HOST: Prime Minister thanks for your time tonight.
PM: My pleasure.
HOST: Now while the floods are ongoing and the damage bill just keeps mounting, there have been estimates, reported estimates, of up to $30 billion for Queensland and then of course there's the other States, the other areas. What's the latest estimate in regard to damage and lost production that you're working with?
PM: We don't know what the damage bill is for rebuilding infrastructure yet and we won't be able to know with clarity for some time. We do have to wait for floodwaters to subside to see what's underneath, but this is a major economic impact from the floods. Everybody's talked about 1974 comparisons for the actual floodwater, what we've got to remember is that in 1974 Queensland was a far smaller part of our national economy than it is now, around 14 per cent then, around 19 per cent now. And Queensland contributes about 25 per cent of our exports so a flood crisis in Queensland has major economic impacts around the nation.
HOST: Even if no one is certain of the amount yet and you do know, what everyone knows is that it is going to be huge and that the lion's share of that cost will be borne by the Commonwealth. Now in light of that what economic reason, economic reason, do you have for pushing on for a Budget surplus for 2012-13?
PM: Well put simply the economic reason is our economy will be running at close to full capacity at that period of time. We are facing a big repair bill for Queensland, and we are facing economic consequences of the floodwaters. To take an example Queensland supplies 80 per cent of our coking coal, the coking coal that comes out of Australia, it exports $100 million of it a day and 40 mines, around about, haven't been able to work during the floods. So yes this is having an impact but we've got to remember our economy is strong with a large pipeline of investment coming through. That means by 2012-13 our economy will be running hot and when your economy's running hot, that's the right time to be having a Budget surplus and saving for the future.
HOST: But Prime Minister business, financial and union leaders are now raising doubts about sticking to the Budget surplus timetable and couple I spoke to earlier today said that if you do hold steadfastly to that timetable, it's for political, not any good economic reason. So therefore, why not reconsider it?
PM: It is for a good economic reason and that's why it's the right way to have our Budget position given where the economy will be at that time. Let's remember strong economy, we came out of the global financial crisis strong, an economy that was running or tending to run close to full capacity. That the right thing to be doing in those circumstances is to have a Budget surplus, that's why we had determined that we would bring the Budget to surplus in 2012-13-
HOST: But if economists and business leaders Prime Minister are saying ‘look we don't have to stick to this, this can rollover, we don't have to steadfastly stick to this timetable' then surely they'd be saying that with some basis?
PM: Well I've got to respectfully disagree. As Prime Minister what I'm saying to the nation is we will rebuild Queensland and we will bring the Budget to surplus in 2012-13 because that's what our economy will require. Now that does mean we face a number of tough choices and I am working on making those tough choices right now.
HOST: Let's talk about a couple of those potential tough choices. Your Government, until now, hasn't ruled out a flood levy. Will you rule it out now?
PM: This is going to require some difficult decisions, there will be spending cut backs and there may also be a levy. I am working on those decisions now and when I'm able to I will announce them at the appropriate time, we obviously have more work to do, we don't have the total damage bill yet, but I want to be very blunt with Australians, we have a lot of flood damage to repair in Queensland, there will be some economic effects on GDP growth, a short-term effect on inflation with food prices and the like, but our economy is strong and we will get through this by pulling together the same way we got through the global financial crisis, by pulling together.
HOST: You say there may be a flood levy, how likely is it? Is it a certainty?
PM: I'm using that terminology deliberately, I am working through the decisions now, when the decisions are made then of course I will announce them, but I think people from a standpoint of commonsense would say we've been fully engaged in responding to the immediate flood crisis, making emergency payments available, getting the Australian Defence Force in there assisting. We don't know what the full damage bill is yet but of course we're collaborating with the Queensland Government and local governments on getting an assessment of the damage bill and we'll see more as floodwaters recede, and at the same time, I am working on making the decisions this nation will need to in order to rebuild Queensland and have the appropriate Budget strategy which is bringing the Budget to surplus in 2012-13.
