FAINE: Kevin Rudd good morning.
PM: Good morning Jon.
FAINE: We'll talk about swine flu with Nicola Roxon a little later this morning so can we talk about financial matters first and the context of the budget turnaround of as much as $200 million and can you confirm that figure?
PM: Well, what we've already indicated is that we have had a write-down in tax revenues for Australia of $115 billion and given what's happened in the global economy more broadly, obviously we think the risks there are on the downside.
And frankly, you put all that together, it means that either you engage in temporary deficit and temporary borrowing to make up that shortfall in tax revenues, and the Liberals have committed to their own $177 billion deficit and debt strategy to that to make up for collapsing tax revenues-
FAINE: Yes.
PM: And if you don't do that, what it means is complete slash and burn of basic Government services like not paying people the pension. This is very big numbers.
FAINE: We'll come to some detail in a moment, but do you think overall Australians live beyond their means?
PM: I think Australians make sensible decisions about their life and their planning for the future. I think what all Australians have copped in recent time is a torpedo amidships from overseas and that's the global financial crisis which wreaks havoc in every economy in the world.
Australians didn't cause this thing but we are certainly suffering the consequences. Our job as the Government, through the actions we take, is to try and reduce the impact.
FAINE: But overall do we have to lower our standard of living?
PM: I believe that the entire nation, because we've taken a cut in national income as a result of the global recession, and because budget revenues have taken a huge hit, $115 billion I referred to before and the risks there are on the downside, it means that our investment overall for the future will obviously be shaped by that.
But this is a challenge we've been dealt with, no point complaining about it. What Government must do is reduce its impact and build long term strategy for economic growth while in the meantime building jobs now by also creating the infrastructure for tomorrow which is what we're doing with school modernisation programs across the country now and building the national broadband network as well.
FAINE: Are you going to make the rich pay?
PM: Look, we think that it's very important that in this nation we get the balance right. And we believe for example that pensioners who've been doing it tough for a long, long time, we've committed ourselves to pension reform but at the end of the day we've also got to make sure that our Budget is sustainable in the long term.
And that means everyone, everyone playing their part and obviously the wealthiest Australians have got more capacity to do that than others. But all will be revealed on Budget night Jon and you've heard the response from myself and my predecessors in previous years, we don't comment on the content of the Budget.
FAINE: There are some things emerging though, in particular the cut to the Youth Allowance where you're going to require unemployed or teenaged who are not in training to enrol in a course or lose the Youth Allowance. Is this for their benefit or for yours? Is it just to keep the unemployment rate down?
PM: The key thing here is to learn from the previous impact of recessions and what I am most concerned about is not to allow this global economic recession and the consequential recession in Australia to create a generation of young unemployed people. So how do you learn that lesson from the past and do it differently?
Our attitude is this - and I was here in Melbourne giving a speech on this three or four weeks ago - a national Jobs and Training Compact with Australians, part of which is a Jobs and Training Compact with young Australians. And the essence of it is this - anyone under 17 must be earning or learning, full time school, training or work.
Secondly if you're under the age of 20 and you're not working, you'll be provided with a training place with the first priority being a year 12 or equivalent vocational education training qualification.
And the third is, if you're under the age of 25 and you're not working, you're guaranteed a training place to ensure you have the skills needed to be part of the recovery.
We think that this will provide support for up to 135,000 young people by getting qualifications now that they don't have which help them with a job once the recovery comes.
FAINE: But Prime Minister, not every young person knows where their life's direction is. Some people need time out, some people don't find themselves at that age.
PM: It's important, it's important for our young people to be out there acquiring skills. For example I am advised that there are around 58,000 young Australians without a year 12 or an equivalent qualification receiving Youth Allowance.
Now what we want to make sure is that if you're out there and you're a young person receiving Youth Allowance, that you are engaged in training of one form or another. We're not going to mandate the type of training but we must ensure that our young people are getting skills today for use for themselves, their families and the economy tomorrow. That's all part of planning for the future.
FAINE: It's not one size fits all though, would you agree? That some young people go through life in different ways and this is going to make life incredibly difficult, you'll have more homeless youth, you'll have more people drifting around, you might even have more crime as a consequence.
PM: Well, we believe that one of the things that we must avoid is to have young people becoming a generation of unemployed and eventually unemployable people and the best way to do that is to invest significantly in training places.
Julia Gillard, the Deputy Prime Minister, is out there investing in more than 700,000 training places for the nation. We want to make sure that young Australians make full use of that. That's really important. Obviously each person's circumstances are different, that's why the training places are different too, across the entire spectrum of certificate level qualifications, but we want our young people to be skilled for tomorrow.
