PRICE: Prime Minister Kevin Rudd is on the line. PM good morning.
PM: Great to see you. How are you?
PRICE: I'm really well thanks, how are you shaping up after that marathon effort last night?
PM: Well there's not a lot of sleep in this business these days Steve. So it was to bed early this morning I've got to say and up fairly early as well but that's what budget times are I like I think for whoever is in Government.
PRICE: Especially in this climate. Now the centrepiece last night was the $8.5 billion on road, raid and ports right around the country. That is going to happen to protect jobs and keep the economy moving forward. Those jobs will largely though won't they be in construction. How are we going to protect jobs in industries like finance, in manufacturing, in the car plants of Australia, place like Pacific Brands?
PM: Well let's take manufacturing for example. We last year announced a new car plan for Australia. A very large long term investment in the motor vehicle industry, which goes out to 2020. It's one of the reasons why the Australian car manufacturers have had confidence going forward despite the fact that there's been such a reduction in demand for manufactured motor vehicles because of the global recession. So we've been out there with a very active industry policy supporting it.
Second thing, in the budget last night is our response to what is called the Cutler Review into innovation policy. That is a further investment by the Australian Government in the commercialisation of Australian innovation. That will also help industry on the ground as well. One final point for businesses more generally, right now we have a special temporary investment allowance of thirty percent deduction for businesses who are out there buying plant and equipment and other nominated items up until 30 June. What we've done in the budget is for small businesses, continued that on and increase it to 50 percent through to the end of the year.
All of these measures are designed to help, none of them obviously solve the problem of the global recession, the worst since the Great Depression, but we're determined to make a difference.
PRICE: Well let's hope the banks actually lend those small businesses the money to actually go out and take advantage of those changes you've made. A million unemployed is the prediction, do you accept that prediction and would you always go for bigger deficits and smaller numbers of unemployed people?
PM: Well we take the challenge of unemployment seriously, those people around Australia now who have lost their jobs, who are under threat of losing their jobs because of this global economic recession. This has all happened through no fault of their own. It's because of the implosion of global financial markets through a financial economic system globally which has got right out of control. But what's our challenge? It's to make a difference with employment on the way through.
And here is the core point. With the investments contained in this budget to supports jobs, apprenticeships and small business today by investing in the infrastructure we need for tomorrow. And by the other actions we've taken.
The Treasury has advised us that we are supporting more than 200,000 jobs next year and the year after, jobs which would otherwise be lost with a Government not actively engaged. Now that is a huge number of additional families who would be affected. We can't eliminate the impact and you're right unemployment is going to go up. This year and next year. But our mission is to reduce the impact and I believe that through actions such as those we've taken, building roads, rail, ports, investing in a high speed broadband network, a clean energy initiative which supports large scale clean coal projects across Australia as well as commissioning what we believe to be the single largest solar energy plant anywhere in the world. These are the sorts of things which provide investment for the future but create jobs, apprenticeships and small business opportunities today.
PRICE: We're talking to the PM from his office. The forward growth figures, they predict growth to go into the negative point five percent in 2010 and then these figures that have largely overnight been looked at and dismissed, the two years of positive growth, 4.5 percent. That's a 400 percent turnaround. Where do the Treasury officials who are predicting that say that's going to come from?
PM: Let me just say about that Steve is that the same Treasury officials advised Mr Howard and Mr Costello before as well. These are independent advisers who use their own methodologies for making these calculations and forecasts for the future. That's the first point.
PRICE: That's wildly optimistic isn't it?
PM: Well secondly if you look at the pattern of recovery from previous recessions in Australia, the recovery years have often been quite sharp and as a result, Treasury, mindful of that in the general analytical approaches they apply to forward forecasting have arrived at the conclusions that they have.
Also I would say this that their forecast growth for the next two years is in line exactly with what the Reserve Bank has said and as for the two outer years of course they are applying the methodology which they've applied in the past.
PRICE: I'll talk to the pensioners groups in a moment. You delivered both for pensioners on single pension and married couples last night. There is some talk today and I think it's light hearted but some people suggesting it might be better off for married pensioners to get divorced.
PM: The, well the-
PRICE: Maybe not just for the financial reasons.
PM: I'll let you sort that out with your listeners case by case Steve. It should be interested talkback radio to listen to.
PRICE: But are you happy you could deliver on that promise?
