HOST: Prime Minister good morning.
PM: Good morning Alison.
HOST: First to the broader economic outlook, overnight we had the IMF warning a world recession can't be ruled out in 2012. Do you believe that the threat of a global recession is now as serious as it was in 2008?
PM: We're in different circumstances to 2008. Of course that was a global financial crisis triggered by problems in the banking system, the subprime mortgage market of the United States being a prime example. This is of a different order, this is about concerns re sovereign debt in Europe, that is countries like Greece and their ability to get themselves back into a better financial position.
We will certainly be raising our voice, my voice at the G20, the Deputy Prime Minister's voice at the international meetings for finance ministers, to say that Europe does need to get its house in order.
HOST: But if Europe doesn't get its house in order and the IMF warning does come to fruition what would that mean for our job market, would you expect it to hit, a global recession to hit the Australian economy harder than at the height of the GFC in 2008.
PM: We're never immune from global trends, we weren't in 2008 and we're not immune now, but we are in the region of the world that continues to grow and is growing strongly. And consequently our outlook is one where we have resilience in our economy, we came out of the global financial crisis strong and we are trading with the region of the world that is continuing to grow. So we're never immune, but there's no better place to be than Australia as we see this kind of volatility and concern about the global economy.
HOST: Well looking at the Future Jobs Forum that the government will be hosting today, should the public be expecting any real outcomes from today's deliberation that will lead to job creation, can we expect a single new job to be created as a result of the talks?
PM: Alison, as a government each and every day we work on creating jobs, that's been our prime motivation and purpose during the days of the global financial crisis we worked to protect Australian jobs. Since, we have been working to harness the new phases in our economic growth so that there can be more Australian jobs.
Now every Australian knows that we're seeing spectacular growth in the mining industry and people work in it, or see the growth in their own neighbourhood, they know someone who's going mining, is on a fly-in-fly-out basis. At the same time, Australians recognise that other industries are under pressure, in part because mining is so strong and our dollar is so strong. So today we want to talk about how we are working right across the economy to get jobs growth, we don't come to this from a standing start, we've been working every day, strongly working with our manufacturing sector, strongly working with tourism, to give two examples of industry sections that are under pressure, but today is about bringing people together to see what else can be done.
HOST: And manufacturing is certainly the sector which is grabbing all the headlines, the manufacturing unions have issued a wish list of demands, they want accelerated depreciation, an independent audit of government procurement policies, the naming and shaming of resources companies that don't use locally manufactured products on major projects. Can you tick off any of those demands, they're not necessarily particularly radical, are they?
PM: Alison I'm not here to pre-empt discussions at today's Job Forum. But what I can say it this, the focus of the government has been on making sure that we seize the opportunities that come with this period of change in our economy. Yes, there are risks, because the high Australian Dollar is putting pressure on manufacturing, for example.
But there are huge opportunities, we living in the growing region of the world. To give you just one statistic - the Asian middle classes are going to grow by 1.2 billion by the end of this decade, now just think about that number - 1.2 billion people demanding all of the things that you and I want in our lives, which will include manufactured products of high quality.
So there is a future for manufacturing in this country, it's about moving up the value chain and so our economic vision, and that's what we will be discussing today, is of high tech, high skills, clean energy, is the future of our economy with industries that some might think of as old, like manufacturing, having a place in that future, because they've gone up the value chain and they've seized the opportunities that this phase of economic change brings.
HOST: Well, taking full advantage of the Asia boom will mean that we need to employ more people in this country, the broader labour market is suffering a different problem from manufacturing job losses and that is a skills shortage. BHP was warning recently that the resources sector will need more than 150,000 extra workers over the next five years, does that mean that unless we find those workers we would be in danger of missing out on the mining boom, not taking full advantage of it?
PM: Alison I think your questions have really encapsulated the issue here, you've asked me on the one hand about job losses in manufacturing and now you're asking me about not enough workers, not enough skills and the fact that you can ask those two questions in the one interview is because you know, as I know, and as Australians are experiencing in their own lives, we live in an economy which is a patchwork. There are different pressures, different growth rates, consequently people who live in manufacturing regions are feeling the pressures of changing manufacturing, people who live in mining regions, or who are associated with the mining industry are saying ‘more, more, more, we want more people, more skills, more infrastructure and we need it now'.
