ALOISI: Prime Minister, good morning.
PM: Good morning Mike, good morning Sandy.
ALOISI: And these are dangerous, fairly unchartered waters that we're in. How confident are you that this package will work?
PM: I believe this strategy will see Australia through this global economic crisis, this global economic recession. The key challenge is this: as we respond to each new piece of economic data to make sure that the package of proposals we put forward is best placed to support growth and jobs in a global environment, which is very, very volatile indeed. There are no guarantees in this whatsoever because we're in unchartered global economic waters.
My job as Prime Minister however, is to shape a strategy which helps support jobs and helps also to build necessary infrastructure like building and rebuilding schools which are needed in the long term as well.
CARLTON: There has been some criticism that you've sold us too much gloom and doom - that you might have spooked us all into saving rather than spending. Does that concern you?
PM: My job as Prime Minister, Mike is to be up front with the Australian people about two things: the challenges that we face and they are real, I will neither overestimate nor understate them. Secondly, to be equally up front about the great strengths we continue to have in the Australian economy and the strengths of course we've got in the Australian people.
And on top of that, to explain clearly our strategy for seeing Australia through. It would be wrong for me to say there is not going to be huge turbulence on the way, and it would be equally wrong for me to say that there is no way through.
I've got to provide a rational basis for optimism, hope and confidence for the future. That's why we put out this detailed plan which builds on the detailed previous parts of the plan we announced in the last quarter of last year.
ALOISI: But the money needs Prime Minister to start flowing into the economy very quickly doesn't it? If families use their money, say to pay off debt or even just keep it in the bank it won't be as effective.
PM: When you provide support to households as we did in the last quarter of last year and again through what we are proposing in the first two quarters of this year, it does a couple of things.
Firstly, based on a lot of international evidence we know that a lot of that goes directly into consumption. And that supports the retail sector and there are millions of Australians employed in the retail sector.
Secondly, obviously we can't control what each person does with their money and they will perhaps save some, they will retire some of their own personal credit card debt, but as they do that, what they are also doing is freeing up their capacity, a little later on in a few months time to spend money which they would then otherwise save.
You see all these things relate to each other but if you do these things on support for households, but most importantly bear this in mind, three quarters almost of the $40 billion package that we announced yesterday, goes into direct Government investment in modernising schools, in energy efficiency in homes, in new investment in social housing, in local government roads and other infrastructure. As well as a tax support for small business, these measures go straight to activity in the economy.
CARLTON: Alright, have you read Peter Costello's comments this morning. He's accusing you of a monumental U-turn and a return to the big spending days of Gough Whitlam.
PM: No I haven't seen that.
CARLTON: (inaudible) Sydney Morning Herald.
PM: No I just, I haven't. I have been head down and completely focused on developing a strategy and implementing a strategy to see Australia through.
Let's be very clear about the alternatives here. First of all, what we have had across the world in every government across the world, is a collapse in government tax receipts because of a global economic recession which came out of unrestrained greed and unregulated financial markets in America and elsewhere.
In Australia's case, that has taken $115 billion off the tax receipts going into the Commonwealth. That's the first thing. Therefore automatically you go into deficit. That's what happens and that's what has happened in every, with every government around the world.
The second thing is this. On top of that, we the Government as a have all governments around the world, decided to invest in separate stimulus into the economy to reduce the impact of this recession on unemployment and to continue to support growth. And that's what we have put forward (inaudible).
It follows that for both those things, that is the collapse in Government revenues and the additional money that you spend by way of stimulus, that you need to go into deficit and you need to borrow.
The Liberal Party surely is not suggesting that you could somehow go out there and not balance your budget by borrowing in order to offset the collapse in tax receipts, or are they suggesting that?
CARLTON: Well I don't know what they're suggesting because they haven't -
PM: Well are they suggesting there should be no stimulus package and you don't borrow for that. You can either play cheap politics on this, which is what they are doing, or you could actually go to the real problem which every concerned government around the world is trying to grapple with - this global economic crisis, the likes of which we haven't seen the 1930s. Therefore, it's all hands to the pump.
CARLTON: Are they likely though do you think to block it in the Senate? I mean Malcolm Turnbull this morning is saying they want to consider that, and see the Bills I guess first of all, but there is chance they might try and obstruct you in the Senate.
PM: Well this is why the position of the Liberal Party is not just of passing interest. They have a huge influence in the Senate and so if there are households out there who need support, through the payments that we've outlined, including the back-to-school bonus of up to $950, including the one-off tax bonus of up to $950 for people earning up to $100,000 - or, if you want to see school modernisation in every primary school in the country, with new 21st century libraries or new multipurpose halls or classroom renovation, all of which generate jobs and build good things for the future - if you want all those things then you've got to get in behind this package.
If you're going to play short term politics as the Liberal Party seem to be suggesting, then they're going to oppose it.
