HOST: Well, today the Government begins to sell its Budget. The Prime Minister joins me now, Mr Rudd, good morning to you.
PM: Good morning David.
HOST: Well a lot of people are saying this Budget is based on us continuing to ride the rickshaw, that China is our saviour, the huge commodities boom. Some saying, they could be a bit rubbery, that they're a bit too optimistic, what's your view on that?
PM: David, I think this is a responsible Budget, based on responsible economic management. It's something I believe in fundamentally, and therefore you've got to be very careful about all the assumptions these are based on. Part of it of course lies in our continued export performance.
But let's be very blunt about this. It also depends on the fact that we've actually generated positive economic growth in this country, kept a quarter of a million plus more people in work. They've been paying taxes rather than receiving unemployment benefits. We've kept a whole lot more businesses out there functioning, millions of them have shut down round the world, they are paying taxes as well.
And we've also brought about savings in terms of expenditure items. Put those three things together, these actually make for a responsible Budget, a responsible Budget which halves our peak debt, brings the Budget back to black three years early, in three years' time.
HOST: It's also based on the best terms of trade in 60 years. We are riding the rickshaw. Are you confident in those figures and are you confident China's not just a house of cards, that, you know, the boom can keep going? We've got a lot riding on it.
PM: The Treasury boffins analyse these things very carefully -
HOST: So you don't put the numbers together do you, Treasury does?
PM: The Treasury boffins do, and they've analysed carefully China's economic growth potential, they've looked at where commodity prices go, not just for China, always remember we're talking about Japan and Korea and other countries as well, which take huge volumes of Australian exports, and increasingly India, and they always pitch at the conservative end of that. In fact if you look at where they're pitching commodity prices for the future, it's quite low against what a number of the market analysts are saying, so we believe this is conservative, responsible economic management.
HOST: Mining has been our golden goose, will your super tax kill the golden goose? Why tax them?
PM: The bottom line is this, if you look at our long term reform for this economy, what I believe in is making sure that all companies out there remain as competitive as possible. That's why we're bringing down the company tax rate. You've got to pay for that by some means, however -
HOST: But these big miners are saying we're going to scrap projects, we're going to move offshore, we're going to take our business elsewhere.
PM: Well one of the former heads of the mining industry council said you're going to hear lots of people crying wolf about all those sorts of things. It's standard negotiation.
But can I say this, our independent Treasury modelling of the impact of this tax on the mining industry says that it will grow by something like 5.5 per cent. Why? Because we're taxing profits, not what's called volume, which means your smaller companies are out there getting taxed only on the basis of the profits they earn. Some of them can't even get a start because they get hit by an early tax based on volumes. It grows the mining industry.
HOST: Okay, Wayne Swan has capped spending increases at two per cent. Can you guarantee today, today, that you are going to keep to that two per cent cap, even during the election campaign?
PM: Absolutely -
HOST: Now remember, we've got this on tape, so whatever you say now we're going to play back to you. No more pork barrelling?
PM: Absolutely, and the reason is we said coming out of the extraordinary measures we had to take last year to keep this economy afloat - remember all those other major advanced economies went crashing into recession - we took extraordinary measures then, kept a quarter of a million Australians or so in work, all those businesses open. We had to do big things then but in order to track our way back to surplus, we had to impose these core budget rules, and one of them is to offset all new expenditure, and then the second is to keep our expenditures within a growth of two per cent and we will stick to that for the future.
HOST: Spending more on border protection than the environment, seems a bit funny, a bit crazy.
PM: Well in the case of border protection, there are basic things like the replacement life of a number of customs vessels. These are lumpy items, you've got to deal with them, make sure that all of our people out there on the front line have got the sorts of resources they need. But can I go to the question of the environment and climate change? This is a big investment, $650 million into a new renewable energy future fund.
HOST: That's Tony Abbott's scheme though, isn't it?
PM: We are building on an existing clean energy initiative of some $4.5 billion, this is on top of that, and this is to go into new projects in solar and wind and the rest to make a difference on the renewable energy front because climate change ain't going away.
HOST: Just quickly, a new Prime Minister in the UK, David Cameron, ever met him, good bloke, will he be good for us?
PM: Yeah, I've met Mr Cameron a couple of times on previous visits to the United Kingdom and we've had very good conversations at Australia House in London and elsewhere as well. I think the Australia-UK relationship goes beyond party politics. It'll be a good relationship. In fact I think I'm speaking to him not long after I get off this program. So I congratulate him on his becoming Prime Mininster of the United Kingdom, it's a high office, an important office.
But also I'd like to acknowledge the role of Gordon Brown as well, critical role last year in that London G20 summit which was so critical in coming out of the global financial crisis.
HOST: Prime Minister, thanks for joining us.
PM: Thanks David.