PM: Look this has been really tough, this costs a lot of money. This investment that we've made to lift the single aged pension by $32.50 a week combined with the other changes that we've made for carers is going to cost the Government and therefore the taxpayer something in the order of $16 billion over the next four years. Now we've had to therefore offset that with savings and therefore we've had to take some tough decisions. Tough decisions to make the payments we've made to pensioners and the other investments we've made for the future sustainable in the budget for the long term. That's why we believe we've got the balance right.
PRICE: You're going to push the retirement age out to 67.
PM: That's one of the sustainability measures that we will be embracing but we're not starting that until 2017 and it won't fully take effect until 2023, giving people a lot of time to adjust. I notice the National Seniors Association came out overnight and supported that move because it underpins the long term financial sustainability of our pension reform.
PRICE: (inaudible) 70 would be reasonable.
PM: Well they can embrace that position for the time being. Our attitude is that this is about the right landing place, it's also been done by many, many governments around the world.
PRICE: You've left the dole at $220 a week, if a million Australians are on unemployment benefits, how are they expected to live on that?
PM: Well it is very tough, I fully agree with that Steve but one of the things that we've also done is to try and assist people who are on unemployment benefits with also a temporary training allowance and a temporary training allowance is available under certain circumstances called the training supplement of $41.60 per fortnight and can be paid to job seekers in receipt of new start and the parenting payment to undertake approved training. The other thing for unemployed Australians is
PRICE: It's not much money though is it? $220.
PM: I accept this is very tough, it's very tough to live on and I accept that but what we are also trying to provide is an opportunity for Australians who through no fault of their own can't be in the workforce at this stage have that by way of an assistance to support them obtaining qualifications and up-skilling their existing certifications during a period of unemployment. But on top of that we're investing massively in 71,000 training places across the country to provide maximum flexibility for firms, for people in local communities to take up training opportunities so that this period of unemployment can be used to up skill, to obtain new skills so that when the recovery comes people come back into the workforce with a new set of skills, which hopefully in the future would also assist in making them more generally employable as well.
PRICE: I know you're limited for time, a question on Sydney and the amount of money that Sydney didn't get in the infrastructure Australia Grants announced last night. We're on air across NSW and I think everybody in country NSW will be congratulating you on your roads and ports initiatives, $91 million only for suburban Sydney, the biggest city in the country, choked by traffic with inadequate public transport, is it only $91 million in a planning project for that underground because you don't trust the NSW Labor Government to spend the money properly?
PM: Oh look as far as inner city metro rail is concerned, Steve, we've got to get our planning right and it's not just in Sydney but also Melbourne and Brisbane.
PRICE: But you put massive money into that line out to Werriby.
PM: I know but I'm just saying that in terms of the inner city metro line that we're talking about we are also investing in pre-construction feasibility study work in Sydney, Brisbane and Melbourne. We've got to make sure that, that is done and done to complete satisfaction before we commit the substantial amount of money which would be involved in a co-investment in the construction of that metro-west line.
Another thing I would say is this, we're also investing in hospital infrastructure, there is investment in the Nepean Hospital in the greater Sydney area as well and can I say this right now? Across all of Sydney, if you're looking at your local primary school, that's about to become a construction site. We are investing massively in NSW by way of our infrastructure investment, billions and billions of dollars. The last time I looked at the figures, probably in the order of some $18 billion across the state in order to invest in the schools and the social housing and in the other hard infrastructure we need for the future, while creating jobs, apprenticeships and helping small business on the way through.
Of course Steve and if I can just finish on this, to do all this you've actually got to deal with the fact that we have suffered a $210 billion tax revenue loss because of the global economic recession. We've also had to invest in this infrastructure as well to support the economy on the way through. Therefore we've had to, responsible course of action is to have temporary borrowings for a temporary deficit. We've been upfront about that, we've said how much we're going to borrow over what period of time and when we'll be returning the budget to surplus.
But here's the rub. Today less than 12 hours after the budget comes down, the Shadow treasurer Mr Hockey and the Leader of the opposition Mr Turnbull have fundamentally contradicted each other on what sort of deficit and debt they would support. Mr Hockey has said they would have a total deficit of $25 billion less than the Government, simultaneously on a different radio program Mr Turnbull was asked the same question, he said it was impossible to provide a figure. Absolute chaos and confusion on something as fundamental as temporary borrowing for a temporary deficit and for net debt for the future. It's time the Liberal Party got its act together because the future of the budget in the parliament depends on what the Liberals do in the Senate.
PRICE: Appreciate your time on such a busy day Prime Minister. Thanks a lot.
PM: Thanks very much Steve.