Sunrise
HOST: The Prime Minister, Julia Gillard, joins me now. Good morning Prime Minister.
PM: Good morning Kochie.
HOST: This time last year we were sitting here talking about a $1.5 billion surplus; $19 billion deficit it's turned into. Massive turnaround.
Are you a bit embarrassed about that?
PM: No I'm not, because I understand what's driven it.
What's driven it is a huge hit of the amount of tax money coming into the Government.
And that's because of where our economy is now. We've had the terms of trade coming off; what the world gives us for what we sell.
At the same time our dollar remained extraordinarily high.
Now those factors have flowed through into company profitability, less money coming into to the Government.
It is an unusual economic time, indeed things are happening now that have never happened before in our economy, it does make it difficult to predict.
HOST: Mining tax and carbon tax receipts way down as well, they were big contributors. Are they policy failures?
PM: No, the biggest contributor is the knock around in company tax, in normal company tax.
The MRRT, the mineral resources rent tax, is down. This is a profits-based tax so if profitability is down it goes down.
Carbon pricing, we always said, internationally linked. We don't want our businesses paying any more costs than businesses elsewhere in the world.
HOST: But when you look at the Budget papers, yes, tax receipts, expectations are down.
But revenue is actually up as a line figure, so you can't help but think if we just kept spending where it is, we would be okay.
But you have got these big schemes and these big spending programs that you want to bring in. Is it bad timing? Can we afford it now?
PM: Sure, let me just give you one statistic on spending. Average growth over five years covered by this Budget is 1.3 per cent.
That's the lowest average growth in 25 years. So the explanation here is not big spending, the explanation is the hit to the tax money coming into the government.
HOST: But revenue is up, revenue as a bottom line revenue is up though, only a tiny amount.
PM: Yes that's right, the average increase in spending is 1.3 per cent.
Some things automatically increase Kochie, we index pensions and things like that for example.
But 1.3 per cent on average, that's the lowest in 25 years. Yes, we have got some big investments for the future. I say they are wise investments.
Investing in every child and school and making a real difference for people with disabilities.
HOST: But can we afford it now?
PM: Yes, because we've made some big responsible savings decisions to back in the spending, not just for the Government's four year budget period but for 10 years.
Yes, I am asking people to make choices: baby bonus, better school education? I say better school education.
HOST: Okay, the Opposition says the budget is in chaos, that you've mismanaged the economy. Tell the Australian public why that's not the case.
When you look at surpluses turning into deficits and having to cut back on baby bonuses, why are you managing so well, in your eyes?
PM: We are managing well because we've got the nation through the biggest economic shock the world has seen since the Great Depression, focusing on jobs, not having a recession.
Anyone sitting in this chair as prime minister would be confronted with the same set of figures I'm confronted with.
What matters is what choices you then make. I am unashamedly focusing on jobs and growth, and big investments, wise investments for the future.
There is a pathway back to surplus there too.
Now there is another way. You could say let's cut to the bone. If revenue is town $17 billion, let's cut $17 billion.
If you did that, you would have to do something like stop all Medicare payments to everyone for the whole year.
Mr Abbott's strategy appears to be those kind of cuts. That's what Andrew Robb, his finance spokesperson was saying last night.
And he said to you this morning Kochie he would rip up the NSW schools agreement; he'd cost schools in NSW on average $1.5 million each.
Well I don't believe in that cutting to the bone.
That's why I believe we are the Government that has made the right decisions for not only now, these economic times, but our nation's long term future.
HOST: Was it stupid to promise a surplus in the first place, given these economic times? Blind Freddy knew the world was in disarray.
PM: The world has been through some tough times. What we have done working with Treasury is the best of forecasts available at the time.
Yes, we have lived in difficult economic times. We have kept people working, I am very proud of that.
Now I want to give our kids a better education.
And gee Kochie, I have met people with disabilities around the country, just heroic people leading incredible lives given the disabilities they have.
We can do a bit better for them, can't we?
And to say let's leave that for five, ten, fifteen years in the future, that's not good enough for me.
Those people need care and support. We've got to start building DisabilityCare now.
HOST: Asylum seekers budget blown out as well; the forecast $4 billion. Any answer to that at all?
PM: We asked the experts for the best possible answer and we are methodically putting in place everything that they've said, including now looking at the way how we work out who is a refugee.
We have been stopped from putting some of it in place because of the negativity in this joint you see behind us.
Parliament and the Opposition hasn't been prepared to go with all of those measures.
HOST: Okay, Julia Gillard, thanks very much for joining us.
PM: Thank you Kochie.