SANDY: What's happened in Wall Street, in the United States, what does this mean to Australia and Australians and should we be worried because inevitably people will start thinking ‘oh my God, it'll happen here'?
PM: This is a bad development in the United States financial markets. I've been on the phone this morning to our Ambassador in Washington to identify when a package will be represented to the US Congress.
Our understanding at this stage is that it will be represented some time later this week, and we will be urging all American Congressman, Republican and Democrat, to support a measure which is necessary to stabilise not just US financial markets, but global financial markets.
In Australia, to go to the other part of your question, as late as last week we had the international monetary fund produce a report on the state of Australia's banks. And it concluded that they are in good shape. It said that Australian banks had weathered the global financial turmoil reasonably well. The four large banks, that account for two thirds of bank assets, continue to report strong profits through to 2008, through early 2008, and together with adequate capital.
And the point I'd emphasise to your listeners on this score is that our regulators are first class, Australia has four of the world's 20 AA rated banks. In terms of sub-prime, which is what caused this crisis in the United States -
MIKE: Loans to people who can't pay them back, you mean?
PM: That's right, yeah. These loans, they represent some 15 per cent of mortgages in the United States. They represent just about one per cent of the mortgages in Australia.
And when it comes to arrears rates, that is, people who are falling back or behind in their repayments to banks, ours is very low, something like less than one percent, the United States five or six times higher than that. So, there are great differences between the state of the US financial system and the state of the Australian financial system, particularly in relation to the banks that I just referred to.
MIKE: Okay, let's put that around the kitchen table then, if you like. People are worried about their family budgets, their savings, their super, their mortgage repayments, their credit card debts - are they safe? Are they going to be okay?
PM: Well what I can say to you Mike, and to your listeners, is that if in the midst of a global financial crisis you wanted to be in any country in the world, you'd want to be in Australia. Because our regulators, as I just indicated, are first class. They've just been through the state of the four large banks and they've reached conclusions about the state of their balance sheets.
So we are in strong order going forward. And this is backed by strong economic management by the National Government.
It is true, we are buffeted by global financial markets and it is true that what happens in the United States does affect the rest of the world. But here in Australia, based on the objective truth of the state of the balance sheets of our major banks, we are in a strong position.
SANDY: But we are Prime Minister, are we not, carrying more debt per household than we ever have before?
PM: Well, personal indebtedness has been at high levels and that has accumulated over a long period of time.
The key thing for the Australian economy, however, is the state of our financial institutions. And, as I said before, as recently as last week, the International Monetary Fund, the global authority charged with looking at the balance sheets, if you like, of each country's financial system, has reached that conclusion about Australia.
It's a difficult time, it's a hard time, but can I say, we together with the Reserve Bank, the Australian Prudential Regulatory Authority and others, together with our international counterparts, are working through this day by day to make sure that we are in the best position possible in Australia.
MIKE: Alright. The maternity leave package, that came as a bit of a bolt from the blue yesterday. Is that just a plan, a recommendation, a suggestion - or are you actually going to implement it?
PM: Well, prior to the - let me just put it all into context - prior to the election we said we'd get the Productivity Commission, and that's a specialist research unit of the Federal Government, to produce a report on this. What happened yesterday is they produced their draft report, runs to a couple of hundred pages, very detailed, looks at a whole range of reasons why Australia could use, productively, a paid maternity leave system. That's their draft recommendation. For the next few months, it's out there for public debate. And they'll produce their final report at year's end.
What I said yesterday was that it's time for Australia to bite the bullet on having paid maternity leave for this country. On the detail of it, that is, how much, how long, we'll wait and until we get the final report come year's end.
MIKE: What do you say, Mr Rudd, when we've had a bit of this criticism here on the program this morning to people who say that they don't want their taxes paying for women who choose to have children and work. Something I have to say I don't agree with, but what can you say to them because they are Australians as well, after all?
PM: That's true. You've got to get the balance right in this system. Across Australia we obviously have stay at home mums, and we have mums who are in the paid workforce. And we've got to provide support for both. Our approach as a Government will be for stay at home mums to provide that support through the baby bonus. And that will remain, and that will continue. But for mums returning to the workforce, we believe the time has come for paid maternity leave.
Now, the precise shape of that, the content of it, the length of it, we will work our way through in the period ahead.
There's a couple of facts, through, which might help the debate on this. That is, across Australia right now there are something like 285,000 babies born each year. 110,000 mums at the time at which their baby was born were not in the paid workforce. 175,000 of those mums were in the paid workforce.
So what about those 175,000 mums? What we're finding is that about half of them have some form of paid maternity leave provided by their employer. But, what's happening is that lower income mums in particular, and those who are finding it hardest to balance their family budget, are in fact not getting paid maternity leave.
That's where we've got a problem on our hands. We've got to make it easier for them to make a decision to have a bub and not to go back to work too early because that's not really good for the health of the bub, not really good for maternal and child health in general.
Getting the balance right between choice, here, mums who choose to stay at home, and that's a decision I entirely respect and will support through the baby bonus. And, those mums, particularly lower income mums, who need to get back to work, we've just got to get the balance right.
MIKE: One last quick one, you get the last leg of this Garnaut Report on climate change today. Aren't we though with this rock bottom world financial crisis, there's not going to be much money around to fix up climate change in the next few years, is there?
PM: Well, climate change is there with a huge impending economic cost for us all. I mean, the overall logic is the economic cost of inaction is far greater than the economic cost of action.
But you know, what we've said all along is that we'll stage our implementation of Australia's response to climate change in an economically responsible way. But we intend to act on the best advice and the best evidence. But if we fail to act and just push it to one side or throw it under the carpet, it's just going to come and bite us on the behind.
If you want some evidence of what's happening with climate change, look at the state of the Murray-Darling, and look at the impact which that's already having on our national economy.
We've got to act, but let me tell you, we're going to be acting in an economically responsible fashion.
SANDY: Prime Minister, we know that you've got to scoot, so thank you for your time this morning.
PM: Thanks for having us on your program.