As a government we've got to be responding to these sets of different pressures in our economy. So yes, we will need people with skills, in the right places to nurture the resources boom. I want the mining industry to be strong. At the same time we've got to be nurturing skills in manufacturing, because I don't want it to be an old industry, I want it to be an industry with a high skills, high innovation, clean energy future. We can achieve that and that's what the Future Jobs Forum today is about.
HOST: But it's not just mining, it's also health, they need an extra 300,000 workers by the middle of the decade, construction close to 200,000. Where are you going to find all of these workers, how are you going to skill them? Could it be necessary to return to Kevin Rudd's notion of a big Australia and increase skilled migration?
PM: We do have a skilled migration program and-
HOST: But is it big enough?
PM: Well we've made some recent changes to it, so it best responds to these patchwork pressures. You go to some regions of Australia and unemployment rates are incredibly low and people are screaming for more workers, you go to other parts of our country - you referred to BlueScope in your questioning, for example, the Illawarra, where people have just lost their jobs.
Now we've got to get the settings right for both areas. So, yes there will be people that we need to bring from overseas and in the budget we moved to a better way of doing that through enterprise migration agreements for those parts of the economy that are growing spectacularly and need more people now.
But I'm also very determined that we don't in this phase of economic change and growth, leave a kid in Kwinana in Western Australia, on the unemployment queue without skills, whilst the people who operate big mines in the north-west of the state say ‘can you import a plumber, or a cook, or an electrician for me'. I want that kid to get that opportunity and that's why we've put $3 billion into skills in the budget to build on all of the things we've already done to increase the number of apprenticeships in this country and to deepen the skills that our Australian people have.
The future's going to be about skills, it's going to be about clean energy (inaudible) too, it's going to be about the best of technology and that's what the NBN's about.
HOST: Well, the future is also about taxation, if we could mop up the Tax Forum, your government has put together a working group to further explore business tax reform. One option is targeted measures for companies struggling as a result of the mining boom. This working group delivers its interim report in November, does that mean that you could announce some tax relief for manufacturing firms as early as Christmas?
PM: Well we want to get on with this as quickly as possible. What we've asked is a working group to look at this question of how you deal with losses and that might sound a little bit odd for your listeners, they'd think we'll losses are a bad thing. We know in this period of economic change businesses are going to have to change and that means there may be a period when they're making a loss because they're reequipping for the future, getting that new big piece of equipment that will make them competitive for the long term. Or they might be a business person who's starting a new venture, come out of an industry or a section of industry where opportunities are closing and going to a new opportunity where demand is increasing. That means for a period of time they'll make losses, we want to make sure the tax treatment rewards that kind of prudent risk taking behaviour, getting in there with new opportunities. That's what the working group's about and we're determined to do it and move as rapidly as we can, but these things do require in-detailed work.
But certainly I want to see this working group reporting back and we are looking to changes in the forthcoming budget.
HOST: Now the Government is also committed to lifting the tax-free threshold to at least $21,000 and to abolish the low income tax offset, but there's no timetable for the tax cut. Wayne Swan says it won't happen until it's affordable, does that mean you'll have to wait until the budget is in surplus? And the very fact that you're talking about tax relief, does that mean you are increasingly confident that you can deliver on your promise of a budget surplus 2012-2013.
PM: I can give you a very clear timetable for the tripling of the tax-free threshold, it starts on 1 July next year-
HOST: But not to $21,000?
PM: But let's just be clear about the reform here, we are going from $6,000 tax-free, to $18,200 tax-free on 1 July next year. One million people not in the tax system, people seeing a tax cut, people earning less than $80,000, people at the lower income end, often women going back to work after having a child, working part time, seeing bigger tax cuts than that, better reward for work.
Yes, I want to go the rest of the way, from the $18,200 to the $21,000 and we have identified that as our first priority for change in personal taxation. But the big lift will start 1 July next year.
HOST: Well Prime Minister, finally and briefly, your leadership continues to be a talking point. The former Labor minister Graham Richardson says two of your backbenchers, Mark Bishop and Alan Griffin, are actively undermining your leadership and ringing around behind your back doing the numbers for Kevin Rudd. Are you watching your back?
PM: Oh Alison, ex-Labor politicians who have become media commentators are going to chatter about insider gossip because the media wants that-
HOST: But is he right?
PM: My focus is on jobs, today we are having a major Future Jobs Forum, dealing with this period of economic change that you and I have just talked about, huge opportunities, yes risks, but my focus is on that and jobs for people today, but also for their kids.
HOST: Prime Minister, thanks very much for your time.
PM: Thank you.