EASTLEY: The Labor Government campaigned on the line that no worker would be worse off after it introduced its workplace reforms but that's something that's been questioned in the past 24 hours. In an embarrassment for the Federal Government the Australian Industrial Relations Commissions says Government's award modernisation process will work to the disadvantage of some workers. While the Federal Government is basking in the glow of a growing economy not all workers may benefit. In the meantime the Opposition is on the Prime Minister's case to pull back on its billions of dollars in stimulus spending. To discuss the issues the Prime Minister Kevin Rudd joined AM a short time ago, and chief political correspondent Lyndal Curtis began by asking the Prime Minister about what intelligence he was hearing about the Indonesian earthquake.
PM: We have been in contact of course with the Indonesian Government and of course our own embassy in Jakarta. Our understanding is that we have had some 100 or so houses badly damaged, some 15 fatalities and a number of those through a landslide. At this stage I am not aware of requests for assistance from the Indonesian authorities but because of the friendship of our relationship with Indonesia of course we stand ready to provide that assistance and I have already indicated that to the Indonesian Government.
CURTIS: It's been nearly 12 months since Lehmann Brothers collapsed. Did you think in the midst of that crisis which you said was possibly the worst since the Great Depression - you likened it to a rolling national security crisis - did you think that a year later that Australia's economy would be growing at 0.6 per cent?
PM: The first point to say is that the universal view of the governments of the G20, the largest economies in the world, are what we have faced in the events since the beginning of the global financial crisis is the worst challenge to the global economy since the Great Depression. If you look at the projection still for growth globally in 2009 it's for a contraction in global economic growth. This would be the first time that the global economy would have shrunk since the IMF began collecting data in the early 1950s. But what we have done in Australia, consistent with actions of governments around the world is say: how can we best cushion the impact of that global recession on Australia? That's why we have unapologetically taken early, strong, decisive action through our Nation Building for Recovery plan. And so far that has had an effect in reducing the impact of the global recession in Australia. But as I have said repeatedly, we have still got a long, long way to go and there are many, many challenges still out there in the global economy.
CURTIS: Is there a prospect though that the final unemployment number might have a seven in front of it rather than an eight?
PM: Well we will see what Treasury advises in terms of future unemployment numbers but we are still deeply concerned about the softness of the global economic recovery. In recent times I have been travelling to a number of Australia's regions - Far North Queensland comes to mind but many others as well, where the impact of the global economic recession for example in the downturn of global tourism numbers has been felt hard and sharp. Therefore it underlines the importance of not simply standing back and doing nothing but actually stepping up to the plate which is what we have done through the nation building for recovery plan - stepping in to occupy a space temporarily while the private sector is in retreat. That is what we have sought to do.
CURTIS: What then, if there is softness still in the economy, do you say to people who are facing the real prospect of higher interest rates before the end of this year?
PM: Well first of all the reason for the stimulus strategy through national building for recovery is of course to reduce the impact on unemployment. The worst people can face in terms of challenges to their living standards is to lose their jobs-
CURTIS: But they also face additional pressures on their household budgets if interest rates go up.
PM: Absolutely, and therefore the first responsibility we face is cushioning the impact of this recession on unemployment, and that's why the fact that we have been able to be the only economy of the advanced economies over the last 12 months to have generated positive economic growth means that the unemployment impact here has been less. But secondly going to interest rates, as I have said and the Reserve Bank governor has said in recent times, obviously there will be changes in the future from the emergency level reductions in interest rates which have occurred in recent times. These are the lowest rates we have had in nearly 50 years and obviously in the future they will go up. But can I say, ultimately the decision on interest rates will be the matter for the Reserve Bank acting independently.
CURTIS: But do you think the prospect is that they will go up before the end of this year?
PM: Well, you know Lyndal that it's not profitable for any Prime Minister to, or Treasurer to speculate on what the independent decisions of the Reserve Bank and its board might be in any given month. But as I wrote recently in an article on the long term economic strategy of the Government it follows that if interest rates have been reduced to what the governor describes as emergency levels - 3%- in terms of the actions taken in recent times, that as we begin to see evidence of global economic recovery and national economic recovery that interest rates will go up. But the individual decisions month-by-month are of course those of the bank. Our job through our national building for recovery plan is to cushion the impact of this global recession on jobs. And if you look at how our economy is performing on growth and unemployment, thanks to the efforts of so many businesses around the country it is better than most other economies around the world.
CURTIS: On another issue that will affect business, do you concede that your Government's guarantee that under the award modernisation process no worker would be worse off and no employer would face increased cost, its costs, is no longer able to be met?
PM: Well you are referring there of course to the determination yesterday by the Australian Industrial Relations Commission. Can I just say that the AIRC and its work and its determination yesterday is entirely welcomed by the Government because what we have said in the reform program that the Industrial Relations Minister Julia Gillard has embarked upon to modernise our exceptionally complex awards system, what the AIRC has done is provide for an orderly and measured transition to a new, modern and simple awards system.
CURTIS: But it also casts significant doubt over that promise that was made, doesn't it?
PM: No it what it in fact said is it goes precisely to how in fact transition arrangements are to be put in place. It has responded positively to the Government submission to utilise a full five-year transition period provided in the Government's legislation; to phase in key award changes in simple and in equal instalments. And secondly it's also indicated that it will use transition provisions to allow Fair Work Australia to deal with any reductions in take home pay that might occur as a consequence. That's entirely consistent with the overall, with the overall reform agenda laid out by the Employment Relations Minister Julia Gillard. And let's always remember what is at stake here - 4,000 complex awards across the Australian economy, a reform process which the Howard Government never had the stomach for. This government has got the stomach for. It is a difficult, complex, arduous process but we intend to embark upon it, do it because it's in the long term interests of the economy.
CURTIS: But doesn't the commission also believe that even during that transition period there's the prospect that employers and employees, some may be worse off?
PM: Well the purpose of transitional provisions is actually to deal with these challenges. Furthermore what the AIRC has indicated is that when it comes to what's called model commencement and transitional clauses, that they will also contain a term that allows Fair Work Australia to review the transitional arrangements and each modern award either on its own initiative or by application-
CURTIS: So does your promise still stand?
PM: So you see if in the determination in large part responsive but made independently of government submissions to the AIRC, firstly a long term transition process because we are acutely conscious of the impact of the global economic recession both on employers and employees; but secondly the specific provisions also to assist with any ups or downs in the process; and thirdly a capacity to review those on the way through. In terms of transitional arrangements the minister has done an excellent job and can I say on top of that the AIRC's determination on this I believe is also a first class piece of work.
CURTIS: So do you believe it's still possible for this process to leave no-one worse off over time?
PM: What we have said consistently is that the Government's objective is to ensure that we deal with these particular challenges of transition and furthermore that this is done with a clear sighted concern for the 20 per cent of the Australian workforce who are reliant on awards and these are among the lowest paid. That's why we put in place these particular protections on the way through.
The alternative of course, as you know, our opponents were and remain long term disciples of WorkChoices. That is simply throwing people to the wolves. We intend to have a properly protected and properly transitioned industrial relations system. That is what the minister is in the process of implementing.
CURTIS: That will leave no-one worse off?
PM: Well our objective remains as we have always said and that is that we will work always to ensure that in the implementation of this overall scheme that we can have a system whereby employers and employees can deal with any costs associated with this over that period of time. As I said the transition period that we were referring to, the objective that modern awards are not intended to disadvantage employees or increase costs for employers stands. That is the objective which the minister articulated at the beginning of the process. That's what we are committed to now and the AIRC in reaching its determination has made it clear that's the way we are going to implement this in practice.