HOST: Mr Rudd, welcome to AM.
PM: Thanks for having me on the program.
HOST: After a frenetic year you've had with thrills but plenty of spills, many in the last couple of weeks, was a dull and competent budget what you needed to help gain lost ground?
PM: The key thing that I believe in is responsible economic management. Responsible economic management during the global downturn and responsible economic management now that we're on a path to recovery, and that's why, what we the Government, have done is halve peak debt, get the Budget back in the black in three years and that's three years ahead of time. I believe that it's really necessary to do that in these circumstances of uncertainty around the world.
HOST: Did you really though have no choice but to produce this sort of budget? Because you couldn't go on spending the way you were during the financial crisis?
PM: Well the core element of conservative economic management in which I believe, is expanding the role of government in the economy when the private sector is in retreat. That was certainly the case during the global financial crisis and had we not done that we would have had a quarter of a million more Australians out of work, many small businesses collapsing.
Now that the economy, globally, is on a pathway to recovery, although it's still uncertain, with the private sector expanding it's time for the role of government to retreat. That's what conservative economic management is all about. That's what's what I believe in. Getting the country back to surplus three years ahead of time making sure, however, also giving a fair share to, for all Australians in this country's national wealth and also preparing for Australia's future. That's what we're on about in this Budget.
HOST: Does putting on your fiscal conservative cloak again meaning you also have to hold spending down in the election campaign? You can't go promising big bribes?
PM: Well again the first responsibility that I have as Prime Minister, and what I deeply believe to be the right course of action, is to steer the economy through a highly fluid set of circumstances around the world.
Right now, if you look carefully at the debt crisis in Europe where you've got net debt rates ranging from 70 to 80 to 90 to 100 per cent plus of GDP, and our own net debt peaking at something like 6.1, the right thing to do is to make sure that we are bringing about a very conservative bottom line. These are uncertain times globally; therefore when it comes to an election year, this is not a pre-election spend-a-thon. Mr Howard used to do that in the year leading up to an election every year. This is a responsible budget keeping to its 2 per cent cap on expenditure and we will adhere to that.
HOST: Will you be disappointed if you don't get a political bounce after this Budget?
PM: The key thing with the Budget is to act in the national interest because if you go around the world at the moment, people look at Australia and say, how did this country manage to come through the recession globally in such good shape? We have a responsibility as a Government, and I have got a responsibility as a Prime Minister, to make sure we keep it that way. Build on the strength that we've had coming out of the global recession and lay the foundations for long-term future sustainable growth. How people judge that and assess that politically will be a matter for them. We've got to make sure we're doing the right thing by the country, this is a responsible Budget for that reason.
HOST: You say you're getting the Budget back in the black in three years' time, but it's a wafer thin surplus and the Opposition is going to block some of what you propose. Can you deliver it?
PM: Well on the question of the surplus, we have worked through this very, very carefully. I noticed some of the commentary about this and I noticed some of the commentary, for example by Mr Hockey, the Shadow Treasurer, who said in fact that last year the Treasury's projections for growth were vastly too optimistic. Now he says the Treasury's projections last year were vastly too pessimistic. I think we need to take with a grain of salt what the Opposition is saying about the numbers here.
We've taken very conservative estimates from the Treasury, bearing in mind all sorts of factors. One is our performance in exports, the second is the fact that we've kept nearly a quarter of a million Australians in jobs, which means they are paying tax and they're not taking unemployment benefits. That helps the bottom line, as well as hundreds of thousands of businesses with their doors kept open rather than them closing down as their counterparts did overseas. We've also produced savings.
HOST: But if you can't get the mining tax through the Senate that leaves a lot of your spending promises unfunded doesn't it?
PM: Well let's be very clear about that. We have said very carefully that the Resources Super Tax is about producing a fair share for all Australians. Now a fair share for all Australians meaning bringing the company tax rate down for all Australian companies, by the way including the mining companies, down to 28 per cent, a big tax break for small business. Also boosting superannuation for working families up from 9 per cent to 12 per cent, and investing with a new fund into the infrastructure needs particularly of our resource states.
Now these things, one is tied to the other and therefore it's absolutely important that we get this Resources Super Profits Tax through. On the question of the surplus it of course is contained within other measures within the Budget.
HOST: Can you make the mining tax more palatable to the mining industry, or are you in a position where you simply can't afford to back down on any more promises?
PM: Well we've been very clear about the fact that we think we've got the rate for the Resources Super Profits Tax about right. We've also been very clear about the fact that we will consult with industry, with the mining industry on detail, on implementation and transition and right now the Treasury and others are engaged in consultations with nearly 100 separate countries on those questions. We'll work through the detail. It will take quite a long period of time, but remember the mining industry itself prior to the Henry review, in its own submission, recommended a resources rent tax for the future and we've had one for the petroleum sector operating for the last 25 years.
HOST: You're predicting growth at 4 per cent but inflation at just two and a half, do you really believe that's achievable?
PM: Well the key thing is to ensure that we, in our fiscal policy, are doing the right thing. When it comes to the inflation number, as I said, this is a modest budget, a no frills budget and we've kept within the expenditure cap of 2 per cent and we've offset new expenditure with saves. That is an important discipline for this Budget.
Obviously it's going to be a responsibility for the entire economy in registering continued, strong economic growth. But our Treasury, remember, is made up of conservative economic analysts who have been at this task for a long period of time, and I believe that these projections they have put forward, with these forecasts they have put forward are based on the best analytical information available.
HOST: Much of what you are promising happens in two or three years' time, including the delivery of that first surplus, yet the trust people had in you is shakier than it used to be. Can you expect people to take you on trust on these promises?
PM: Well, on the question of the Government's economic projections, these are based, as I said, on the conservative analysis of the Australian Treasury-
HOST: So you can deliver these?
PM: -It is the Treasury together with the Budget and Strategic Policy Committee of the Cabinet, which puts together this Budget over a long period of time. As I said, the fact that we are able to produce such a strong budget performance, the fact that we're able to provide Australians with a fairer share, for example fairer super and tax cuts for working families, the fact that we are able to invest in our future, for example in health and hospitals and schools and a new Renewable Energy Future Fund.
This is all because we've provided strong economic management for a long period of time, but the numbers upon which these are based come out of the expert analysis of the Treasury itself.
HOST: Finally Prime Minister you worked closely with your now former British counterpart Gordon Brown in the lead up to the G20 meeting a little over a year ago. Are you sad to see him go?
PM: Well Gordon Brown should be congratulated for his core achievement at the London G20 Summit in April of last year. Any analyst who looks back at what happened in that summit will know that that action, which he chaired as head of the G20 at the time, broke the fall in the global economic collapse which was occurring at that time. It was a critical meeting.
I've just now got off the telephone from David Cameron however, his successor. I've congratulated Mr Cameron on being elected to the high office of Prime Minister of the United Kingdom. We've had a good conversation just now, he's looking forward to a further upgrade in the Australia/UK relationship. We even talked about the possibility of him coming out to Australia at some stage, perhaps coinciding with a few games of cricket. So it will be a good relationship. The Australia/UK relationship is above party politics.
HOST: Prime Minister, thank you very much for your time.
PM: Thanks for have me on the program.