HOST: Prime Minister, welcome to Lateline.PM: Thank you very much.HOST: What are you hoping will be achieved from the G20 meeting there in Mexico this week?
PM: Well, I'm hoping the G20 meeting for the global economy achieves four things and certainly I will be advocating them. I'll be advocating that countries have country-specific commitments about what they're doing to bolster growth and jobs. I'll also be advocating that we've got to fiercely resist protectionism. It's too easy for countries during difficult economic times to slide away from free trade and that will end up being a problem for the whole world.
I'll also be advocating that countries that have made IMF commitments need to make - honour those commitments, need to take those commitments forward. And lastly, I will be arguing for an agreement on trade facilitation. The more freely we can trade with the world, the better for Australia. We are a great trading nation. Of course all eyes too will be on Greece and what is happening in the eurozone and I will be advocating to my European counterparts that they do need to take decisive action to address the problems in the eurozone.HOST: What exactly is that decisive action you're looking for?PM: Well I think it's really threefold. They need to strengthen and recapitalise banks. Second, they need to work together on greater fiscal integration and greater banking integration. I think that's very important to resolving the current problems in the eurozone. And third, they need to work together on a plan for growth.I've been speaking today about the Australian example. Emma, a lot of times austerity is put at one end of the spectrum and growth at the other. I think what Australia's example proves is you can have both. We went for growth during the Global Financial Crisis. That's why we stimulated our economy to support jobs.
But at the same time, we clearly charted a return to surplus and fiscal discipline, we charted the path, the rules that would guide us. So we went for growth, but we also outlined how we would engage in that with fiscal discipline. That's what we need to see the eurozone do: go for growth, but also with rules that enable them to repair their balances - their budget balances over time.HOST: It's a little unfair, isn't it, to compare European governments with your own? I mean, when you took office back in 2007, you arrived with a $21 billion surplus and unemployment around five per cent, and now you have no surplus five years later, unemployment is still around five per cent. We escaped the Global Financial Crisis, but many suggest that has more to do with good luck than good management. I mean, we have a bounty of resources and our chief trading partners are in Asia. It's hardly right for Australia to be smug about those things, isn't it?PM: Well, anybody who said that would be completely wrong, Emma, and wouldn't be analysing what had happened in our economy during the days of the Global Financial Crisis. We would've had a recession with hundreds of thousands of people thrown out of work, with young people not able to get that vital start in the labour market, that first training opportunity and apprenticeship if we hadn't engaged in targeted and timely stimulus.
The decisive action of the Government then did keep us going for growth. And here we are, past the Global Financial Crisis, with growth in our economy at 4.3 per cent. This is a truly remarkable result. It's not true to look at that result and say that's only mining; that is showing broader strengths in our economy. And as a nation we have strong public finances; a strong banking sector. So the Australian example I think does have some lessons in it. Of course I understand every country faces its own unique circumstances.But the lesson from the Australian experience is that you don't put austerity and growth and jobs as if they are polar opposites. You can work on them together, and we have, with a growing economy, 800,000 jobs created and a budget returning to surplus.HOST: Even Bob Zoellick, the head of the World Bank, just today expressed his frustration with the lack of certainty coming from Europe from a policy perspective. I mean, if the eurozone is going to function properly, in your view, do you think more economic and political union is a necessary part of that?PM: I think further integration is part what have the eurozone needs to achieve. European leaders will be here at the G20, the leaders of the major European economies. Then there will be some major meetings in Europe towards the end of this month. So the G20 comes at a good time for the world to strengthen the resolve of European leaders to act decisively in the face of the ongoing problems in the eurozone.HOST: Fiscal transfers between states are unlikely though given the resistance from Germany in particular. I mean, Angela Merkel has made the point that any kind of debt sharing exercise removes incentives for the deep structural reform that countries like Greece need to implement.PM: Well once again I don't think these things should be put as if they are alternatives. Nations like Greece do need structural reform. They do need economic change. That must be part of their future. But if we are to see a strong eurozone in the future, we also need Europe to be working on strengthening banks, recapitalising banks, we need them to be working on growth policies and we need them to be working towards greater integration.I don't underestimate the political difficulties of all of this and we're talking about a large number of countries coming together and finding common accord, but the world has an interest in seeing a strong and stable eurozone. When we look at Europe, it is the single biggest economic bloc in the world.
