SPEERS: Prime Minister good morning. This Budget contains the biggest deficit and the biggest debt Australia's seen. A lot of Australians would be worried about it. Now you blame the global recession, but do you also accept your government's played a part in this as well?
PM: Can I say David in response to the core element of your question, which goes to how this country is viewed around the world, Standard and Poor's the credit rating agency put out a statement last night and it says as follows, I picked this up this morning , Standard and Poor's rating services said that, “The Commonwealth Budget is consistent with Australia's triple A long term credit rating”. Furthermore it says, “We believe that deficits and associated borrowings do not, do not alter the sound profile of the country's public finances.”
So you can have a political argy bargy with the Liberal party about that. That is a statement of Standard and Poor's, who have gone through the numbers of our Budget yesterday, and can I just add one other point, that when our net debt reaches its peak at 13.8 per cent of GDP, not only will it be by a country mile the lowest of all the major advanced economies, it will be so by a factor of seven. So let's put all this into context.
SPEERS: When you make that international comparison, do you also have to acknowledge that you started this global recession in a much better position. No net debt, thanks to the Howard Government; a Budget surplus, a healthy Budget surplus, better than most other countries.
PM: The infrastructure investment, upon which so much of this Budget rests, is based on the fact that in our previous Budget, we put aside more $20 billion to invest in infrastructure, to invest in rail, roads and ports across the country. What's our strategy? Nation building for recovery, that is supporting jobs, apprenticeships and small businesses today, by investing in infrastructure we need for tomorrow -
SPEERS: But again -
PM: And we've done that on the basis of what we ourselves put aside in our last Budget. So let's just pin that for what it is, and accept the fact that there's going to be all this hoo-hah about debt and deficit and the rest. But can I just say, look carefully at the credit rating agency has said this morning. These are a tough bunch of customers, Standard and Poor's, they have gone through the Budget in detail, that's their conclusion, I think we should appropriately reflect on that.
SPEERS: But again the $22 billion infrastructure program you've announced last night, more than half of that is taken from funds the Howard government set up; the communications fund, the higher education fund. Don't you owe them a bit of credit?
PM: On the question of long term investment and infrastructure, there were repeated criticisms in multiple bulletins by the Reserve Bank over a long period of time as to why were not investing in the past in infrastructure and skills - the two great capacity constraints in the Australian economy. If after 12 years there is no National Broadband Network, don't you think that is a bit of a problem? We've actually got on and done something about it, like we are getting on with direct national investment in a national clean energy initiative. Massive investments in clean coal projects across the country. We will be out there tendering for what will end up being, I am advised, the largest solar power plant in the world.
These are the sorts of infrastructure projects we need for the future, but they are about supporting jobs and business today, when we are impacted by this global recession.
SPEERS: This budget does spend as well as save, but some commentators are saying you have squibbed it with the cuts here, that you haven't taken the opportunity to really make some deep cuts. Did you think about going further with those areas of so called middle class welfare?
PM: David, together with the team, we went through all of our expenditures. And in this difficult environment where we have a double challenge - one, to provide injection of activity in the economy now to support jobs, small business and apprenticeships because of the global economic recession and its impact on employment and secondly, to then build sustainable public finances through the budget for the future. That's our double challenge. So we believe we've got that balance right, which is why you see some papers this morning saying you have gone too far, too hard and others saying we haven't gone hard enough. We believe we've got that balance right.
SPEERS: Part of those cuts though involved breaking a few promises along the way. The private health insurance rebate, superannuation. You recently said that trust is the coin of politics, has your credibility been dented at all through this?
PM: The key question of trust here is dealing with the state of our nation's public finances when a $210 billion hole has been delivered in our national tax revenue because of the global economic recession. No one can wish that away with a magic wand. It's there, it's a fact, it's the single largest write-down in Commonwealth tax receipts since the Great Depression.
This is huge. Therefore the responsible course of action is, how am I going to plan for the future on that basis and obviously it involves tough decisions for which I accept full responsibility. I don't shirk that. My ultimate responsibility is to supply the soundness of public finance for this country into the future while dealing with the reality of this global recession, the worst in three quarters of a century today.
SPEERS: But will more promises be broken if things get worse?
PM: David, we believe that we have got to wrestle with this challenge presented to us with the great global recession which now confronts us. We've got to do that in a sensible, intelligent way on a daily basis and we have been getting on with this right from the days we were confronted with the Lehmann's collapse last September/October. And can I just say this, if we are going to have some truth and honesty in this debate, I welcome a discussion and a debate on temporary borrowings for temporary deficits, I want to know where does the Liberal party, Mr Hockey, stand on how much deficit and debt they'll have.