You talk about homelessness. Part of the national economic stimulus strategy to create jobs now to build the infrastructure for tomorrow is for us to invest some $6 billion in the biggest expansion of social housing this country has ever seen. 20,000 additional units of social housing now being built. This is a big investment in the homelessness challenge, we're moving on all fronts, making sure young people have skills but also expanding the availability of public housing for people in need at the same time.
FAINE: But aren't you ripping a big hole in the so-called Labor safety net, the Labor compassion, Labor commitment to looking after those who are slipping through and in fact you're going to leave more people without that sort of support.
PM: We believe Jon, firmly, that it's important to invest in providing a proper, decent and humane safety net for all Australians. We've already discussed this morning the importance of long term pension reform, that's part and parcel of it as well.
But also equipping young people with the skills that they need and all Australians with the skills they need for tomorrow. Our attitude is this, in the midst of this global economic recession, the worst economic circumstances in three quarters of a century, how do we learn from the past, how do we prepare for the future, and that's to through our national nation building and infrastructure program, built the best schools for the 21st century, build social housing for our needs today, invest in energy efficiency measures in households, create these things for tomorrow while creating additional jobs and training places for today.
FAINE: Alright.
PM: No solution is perfect Jon but I believe absolutely that this Compact with young Australians is the right way to go, given the circumstances we now confront.
FAINE: Prime Minister, to move to the Defence White Paper about to be released and some details have already been leaked through the press. The relationship with China is said to be being renegotiated because of this, Australia being seen to be re-arming on behalf of the United States. What signal does that send to China? Your great friends in China?
PM: Well Jon that question burries in it about 15 hypothetical assumptions, so let me just go to our overall approach to planning for this country's defence needs for the next 20 years. And that's what our task is.
We want to make sure that our defence force is equipped with the resources - our navy, our air force, our army - with the resources and the skills necessary to meet a whole range of future defence contingencies.
It follows very plainly that here in the Asia Pacific region, there are in certain parts of the region the build up of armed forces. We simply need to take a calm, measured, responsible approach for the future to make sure that our army, navy and air force have the resources they need for the future.
They're a fantastic group of professional men and women. We just want to make sure they're properly equipped for the future and proper defence planning means this, being prepared for the whole range of national security challenges in the future and that is what will be outlined in the Defence White Paper.
FAINE: There is no department that has a worse track record in spending enormous amounts of money than the Department of Defence. At a time of great economic belt tightening, why spend so much in a department that doesn't know how to spend?
PM: First of all I believe that the Australian Defence Force are a first class fighting force and they are under excellent leadership.
Secondly, of course there have been problems with defence procurement in the past and that has been the case for many, many years including under our predecessors as well, we accept that reality. That is why the Government has also commissioned its own work internally through what is referred to as the Pappas Review on the way in which defence procurement is done for the future. That's important as well as a set of internal reforms.
But what's the key mission here Jon? It's to build the defence force Australia needs for the year 2030. We're talking about 20 years time. Defence procurement lead times are very long.
But we've got to make sure that we're taking decisions now which means that those who come after us can look to the men and women of the Australian Defence Force and know that they've got the kit, the equipment, the skills, the manpower, the staffing levels that they need. That's our job, that's our responsibility, I take the nation's national security needs deeply seriously.
FAINE: Prime Minister the Fiji strongman General Bainimarama has said he wants to meet with New Zealand and Australia to talk about improving democracy, restoring democracy in Fiji. Will you meet with him?
PM: This is the bloke who just abolished freedom of the press in Fiji, this is the bloke who just sent independent judges, including those from Australia, packing. This is a bloke who just suspended the Constitution of Fiji. These are decisions taken by the military government of Fiji.
It's quite plain that the Pacific Island Forum countries - these are all the island countries of the Pacific, except Fiji, plus Australia, plus New Zealand - when we met in Port Moresby earlier this year, we said that we wanted Fiji to come back into the family of democracies which make up our South Pacific family.
We invited Fiji to announce an election timetable within a reasonable timeframe. Not only did they not respond to that but they then went in exactly the reverse direction by the three measures I've just outlined.
And as a consequence they are setting themselves up to be automatically suspended from the Councils of the Pacific Island Forum, something which has never happened before with any of our Pacific Island neighbours. It's with great sadness that these actions have been taken.
FAINE: Are you questioning his sincerity when he says he wants to meet?
