ALISON CARABINE:
Prime Minister, thanks for your time this morning.
PRIME MINISTER:
‘Morning, Alison.
ALISON CARABINE:
Prime Minister, we will get to the states in the moment but we can’t avoid the opinion polls – voters have passed judgment, they are angry and are feeling betrayed. Aren’t you now being called out by the Australian people?
PRIME MINISTER:
Alison, no one ever said it was going to be easy to tackle Labor’s debt and deficit disaster, but every day in the lead up to the last election, I said to people, “We are going to get the Budget back under control”. I think the public were on notice that we were going to have to make some very tough decisions. We have made them. We are not making them for our own political benefit, obviously. We are making them for the long-term economic benefit of the country and that I believe is what people elected us to do. They elected us to ensure them that we weren’t paying the nation’s mortgage on the credit card because we just could not go on spending a billion dollars a month just paying interest on the interest on the borrowings and that’s the situation we were in under Labor.
ALISON CARABINE:
And that’s an argument you have prosecuted consistently since you were elected, but you also said yesterday, Prime Minister, that before the election people heard different things. That sounds like a concession that you carefully massaged the message pre-election to tell voters what they wanted to hear. Does that amount to deception?
PRIME MINISTER:
Well, if you go back to the pre-election mantra, which people were sick of hearing, I said in interview after interview - I said: we will stop the boats, we will scrap the carbon tax, we will build the roads of the 21st century and we will get the Budget back under control. Now, sometimes Alison the order was different, but they were the elements that I put forward to the Australian people every day during the election campaign and we are getting on with all of them.
ALISON CARABINE:
But you didn’t mention welfare cuts and tax rises; does that mean stopping the boats, scrapping the carbon tax, building the roads, getting the Budget back under control, are they the only areas voters should hold your Government to account, everything else is carte blanche for the Government to do what it likes and not be held to anything it said before the election?
PRIME MINISTER:
Well, Alison, we did talk about scrapping the Schoolkids Bonus. We did talk about eliminating the Low Income Support Payment. We did talk about reducing the public service by some 12,000 people. We put all of this before the Australian people and I don’t think anyone really expected that you would get a soft-option Budget from the Coalition and obviously it is not a soft-option Budget from the Coalition but it’s the Budget that Australia needs at this time if we are going to get Labor’s debt and deficit disaster under control.
ALISON CARABINE:
Well, if you were so up-front with voters before the election how do you account for these terrible polling numbers today?
PRIME MINISTER:
We never said it was going to be easy and I think the last government which brought down a very tough Budget – the Howard government in 1996 – took a big hit in the polls too. But in the end, we were elected not to take the easy decisions but to take the hard, necessary decisions and that is what we have done.
ALISON CARABINE:
What about unfair decisions – 63 per cent of voters according to Nielson believe the Budget is unfair – that suggests voters are not buying the Government line that the burden of Budget repair is being shared equally?
PRIME MINISTER:
If you look at the actual decisions in the Budget, the high income earners, like politicians, will pay the deficit levy. That’s the top 3 per cent of learners will pay the deficit levy. People like politicians will get a pay freeze for 12 months, judges and senior public servants likewise. Yes, everyone is going to pay fuel excise indexation, but for the average family that is about 40 cents a week in the first year. So, look, there are tough things in this Budget, there is absolutely no doubt about that, tough things in this Budget but it is absolutely necessary if we are going to get Labor’s debt and deficit under control and stop paying a billion dollars a month just in interest on the borrowings.
ALISON CARABINE:
Prime Minister, I promise you we’ll get off the polls in a moment, but your own authority appears to have been damaged – your net approval rating has jumped as high as minus 30. How do you plan to win back people’s trust or once people feel that they have been misled by their Prime Minister, could it be that that trust is gone forever? Was that the Julia Gillard example?
PRIME MINISTER:
Alison, I am just getting on with what we were elected to do. As I said, we were elected to get the Budget under control and you don’t rein in debt and deficit disaster without making tough decisions. Labor gave us the sixth biggest deficits in our history. Labor left us with debt and deficit stretching out as far as the eye can see; debt peaking at $ 25,000 per Australian man, woman and child. We have to take tough decisions to tackle this and in the end my job is not necessarily to win a popularity contest. My job is to run the country effectively and what I am going to do my best to do.
ALISON CARABINE:
And you would be well aware that politics is the art of the possible. When you take into account the resistance in the Senate plus the disapproval of voters, maybe you have bitten off more than you can chew with this Budget?
PRIME MINISTER:
Oh no, we have done what is absolutely necessary to tackle Labor’s debt and deficit disaster. I mean what is the alternative? Labor’s alternative is just to keep borrowing and keep spending. The Greens alternative is to just whack up everyone’s taxes. What is the alternative?
Now, we have put forward a careful, thoughtful, measured way to get the debt and deficit disaster that the Labor Party left us under control and there is no alternative, certainly no alternative that the Labor Party have offered us, and that’s why we are going to press steadily forward with the measures that we have brought forward.
ALISON CARABINE:
Prime Minister, you say that it’s a careful and considered approach to Budget repair but state and territory leaders have unanimously rejected your cuts to health and education funding. They want an urgent COAG meeting to discuss the cuts but you’ve knocked them back. Why won’t you speak to them?