Which of the investments in this budget would they support and oppose? Which of the savings measures, the $22 billion of savings measures, do they support or oppose? Otherwise, whatever they say in this debate is purely white noise and hot air.
SPEERS: On pensions, you are increasing the qualifying age for the aged pension. What do you say to those baby boomers, who will now some of them, have to work an extra two years before they can get the pension?
PM: Well as you know, this increase in the pension age starts to phase in from 2017 and is completed by around about 2023. This is a tough decision. It has been part and parcel of two sets of intergenerational reports which were commissioned by the previous treasurer Mr Costello, which he never had the courage to do anything about. Long term our responsibility to government is to make the pension sustainable in our public finances. We have upped the pension by $32.50 for the single aged pension because aged pensioners need that support. But we have got to make this sustainable in our public finances long term.
That's one of the reasons we've done that, together with the $22 billion worth of other saves that we have achieved across the forward estimates of the Budget.
SPEERS: A $32 increase in the single aged pension but the unemployed didn't get an increase at all, the unemployment benefits now almost $90 a week less than the single aged pension, could you live on $226 a week?
PM: It's very, very tough. I accept that. What we are seeking to do with the great challenge of unemployment which has been brought about by this global recession is to provide maximum support by way of training places across the economy, so people can use a time of temporary unemployment or partial unemployment if they are losing a couple of days a week to maintain their skills or upgrade their skills for the future.
SPEERS: They're living by the poverty line.
PM: 711,000 productivity training places we've created across the economy, and for those contemplating going to university, we are also looking at significantly expanding the number of places there by around about 50,000. These are large investments in skills. Remember the two great productivity drivers for the economy of the future, infrastructure and skills. We are doing this for the long term future of our economy, while also supporting, remember, up to 200,000 jobs by our investments in infrastructure and other actions by government for the next year and the one after.
SPEERS: The unemployed, people who can't find a job, many of them will be living below the poverty line, do you accept that?
PM: We have also, as you know, changed some of the eligibility criteria for NewStart, we have also changed the criteria for being able to access assistance from Job Services Australia. We understand how difficult this is.
I have been around the country in practically every state and most capital cities, in high unemployment areas in the last month speaking to local jobs forums, talking to people and community organisations wrestling with this on the ground.
It's tough. What we're seeking to do however is to make a difference on the ground. We've established a Local Jobs Fund and the objective there is to do what we can on the ground, grassroots up, building social enterprises, building not-for-profit organisations, building and supporting local micro businesses to make a difference with high unemployment levels on the ground.
SPEERS: Just also on the pension area, sole parents missed out, all the other pensioners get an increase, why don't sole parents deserve an increase?
PM: We have to take some tough decisions about the sustainability of our pension changes over time. The single aged pension is a critical area. We've also provided support as you know for carers, that's important as well. But my ultimate responsibility is to ensure the public finances of this country are in sound order, for the medium to long term and we are doing the right thing by the economy in the short term on the back of this recession. And again David I would say, I believe we've got that balance right.
SPEERS: Just finally Prime Minister, the International Monetary Fund keeps telling us we'll have a slow recovery from this recession, a slow global recovery, but the Treasury forecasts last night looked pretty optimistic, that in a couple of years we'll be rocketing back to 4.5 per cent growth. Are we to believe that?
PM: I noticed today that Mr Hockey on behalf of the Liberal Party attacked directly the independence of the Treasury. Last year they were attacking the independence of the Reserve Bank, last week they were attacking the independence of the Australian Bureau of Statistics. We -
SPEERS: (inaudible) out of whack with some other forecasts -
PM: Hang on. We are using the same Treasury advisors as the Howard and Costello government used as well, that's the first point.
Secondly, I'd ask you to reflect on the data coming out of previous recessions in the history of the Australian economy. What happens with an uptake of growth once you come out - it tends historically to come out sharper.
Therefore if you look at both what they have done in previous years, what has occurred in previous years, together with the consistency of the advice provided by Treasury to previous governments, we will stand by the independence of the Treasury, and I would challenge the Liberal party, that when it comes to economic policy, take the debate head on rather than attacking the independence of our core institutions, the ABS, the Treasury and the Reserve Bank.
SPEERS: Prime Minister, thank you.
PM: Thank you.