HOST: The PM has just turned up in our city and he joins me on the program now on the phone. Mr Rudd good morning to you.
PM: Morning Simon, in fact I'm with the Premier of Western Australia here in Geraldton, so that's where I've just flown and there's a lot of rain let me tell you which I'm told will be welcomed by the wheat farmers.
HOST: Yes it's heading from south to north so you'll get more of that throughout the course of the day. Mr Rudd there's a few issues - we have had Mr Turnbull on the program, I should preface our comments with that - and I know there are some issues bumping around nationally today.
Can I ask you first of all, this $32,000 that all MPs receive, federal MPs receive as an electorate allowance, the Greens are saying today there needs to be more checks and balances on how that 32,000 is spent. Do you agree?
PM: I'm happy to look at any further transparency measures. These arrangements have been in place as I understand it from when Mr Howard last looked at MPs' travel entitlements way back I think in the mid 90s. But if there are further measures to enhance transparency on this and other, we're open to those ideas, we'll work our way through them.
HOST: Can you tell my listeners this morning about the federal Budget. There's comment around, it's been around for a couple of days Mr Rudd, about your apparent avoidance of describing to us exactly what the federal Budget's deficit will be in years to come. Can you tell 6PR listeners this morning what it will be?
PM: Well, on the question of the federal Government's debt which has been the subject of debate in recent days - as I've said on a number of interviews in the last week, that I welcome a debate about deficit and debt because it is the right strategy for dealing with what is the worst set of global economic circumstances in three quarters of a century and the objective is to cushion the impact of the global recession in Australia by supporting jobs and small business today by investing in the infrastructure we need for tomorrow.
On the question of the actual debt and deficit itself, net debt peaks at about 188 billion in 2012-2013, gross debt at about 300 billion at about that stage. Net debt rises to 13.6 per cent of GDP. That is the lowest of any of the major advanced economies and represents, in fact it's about seven times lower than the major advanced economies.
If you go through the other advanced economies their net debt figures are something like this: Japan 103 per cent, United Kingdom 56 per cent, United States 61 per cent, Canada 26, France 65, Germany 51, Italy 111, ours will peak at 13.8.
I think it's important to put that into context and also, following the Budget being released, the international credit rating agency Standard and Poor's reaffirmed Australia's triple A credit rating. Therefore that reflects the fact that our overall approach to net debt at this stage is very conservative by global standards.
HOST: Mr Rudd, I asked our Premier this last week when he handed down the state Budget. You believe that Australia will haul out of this, this global situation more quickly than other countries. Mr Barnett believes that WA will haul out quicker than the rest of Australia. On what do you base your optimism about Australia's finances?
PM: Well, we've taken a responsible and conservative approach to the way in which we handle the impact of this global economic recession. Let's put it quickly into context. Eight of Australia's top trading partners right now are in a recession, 32 of the 33 major industrial economies around the world are now contracting. This is the challenge we face, it's the worst since the Great Depression of the early 1930s. That's the challenge that we've got. But what we're doing in partnership with state governments, including the WA state government, is investing in infrastructure for tomorrow and therefore supporting jobs and businesses today.
Our projections are that WA is powering along well given the relative challenges that every state and the country at large has at present. And I've been talking to the Premier about this on the plane coming up from Perth this morning to Geraldton - and we're off to look at our proposed joint investment in the Oakajee Port development - is that WA will be strong in the recovery phase. We also obviously project that this coming financial year we will see negative financial, negative economic growth, but we also project that in the following financial year we'll see positive economic growth. We think that Australia is doing better than most other economies now around the world, given the overall impact on all economies from this global economic recession. And our strategy is nation building for recovery.
HOST: You talk about being responsible and conservative, Mr Rudd, was it responsible and conservative to hand out the $42 billion, much of which was made up by these $900 payments and $950 payments, was that responsible and conservative?
PM: Well, Simon actually that point you just raised is actually wrong. Out of the $42 billion Nation Building and Jobs Plan, about $30 billion is direct investment in the biggest school modernisation program the country has ever seen, the biggest investment in social housing the country has ever seen and the biggest investment in energy efficiency and residential houses the country has ever seen.
