HOST: Did the Prime Minister spit the dummy when the army diggers he was visiting in Afghanistan couldn't produce a hairdryer? That is the claim from an opposition backbencher this morning.
We have summoned the Prime Minister to answer this question. Good morning.
PM: Morning Mike.
HOST: Did you?
PM: This particular allegation by Mr Turnbull is absolutely ridiculous and absolutely false, and designed I presume to distract attention from Mr Turnbull's own problems, in his own political party, which are considerable.
HOST: Nothing at all, no angry altercation about lack of hair dryer at Tarin Kowt?
PM: My time in Afghanistan with the Chief of Defence Force, with my National Security Adviser, with the Head of the Prime Minister's Department, was focussed exclusively on speaking with the troops about what they were doing on the ground.
As I said, the particular allegation by Mr Turnbull is absolutely ridiculous. I noticed his spokesman today walking away from it at a pace of knots.
HOST: It does seem the opposition though is trying to portray you though as rude and petulant after the VIP jet thing with the air force.
PM: Well if you are a Liberal Party without a positive proposal to deal with the global economic recession, then obviously such a Liberal Party is likely just to engage in personality politics. I think the expectation of the Australian people, when you've got unemployment going up around the world, when this global economic recession is biting, is what are your practical proposals for reducing the problem, instead of just playing personality politics.
HOST: You mention unemployment, yesterday those figures surprised just about everybody, did they surprise you as well?
PM: Well this is a really tough time and we're in the business of framing a really tough Budget, but we're in the business of taking decisions which reduce the impact of the global recession on Australian families.
We welcome positive economic news but there will be bad news to come.
HOST: But do you believe those figures are right?
PM: The statistician this morning has clarified that point of itself.
HOST: Well what do you think?
PM: The statistician, we have relied upon historically and we will continue to do so in the future. The Australian Bureau of Statistics is an independent body. Sometimes they produce data which certain politicians may regard as positive and sometimes they produce data which certain politicians regard as negative.
What is the key thing here though? The key thing is, what practicial difference can you make on the ground?
The facts are we've got the worst global recession in three quarters of a century which is causing revenues to collapse, tax revenues to collapse and causing unemployment to rise, right around the world.
Are we making a difference by what we're doing - early, strong, decisive action by investing in infrastructure tomorrow. And in the process of doing it, supporting jobs and apprenticeships today.
HOST: But unemployment will keep going up.
PM: Well we've already indicated that we believe that the forecast proposed level of unemployment will rise. That is what is happening right around the world. But the reason we are in there with a national economic stimulus strategy is to make a difference, to reduce the effect, again supporting jobs and apprenticeships today by investing in infrastructure we need tomorrow.
That is why we are in Sydney at the moment, working on our investment in the single largest school modernisation program the country has ever seen.
HOST: But not investing too much in NSW it seems this morning. Are you falling out of love with Nathan Rees, does he not have your full confidence Prime Minister?
PM: I was talking to the Premier of New South Wales at length about many of these matters only last week in Hobart at the Council of Australian Governments conference.
But on the question of New South Wales. A few facts and figures on stimulus investment in New South Wales. Total stimulus investment in New South Wales, $18.2 billion. Total stimulus in 2008 - 09 - around $7.3 billion, that is two per cent of gross state product, I am advised.
And if you go around the categories, in terms of what is going on in road, and rail and health and education, these are significant additional investments. Why? In New South Wales, in Sydney and everywhere, we want to make a difference by investing in the infrastructure we need tomorrow, to support jobs and apprenticeships today.
HOST: There are constant rumours of a chilly, if not icy relationship between you and Premier Nathan Rees and between your Government and the New South Wales state government, that they don't get on.
PM: We have a good working relationship with all Governments in Australia, all the state and territory Governments and that includes New South Wales.
I am in the practical business of just making a difference.
HOST: But you must be worried, I mean your federal election comes before the next NSW election and this Government is deeply on the nose here, in fact widely hated, the voters are there with a baseball bat ready to thump them. Do you worry New South Wales voters might take out on you first?
PM: I believe that the people of New South Wales like all Australians will stare me in eyeballs and say, ‘has this bloke been fair dinkum, been out there, trying to make a difference to the global recession, and has he been out there trying to make a difference in bringing down the level of unemployment over time?'
Can't stop this recession but you can make a difference in terms of its impact and that is what we are doing, head down, tail up, sleeves rolled up, having a go. And I believe that is the right thing. What judgment the good voters of this state or other states in the country make of me -
HOST: Or the bad ones.
PM: - that is a matter for them. I have got to simply take tough decisions. We've taken tough decisions in the Budget, tough decisions on temporary borrowing and temporary deficit, because that is necessary to support continued investment in hospitals, continued investment in providing the infrastructure we need for the future, because that generates jobs on the way through.
HOST: Now talking about infrastructure, the Herald is reporting this morning there will only be $100 million in funding for this Western Metro Line when the state Government was hoping for up to $2 billion, and no money at all for this CBD metro. Why is that? Are the propositions just not up to scratch?
PM: The first point is that we don't comment on what will be in the Budget; you know that as well as I do.
HOST: Someone has leaked it, obviously.
PM: That is a matter for you to pursue with your own journalistic sources. But in the Budget, we don't comment on its content.
What we have said loud and clear though is that we are investing in infrastructure long term - road, rail, ports, schools, TAFEs, universities, the National Broadband Network. This is the biggest single nation building plan advanced by an Australian Government since the Snowy. That is what we are engaged in at the moment. And when it comes to the provision of urban transport, you have got to make sure that all these projects are properly planned.
HOST: And this lot isn't apparently, right?