Our economy is not that strongly directly exposed, but of course, we are exposed through our major trading partners who trade with Europe. So, I will be rising Australia's voice about what needs to happen in Europe and then focusing on the rest of what needs to be done to strengthen the global economy at this time.Our economy's strong, that's something we should all be proud of, we built it together, but a stronger and more resilient global economy is in Australia's interests and that's what I'll be arguing for here.HOST: Given the relative strength of the Australian economy, do G20 countries seek your counsel about how they might improve their lot?PM: Well, at a meeting like the G20, because it is small in number, you do get the opportunity to speak to your counterparts, to speak to other leaders. That's one of the great strengths of this format. I've had the opportunity over a number of meetings to meet with Chancellor Merkel. I had the opportunity at the NATO ISAF summit to meet with President Hollande. Obviously I'd met with his predecessor President Sarkozy on more than one occasion. So it does give you an opportunity to share views.HOST: And do you have the kind of relationship with Angela Merkel for instance where you might be able to persuade her of your point of view?PM: Of course. And I've talked to Chancellor Merkel about these issues in the eurozone in the past.HOST: Prime Minister, looking back home, the governor of the Reserve Bank, Glenn Stevens, says productivity is Australia's number one challenge. Is he right?PM: Productivity is a major challenge for our economy, which is why each and every day we work on the drivers of productivity. The skills agenda of government, the education agenda has been one of our principal drivers and will continue to be. That's reforming everything from early childhood education through schools, through the huge expansion we've engaged in of university places, 150,000 more, and then at the last COAG meeting, we agreed a major vocational education package with the states and territories to bring benefits to students who want new skills like the benefit of HECS. That is, like university students, you don't have to have the money upfront. You can do a course, get new skills, when you're earning higher income, because of those skills, pay back your course costs. So, a very big driver of productivity. Infrastructure, a huge driver of productivity.We are a huge investor in traditional infrastructure, roads, rail, ports, but of course the infrastructure we will need for future, the National Broadband Network. Our telephone system's done a very good job. It's served us well, 100-year-old copper. Done a great job. But left unattended to, it's going to choke off future productivity gains and future growth in our economy, which is why the NBN is so important.And then we're working on some of the areas that don't necessarily get column inches in newspapers and many people would think, "Gee, that meeting's as dry as dust," and it probably is, but we're working on deregulation and a seamless national economy, because that's a big driver of productivity too.HOST: Glenn Stevens urged the Government to grab the Productivity Commission's to-do list and get on with ticking them off. Why aren't you doing just that?PM: Well we are ticking off some things that the Productivity Commission has talked about. One of the big ones of course being vocational education and training reform, which we ticked off, to use your terminology, firstly in the budget last year, by making the money available, and then through very detailed negotiations with states and territories to drive our education system, our skills system, to an entitlement model because I want people to have an entitlement to a training place that gives them the first certificate level that will make a real long-term difference to their employability and their income.HOST: You talk about skills, but we're still facing such a skills shortage that we're having to import workers from overseas, and on the matter of education, we're spending more, but it would appear still falling further behind.PM: Well we are investing in skills and we are spending more on education. We've doubled the amount of money that is going into school education from the Federal Government and we are getting results. If, for example, we're talking about the most disadvantaged students who are falling behind in literacy and numeracy, those struggling kids who are at the back of the class and who are at real risk of never learning to read or write, our national partnerships are making a difference for those children. We know that in 70 per cent of schools, a difference is being made in reading; in 80 per cent of schools, a difference is being made in numeracy.And that's vital because if we don't work with those children who are below national benchmarks, the real risk is that they'll end up hating school, they'll drift away from school and they'll be on a one-way path to a life of welfare dependency. So we've got a comprehensive reform agenda. It's about transparency through MySchool, it's about national curriculum, rewarding best teachers getting the best and brightest into teaching through Teach for Australia, putting money into disadvantaged schools and really focusing on literacy and numeracy and we are seeing results, as well as seeing results in closing the gap for Indigenous students.HOST: In a letter that you and your Treasurer penned to your G20 colleagues ahead of this meeting in Mexico, you wrote that strategies to promote growth should be underpinned by among other things flexible labour markets. Is the Australian example a good one for them to follow on that score?PM: Yes, I believe the Australian example is a good one. We of course got rid of the offence that was WorkChoices where we saw people go to work in the morning and have their penalty rates ripped off them that day without a cent of compensation, or even worse, lose their job, be sacked after many years of good service, never given a reason as to why they'd been tossed out the door.
We got rid of that because of how grossly unfair it was and we will always fight as a Labor Party and a Labor Government to prevent workers being ripped off through losing penalty rates or getting the sack unfairly. The Fair Work system responds to that need for appropriate decency and respect in Australian workplaces while ensuring that in workplaces people can bargain above a safety net so that working with their employer, they can make their workplace more productive and they can have more rewards for them to share. Of course when you do a change as big as that, and it was a big change, it's appropriate to look to see how it's working and we are doing that through the Fair Work Act review. But I believe our labour market system brings fairness together with flexibility.HOST: Well the Government's now received the review panel's report on the Fair Work Act. There's been some suggestion that your response is likely to include some sidelining of unions at greenfield sites.PM: Look, I understand there's some speculation in newspapers today and I'm not going to comment on speculation. We'll work our way through the review and when we've got a comprehensive government response to release then we will.HOST: Do you accept the view though that unions are wielding a kind of virtual monopoly when it comes to negotiating agreements at new project sites? I mean, employers are saying that that kind of monopoly is causing big increases in the costs of production and very long delays.PM: Look, I'm not going to deal with speculation about aspects of the Fair Work review. On construction costs and working around the country on construction, we understand at this time in our nation's history with more than $500 billion of resources projects in the pipeline, that there is pressure on construction, there's pressure on the number of people available to do the work, there is therefore some pressure on costs.
I want to make sure that we're maximising all of these opportunities for Australians so building workers can get the benefit of those jobs and we can see construction happening appropriately around the country. But let's not remember there are some big civil construction projects the Government's been involved in where we have done major highway works and brought it in quicker than the projected time and under the projected budget.HOST: Finally Prime Minister, you're off to Rio de Janeiro at the end of the week for the UN's Earth Summit. Realistically, what are your goals for that particular meeting given the absence of key players like President Obama, the UK's Prime Minister David Cameron and Germany's Angela Merkel?PM: This is an important opportunity for the world to come together and to talk about sustainable economic growth, sustainable in the sense of environmentally sustainable but also socially sustainable. This is the 20th anniversary of the original meeting which focused on these sustainability questions. Australia is an innovator in this field. For example, we have a good story to tell about what we have done to preserve our wonderful natural environment, whether it's Kakadu National Park on land or now moving to marine reserves in our oceans. So I think it's appropriate that I do participate there.HOST: Thanks very much for being there for us, Prime Minister, and all the best of luck for a very busy week ahead.PM: Thank you.