too?
PM: Ah, no. Very bad, actually.
MITCHELL: And you're a horse rider?
PM: Yeah. I grew up on a farm, I like horses.
MITCHELL: How often do you rise horses?
PM: Well, last time I was on a horse was probably a month or two ago up on a cousin's sheep property not far from Canberra.
MITCHELL: Clears the head?
PM: I beg your pardon?
MITCHELL: Clears the head, does it, riding a horse?
PM: I like riding.
MITCHELL: No, no - I think it does clear the head to get out and do it. But, if anybody ever worries about your nerd image all you need to do is be seen with a horse and a gun.
PM: Mate, you know something, I grew up on a farm where there were guns around. I like shooting, when I get a chance to go out and doing sporting clays, and I like riding a horse. Do you know something, that's not what I'm paid to do.
MITCHELL: Thank you very much for your time.