PM: Well I always look at what people do, Jon. And if you've been out there kicking out journalists, shutting down freedom of the press, suspending your constitution and launching a fundamental assault on the independence of the judiciary, I don't think you need too much imagination to conclude that what all that equals in terms of a real commitment to return to democracy.
FAINE: So what do you want to see from Fiji before you will agree to meet?
PM: Well it's a question of what the Pacific Island Forum, which is the paramount regional body of states including Australia, New Zealand and all the other Pacific Island nations including Papua New Guinea, I met their Prime Minister in Canberra only a few days ago and we discussed this matter.
We laid out very clearly, both in a communiqué we released at the last Pacific Island Forum in Niue at the end of last year and at the special Forum meeting explicitly on Fiji in Papua New Guinea earlier this year, that what they need to do in Fiji is announce a timetable for elections, which is reasonable, which is within the immediately foreseeable future, not off in the total never-never, in order for us to begin to contemplate any form of normality in our relations with the Fijian military government.
But the bottom line is this, the people of Fiji deserve better than this. We, Australians have great relationships with the people of Fiji, they are a wonderful people but this military government has taken a fundamental assault on the institutions of democracy including the freedom of the press, I don't regard that as a basis for business as usual.
FAINE: Prime Minister, Nicola Roxon joining us in a minute to talk swine flu but just finally you've had a lot to do with someone that we have a lot to do on this program. Sally Warhaft is the editor or was the editor of The Monthly magazine, she's a regular on this radio program and you worked closely with her on your much-discussed essay about the economy post-collapse.
PM: I've written three essays.
FAINE: Yes indeed, earlier ones as well. She's been removed from her position as editor of The Monthly, will you-
PM: I read this.
FAINE: Will you continue to contribute to the magazine without her?
PM: Yeah of course. I think it's a great mag and I actually gave a speech on related matters for the launching the John Button Prize here in Melbourne last night and the great opportunities for considered political thinking, political writing, long term not short term, whether you're from the so-called political left or the political right, the platforms in our nation are really important.
The Monthly provides that one and it's a good read as are many other such magazines across the country. It's all part of the vibrancy of democracy.
And yeah, sure I'll be contributing in the future. I'm just waiting for a, you know a substantive response to the body of ideas I advanced in the last essay which was that neo-liberalism basically has been shown to be the Emperor without clothes when it comes to the causes of the global financial crisis because of their commitment to unregulated financial markets and their commitment to abolishing any effective functioning for the state and government at a time when, what's happened? Everyone around the world has turned to the State and to Government to try and bail out banks around the world which have failed and unregulated financial markets now needing to be re-regulated.
FAINE: I sense an occasional frustration in Kevin Rudd about the superficiality of political dialogue in Australia. Do you look more and more to overseas to get your juices flowing? And for how long do we retain Kevin Rudd's full attention in Australia?
PM: On the question of day-to-day political life in Australia, it's just important to keep your sleeves rolled up and do practical stuff. The core challenge I face as the Prime Minister of Australia, Jon, is to spend every waking hour working out what I can do to reduce the impact of this global economic recession.
You talk about cooperation with colleagues from abroad. This is global. The solution to the current recession lies in a combination of global action, national action, local action and why am I engaged in the G20? Apart from articulating strongly Australia's views, it's to help fashion cooperatively the responses to return to normality of private credit flows with the world's major banks, properly resourcing the International Monetary Fund, getting enough stimulus out there in the global economy and drawing a line under protectionism, because all those things make a fundamental difference about the pace and time and intensity of economic recovery here.
FAINE: Can I detect Kevin Rudd would be looking more to the United Nations in a couple of years rather than Australian politics for his future?
PM: Oh nice try Jon. Nothing could be further from my thinking, I've got to say. This is a really important job because a whole lot of folks listening to your program this morning have one basic concern, that is, is my job secure and what can the Government do to reduce the risks to my job.
One of things I'm doing today here in Melbourne, at a conference co-chaired with the Brotherhood of St Lawrence, is working out how we work together practically at a local level through the not-for-profit sector, the community sector, the social enterprise sector and local government to make a difference on the ground to rising unemployment.
It's that practical stuff, together with the national actions like our national economic stimulus strategy and our global actions through the G20, together that's our overall approach to reducing the impact of this appalling global recession. This is the worst challenge any government's been dealt on the economic front in three quarters of a century and we are exerting every effort, including me, to try and make a difference.
FAINE: Prime Minister you've been generous with your time and thanks very much this morning.
PM: Thanks for having us on the program Jon.