Now, let's put all that into context. Therefore, when you look across the state of Western Australia, we are currently as an Australian Government investing $5.9 billion worth of various forms of stimulus, the vast bulk of which is going into infrastructure, nation building infrastructure, state building infrastructure, port developments like at Oakajee, also the north ah, link project in the middle of Perth, together with hospital developments at both Fiona Stanley and out at the Swan District Hospital which I visited yesterday.
HOST: I understand that, I understand the infrastructure component, I understand it's not the major -
PM: But you have assumed that the payment to individuals was dominant, it's not, it's the smallest portion of what we are doing overall.
HOST: But there has been, has been, criticism -
PM: The reason (inaudible) was to actually support activity in the economy at the point which we had near collapse of major financial institutions in the global economy last September-October. And the first and most important response you could do then was to provide direct stimulus to consumption and to housing by trebling of the first home owner's boost, while you then lined up infrastructure projects over the next several months
HOST: Well, let's talk about the payments then, from a detailed point of view. We now understand as I'm sure you do and I can only assume you roll your eyes when you hear, that people who've moved overseas and people who should not be recipients of this payment have, in fact received the 900 or 950. Um, that leads to criticism that this was done on the run and the systems weren't in place to make sure this money went to the right people, you must, you must concede that some people have got the money when they shouldn't have.
PM: Simon, our responsibility as the Australian Government, faced with the near collapse of the global financial system last September-October, was to act early, decisively and effectively to support the economy then through stimulus. We make no apology for that.
And if you look one and a half million Australians, including a huge slice of Western Australians, who work in retail, what happened to their counterparts around the world in most other advanced economies is that retail sales collapsed in the last quarter of last year and the first quarter of this year, shedding millions of jobs around the world.
In Australia, we acted early and decisively to provide support to that sector because it would have taken us at least six months to prepare for medium term investment in infrastructure like the school modernisation program and longer term infrastructure like the Oakajee Port Development I'm inspecting with the Premier today here in Geraldton.
Therefore, we had to take the Treasury's advice and to act early and decisively on that front. Of course there will be criticism, I accept that, but the alternative would be to produce an impact of this global recession on Australia, which would have seen hundreds of thousands of more Australians and Western Australians out of work.
And I wasn't prepared to do that, and we defend the Government's action.
HOST: Sp you won't concede that some people picked up the payment when they shouldn't have?
PM: Can I just say Simon, every decision is going to have, you know, certain unintended consequences, I accept that. But had we delayed the delivery of those payments, to pensioners, to carers, to veterans and to families, in order to make sure that every last element of uncertainty was removed, the impact on stimulus in the economy and keeping hundreds of thousands of Australians in jobs in the retail sector in the critical last quarter of last year and the first quarter of this year would have been undermined.
The Treasury's advice was we needed to act now. To put all those other matters into place would have led to unnecessary delay. And we needed to inject activity in the economy in that six month period, leading up to our investment in the school modernisation program which is about to invest hundreds of millions of dollars in the biggest school modernisation program that this country has ever seen.
HOST: Alright, PM, we get the message on school modernisation. I think you have said that three times.
PM: Well I think your local P&Cs and P&Fs are going to be pretty happy about that. If you don't have a multipurpose hall in your primary school, we are about to invest to make sure that there is one there, together with a library.
HOST: Fair enough. PM, can you tell the listeners to 6PR this morning, will we be going to an early poll, an early federal election?
PM: Look, I have said before Simon that I have a very conservative view of these things and that is that we are elected to serve for a three year term, federally. And my belief is that that's what we should be doing.
I have also said that when it comes to the passage of important elements of economic policy and public financial policy, including the Budget, that the savings measures outlined in the Budget have to be preserved.
We have an economic strategy which has two arms to it. Supporting the economy now at a time of global economic recession through our nation building and jobs plan, our investment in jobs by supporting investment in infrastructure, and secondly, having filled some of the gap left by the private sector now, once the global recovery gets underway to return the Budget to surplus.
That means supporting the $22 billion worth of medium term savings we have outlined in the Budget, because we believe it is important to return the Budget to surplus, that is why those difficult savings are contained there.
HOST: Mr Rudd, thanks for your time this morning, enjoy Geraldton won't you?
PM: Good to be back in the West, good to be back again.