PRIME MINISTER:
I’m talking to them all the time. I talk to the Premiers all the time. I had a number of conversations with most of the Premiers last week and I dare say I’ll have more conversations this week. But the changes are not cuts; they’re just a reduced rate of growth in spending. They were clearly flagged before the election. We never said that we would honour the Rudd/Gillard government’s pie in the sky promises in the out years. The first of the out years has now come into the forward estimates as part of the Budget. We think what we’ve put forward in the Budget is perfectly reasonable. It does involve, as I said, a continued growth in funding and we’re happy to keep talking to the states as part of the Federation white paper process about all these issues.
ALISON CARABINE:
You may have said before the election that a Coalition Government would not be bound by the out years, but you also said there would be no cuts to health and education. Can you understand why people, including the Premiers, are confused and quite annoyed with you?
PRIME MINISTER:
But there are no cuts to health or education. In health, all of the money that we’re saving is going into the medical investment fund – the Medical Research Investment Fund – and that’s going to be dedicated to finding the treatments and the cures of the future that we need if our population is to live longer and better.
ALISON CARABINE:
But that reshuffling of the money will, according to the Premiers, mean hospital beds will close, no fewer than 1,200. On 1st July there’ll also be $300 million in cuts in concessions for the elderly. They will also be lost and they’re not going to happen in three years’ time, that will be in 42 days’ time according to the Premiers and they’re saying they can’t absorb these cuts.
PRIME MINISTER:
There was a national partnership agreement which the Labor Party hadn’t funded. There was a national partnership agreement on beds which the Labor Party hadn’t funded and we haven’t decided to renew it. But this is actually a Labor cut – it’s not a Coalition cut.
On the concessions, look, it is true that for many years the Commonwealth had been paying the states money so that the states could offer concessions to pensioners and concession card holders in various areas and we made the decision that in a very tough budgetary climate, if the states wanted to continue to offer those concessions, they should do it themselves. They shouldn’t need the Commonwealth to pay them to offer concessions to people.
ALISON CARABINE:
And, Prime Minister, you did mention the white paper into the future of the Federation. Are you hoping to use that process to see a fundamental shift in who takes responsibility for funding schools and hospitals?
PRIME MINISTER:
Well let’s see where it goes. What I said pre-election and what I’ve said post-election is that I want the states and the territories and the Commonwealth to be soldiers in their own spheres. It’s well known that the states run public schools and public hospitals but the Commonwealth part funds them. The states find that an unsatisfactory situation because they want funding certainty. I think most of them would prefer to have own source funding for this. So, let’s talk all of this through and come up with a system which means that come 2017-18, which is more than three years away, we have schools and hospitals which are well funded, which are better run and let’s have a Federation which works better as well.
ALISON CARABINE:
But with regards to that source funding that you’ve mentioned, the states are feeling pawned and they believe you have engineered a funding crisis to flush them out on the GST. But they’re not biting; they won’t go there, so that tactic seems to have flopped.
PRIME MINISTER:
Well let’s wait and see. We’ve got three years before the rate of increase drops. We’ve got three years of funding as agreed by the Rudd/Gillard government and that’s as we promised at the election and then in the fourth year, funding will continue to increase, it’s just it will increase at a slower rate. So, there’s plenty of time to come to grips with all of this and to work out the best possible way to deal with it.
ALISON CARABINE:
So, plenty of time to come to grips with a bigger and broader GST, is that what you’re saying?
PRIME MINISTER:
We have no plans. At the Commonwealth level, we certainly have no plans whatsoever to change the GST. We went into the election with that position and we’ve come out of the election with that position.
ALISON CARABINE:
Why not? Why won’t you show the same political courage John Howard displayed on tax reform? Why not take a lead on this?
PRIME MINISTER:
Are you accusing me of lacking political courage, Alison?
ALISON CARABINE:
No, I’m certainly not doing that, Prime Minister.
PRIME MINISTER:
Well, thank you!
ALISON CARABINE:
I’m just suggesting that if you did want a bigger and broader GST, you being the Prime Minister might be the person perfectly position to prosecute that debate.
PRIME MINISTER:
Well let’s see what comes out of the Federation white paper process. I have no plans to change the GST. All of the GST revenue goes to the states. It’s really up to the states if they want to put that stuff on the table. I don’t know whether they will. It is really up to them and let’s just see where the Federation white paper process takes us.
ALISON CARABINE:
Prime Minister, just finally, you’ve got the states offside, that’s clear, so too the voting public, also the Senate which will knock out some of the major Budget measures. Is it now time to rethink your Budget strategy?
PRIME MINISTER:
No, because there is no alternative to getting Labor’s debt and deficit disaster under control. We cannot go on stealing from our children to spend in the here and now. We just can’t do it. Now, Labor has no answers. They are all complaint and no solutions. We have put forward a very carefully thought through, sensible, reasonable, moderate way forward and we’re just going to push on with it.
ALISON CARABINE:
So it’s crash or cash through?
PRIME MINISTER:
Well, it is keep going with a carefully thought through Budget strategy. The last government that brought down a tough Budget was the Howard government in 1996. That set up a decade of prosperity, because it demonstrated that the government had political courage and economic strength and that’s what this Government is doing.
ALISON CARABINE:
Prime Minister, you’ve been very generous with your time. Thanks so much for joining Radio National Breakfast.
PRIME MINISTER:
Alison, thank you.
[ends]