HOST: Now the independent MP Tony Windsor has said a flood levy should be considered and he believes most Australians would be willing to pay into it. Now you've been travelling the country over this past few weeks on this issue of floods, visiting flood areas, have you actually had the opportunity to ask folks on the ground ‘are you prepared to pay a higher tax, an extra tax to pay for this'?
PM: Now I haven't, when I've been out on the ground in evacuation centres and when people have been cleaning up from the floods I've been chatting to people to provide some words of reassurance and support, there have been a few tears along the way, there's also been some great Aussie good humour and larrikin spirit, and I've of course talked to people about their individual entitlements, what we can do to assist them with emergency payments and help their business recovery and their farm recover. But at the end of the day, whatever the community thinks about the measures I determine are necessary, I'll decide and we'll do them. I suspect we'll get a fair bit of criticism and that there will be things I decide are necessary that won't be very popular at all, but we need to make the decisions to rebuild Queensland and to get the Budget to surplus.
HOST: Now the economist Saul Eslake believes before looking at a levy, at more taxes, that Government spending should be seriously reviewed, the cutbacks and reigning-in in certain areas ranging from the Pharmaceutical Benefits Scheme to the first homeowners grant. Now do you know yet what areas you will be looking at and will you, in priority, cutback before you look at a levy or a tax?
PM: There will certainly be spending cutbacks. I'm not in a position tonight to detail to you the areas, I am working on that now, working of course with Treasurer Wayne Swan and my federal colleagues on those decisions, but there will be spending cutbacks and there may also be a levy.
HOST: So maybe both?
PM: Well I've put it as plainly as I possibly can, there will be spending cutbacks and there may also be a levy. We are obviously working on those decisions now, as we work with our Queensland colleagues to clarify the bill for infrastructure rebuilding. At the same time, of course we're seeing floodwaters in Victoria, they're right in the midst of battling those floodwaters and there may well be infrastructure rebuilding that needs to be done after those floodwaters recede.
HOST: Prime Minister in terms of funding for the rebuilding what about Tony Abbott's idea of scrapping the National Broadband Network and using some of that money?
PM: I've seen this suggested and this is a misunderstanding of the way in which the National Broadband Network is being financed. The National Broadband Network is an investment which will end up earning interest money, effectively, for taxpayers. It's the same as investing in a house and then when you ultimately sell it you get your money back with interest, so this is a very different form of investment expenditure than the budget spending that governments normally do from year to year, and apart from that we've got to be able to deal with the consequences of floods as well as do the big economic reforms necessary for this nation's future and building the infrastructure we need for the future is part of that necessary economic reform.
I think Australians would be rightly very disappointed is we just said ‘well the only thing we're going to do is recover from the floods' as considerable as that task is, and we're not going to invest today in the things that are going to ensure they and their children have jobs tomorrow.
HOST: Prime Minister a major issue that has arisen out of these floods is that of insurance. Frustration is deepening and widening among people who thought they had flood cover and evidently don't. Just how committed are you to ensuring that there is a clearer standardised definition of ‘flood' in policies, without it being used as a reason to hike premiums?
PM: My colleague Wayne Swan and Assistant Treasurer Bill Shorten have been meeting with the insurance industry, they've been doing that from the point of view of prevailing upon them to show the same spirit of generosity in this flood crisis as Australians have shown to each other. So we're certainly putting that message to the insurance industry and yes this issue has been raised about standardising what it means to be flooded, hit by floodwaters, so that's something that the Government is considering. But for people who are in this circumstance right now obviously we do want to send a message to the insurance industry to be on the side of generosity; on this occasion I think Australians expect that.
HOST: But if it's in black and white in a policy, how can they be on the side of generosity when they could argue back ‘well it's all there, it's in black and white, it's in a policy'?
PM: Well my understanding is that there are some areas of interpretation too that people are raising as to what their policies mean, so on many occasions it's not as simple as saying ‘it's in black and white' and everybody clearly understood what was covered and what wasn't.
HOST: Prime Minister Julia Gillard thank you so much for your time tonight.
PM: Thank you.