I think they are playing with fire here, because what we're trying to deal with is a bushfire, and economic bushfire which has spread throughout the world, which Australians and Australia did not cause but which this Government now has to deal with.
ALOISI: Nonetheless Prime Minister, with the $42 billion package you've announced, you're still forecasting unemployment to rise I think 300,000 people extra on the dole queue in the next 12 months is what's being predicted. What can you say to those people who may now use their jobs?
PM: On the question on unemployment, this is, goes to the absolute core of why we've announced the package that we have announced yesterday.
I cannot eliminate the impact of a global economic recession. What I can do is try and reduce its impact. We have been as up front as we can with the numbers that we've been provided by the Treasury about the impact of this global economic recession on unemployment in Australia.
The 300,000 figure you referred to, I am advised is made up of two parts: 100,000 who would lose their jobs, 200,000 who would be prevented from entering the labour market.
The impact of our package is to support up to 90,000 jobs. As I said, I cannot eliminate the impact of this global recession. I can however reduce its impact.
It's what responsible governments are doing. In fact just on that point you raised before about the Liberals, I note also that the Liberal Government of Western Australia through its Treasurer has said, and I quote ‘the type of stimulus, whether it impacts on consumption, expenditure or investment is something that the State Government of Western Australia welcomes.'
It seems the Liberals in Western Australia, in Government know the challenges the nation faces. The Liberals in opposition it seems in Canberra are trying to bury their head in the sand and just play short term politics.
CARLTON: Prime Minister on this business of unemployment benefits. You can ease up on the rules for claiming. I mean the Howard Government went out of its way to bash people who had the nerve to walk in the door at Centrelink. Can you make it easier, I suppose, less punitive for people who really, genuinely do need help?
PM: Mike, I think when it comes to how the Government, the country and the community responds to the challenge of those who find themselves unemployed through absolutely no fault of their own, we're going to have to go through every one of these measures.
And I know for a fact that the Deputy Prime Minister and relevant Ministers are working through all elements of labour market programs and the rest about how you respond to people who find themselves unemployed (inaudible)
Work is underway. We'll have more to say on this before too much longer.
CARLTON: But are you inclined to that view that it should be not such an ordeal now, to claim unemployment benefits.
PM: Well my view Mike, very simply is that Government and the community have to be humane and compassionate and sensible about how we handle this challenge and therefore all these things have been gone through as we speak.
Remember, anyone who is affected by this global economic crisis which comes out of unrestrained greed on financial markets, it strikes me again as curious that the Liberals, these free market fundamentalists, haven't had pause to reflect on how this thing actually came into being in the first place, this crisis which now engulfs working people across the world.
Our job as a Government is to help stabilise, as a Labor Government is now to help stabilise financial markets, how to try and keep the economy going through growth, through direct Government investment and support of families. And thirdly, how you also then help those who are the victims of this crisis - the unemployed.
ALOISI: Prime Minister pensioners and self-funded retirees feel a little left out of your package. When are you going to make a decision on pensioner reform?
PM: Well on the question of pensions, first of all you recall the very large provision we made for pension at the end of last year, in terms of the one off payments.
HOST: That was a one off though.
PM: I understand that. I was just going to run through what we said then and how our position hasn't changed.
Secondly, I also indicated that we would, through the upcoming budget determine the final shape of pension reform and that of course is the budget which is due in May.
Can I also say in terms of self-funded retirees and you mentioned them in your question as well. If self funded retirees for example paid tax in 07-08 then they of course become eligible for the one-off bonus, one-off tax bonus of up to $950, for those on incomes up to $100,000. That's one point.
And secondly, self-funded retirees at the end of last year, if they were in possession of the Commonwealth Seniors Health Card and a large number are, would (inaudible) for the one-off payments of $1400 for singles and $2100 for couples.
CARLTON: Okay. Last question, when do you think you might know if this is working. When will the indicators start showing green, if you like?
PM: The problem we have Mike is every two or three months when the new wave of global economic data comes in, it has A - changed and B - got dramatically worse.
I'll give you one example. When we did the mid-year economic forecast in November last year we indicated there had been a $40 billion collapse in Government revenues, tax revenues coming off the back of a global financial crisis. Come this statement, we've indicated there has been a further $75 billion collapse, that's $115 billion off our bottom line.
So the problem is this: I can respond to the circumstances as they present themselves to me now, based on the information which has come in from across the world including the halving of China's growth which so directly affects us and shape a strategy to see the nation through.
To go back to one of your earlier questions. You know, this nation will come through this crisis. And we'll come through it more resilient than we were before because we've got a strategy here which seeks to support growth, support jobs and provides therefore a rational basis for optimism for the future. We intend to get on with it.
CARLTON: Prime Minister thanks very much for your time, much appreciated.