PM: You've got to make sure that any such project is properly planned and that all the work is done so that once the funding is committed, it happens. That is my base line concern, and concern that I would have expressed to every state and territory government in the country.
HOST: Without getting into the specific details, which you won't tell us but next Tuesday night (inaudible) are you set for a massive negative reaction from -
PM: Making tough decisions will not be popular. I accept that. But I am elected to take necessary decisions in the national interest.
This is a global problem affecting all Governments. The challenge we have is to reduce its impact. Therefore in doing that, in other words cushion the impact through our investments in the schools of tomorrow, creating jobs and apprenticeships today, it's necessary at this time to engage in temporary borrowing and temporary deficit.
Even the Liberals under Mr Turnbull say when pressed they have a $180 billion deficit and debt program themselves, they just don't like talking about it.
We're on with the business of trying to make a difference but that means you've also got to make tough decisions as well to make sure that we restore the Budget to balance over time.
HOST: Alright there was obviously another leak, this to The Australian this morning that the wealthy will lose their private health insurance rebate, it will be means tested. Yes or no?
PM: Well I go back to my earlier comment -
HOST: You don't comment on Budget -
PM: We don't comment and if you had Mr Costello here for the previous 12 years and -
HOST: They all do, they've said the same thing since Harold Holt.
PM: And back to good old Mr Holt as well, the same response would be delivered and there are reasons for that because the Budget is-
HOST: Well these things are all leaked though, very carefully.
PM: These things are deliberated on as a whole on Budget night itself. But I go back to the general principle, if you're going to engage in long term reform and for example do the right thing over time for our pensioners, it means that you've got to have an overall long term balance in the sorts of measures you take in the Budget.
HOST: I'll take that as a yes then.
PM: No, you've got to make sure that you balance things out over time.
HOST: And it wasn't balanced in the Howard years?
PM: Well when you look at the past ask yourself this question. Where was the single national infrastructure investment of the 12 years of the Howard Government?
HOST: On that stupid railway line up to the North, it didn't work and went broke.
PM: So if you were to look for example at the 12 years to invest for example in urban transport in Sydney, 12 years to invest in a national broadband network, 12 years to invest in our universities, when the cash was rolling in the door from the resources boom right around the world not a jot, not a jot was done.
Our job as a party and as a Government of nation building is to make a difference for the long term future but through the process support jobs and apprenticeships now so we can make a difference.
HOST: Alright this is not a Budget leak but are you committed to the tax cuts you promised?
PM: We have indicated quite some time ago that we believe that it's important to proceed with legislated tax cuts because it is necessary in order to provide families with support through a difficult time.
HOST: Alright but they're expected to happen in the Budget. Will they?
PM: I won't comment on the content of the Budget but I said before -
HOST: But that's a promise -
PM: I've said before that we believe it's important to honour our legislated tax cuts. I was asked this question in Canberra only a week or two ago and the bottom line is that's legislation in the parliament.
Families out there dealing with a whole bunch of uncertainties need to have that certainty and that's why we have proceeded on that basis. But this will be tough and going back to your original question, as what will be the reaction on Budget night, there will be many howls of protest about things that we are doing. I accept that, I take responsibility for it but we've got to cushion the impact of this recession today and restore the Budget to balance over time and that means-
HOST: It's no longer a temporary deficit.
PM: A temporary deficit and temporary borrowing and restore the balance -
HOST: A temporary deficit, you're still saying that?
PM: Absolutely because the objective -
HOST: Six years?
PM: - the objective of responsible economic management is to borrow now when you need it. Let's just take an example if you don't do that. If you don't borrow now to offset a $2 billion collapse in revenues and I noticed the Liberals were out yesterday saying they would halve the amount of borrowing.
One hundred billion dollars of borrowing now of about a two hundred billion dollar collapse in tax revenue; that is equivalent to defunding now for four years all Australian Government payments to the States for health and hospitals in one fell swoop. That's what would happen. Let's get real about this.
What we're doing is temporary borrowing and temporary deficit now to support jobs and infrastructure now and create infrastructure we need for tomorrow. Then taking the measures necessary to restore the Budget to surplus and to use that surplus to pay down the deficit over time. That is a responsible course of action now and a responsible course of action for the medium to long term.
HOST: I almost dare not ask because you'll only slap us down but do the pensioners, the single pensioners, get their thirty bucks?
PM: We've been working hard with pensioner groups on necessary reforms for the long term. We, Jenny Macklin the Minister has spent a lot of time with their representatives-
HOST: Do they get the thirty?
PM: And it will be very interesting to answer that question Michael on Budget night.
HOST: And the pain is going to be spread more broadly?
PM: Well -
HOST: Soak the rich, Prime Minister.
PM: No let's be clear about it. We need to look after people who are finding it tough, really tough right now. We've got to offset that over time to make sure that we've got a Budget which returns over time-
HOST: So wealthier Australians might be expected to make something of a sacrifice and a contribution?
PM: - a Budget over time which returns to balance and surplus. That's the responsible course of action; it's just as responsible to support temporary deficit and temporary investment now to cushion the impact of this recession.
If we were not doing that, unemployment in this country would be higher. Look around the rest of the world. Unemployment numbers going through the roof and at least for this month, we have actually our numbers have in the reverse direction but there is still a lot of pain to come.
HOST: Prime Minister thanks for coming in.
PM: Great to be with you.
HOST: Hair looks great.
PM: Yours is not too bad either.
HOST: I don't know about mine. Thanks.
PM: Is that receding or not?
HOST: Receding. The R word. The R word in the studio. It's retreating, it's vanishing at a great rate. The R Word. Thanks very much.
PM: The Prime Minister.