FRAN KELLY:
Prime Minister, good morning. Thanks very much for joining us.
PRIME MINISTER:
‘Morning Fran.
FRAN KELLY:
Prime Minister, you said before your Budget, ‘by sharing the load we lighten the load’. Now, the truth of this Budget is the load falls heaviest on the poorest, on the sickest, on those least able to bear the load. Where is the fairness in this Budget?
PRIME MINISTER:
Well everyone plays their part. High income earners pay the deficit levy, Members of Parliament take a pay freeze and everyone will pay fuel excise indexation. So, I think the load is fairly shared because that's the Australian way.
But, Fran, let's talk about why this is happening: this is all happening because we were living beyond our means. The former government gave us the sixth biggest deficits in our history. It was debt and deficit stretching out as far as the eye can see. We’re not doing this because we are somehow political sadomasochists; we are doing this because it is absolutely necessary for the long-term welfare of our country.
FRAN KELLY:
You get to make the choices about what you do and you talk then about everybody bearing the load, but if you drill down into the numbers, there was an example this week of a distribution, a single mother actually on $45,000 a year with one child. This Budget was going to cost her around $6,500 – sorry, around $2,690. You said, as we heard there, this will cost you, your contribution, around $6,500. You earn 11 times more than this woman but you pay two and a half times the contribution. How is that fair?
PRIME MINISTER:
I just want to get back to the fact that we could not just sit here and do nothing because to do nothing would be to rob the future; it would be to make our children and grandchildren pay for our excesses, or the excesses of the former government. So doing nothing was not an option.
Now let's look at the precise issue you raised. I don't have front of mind the figures for people on $45,000, but if you look at a sole income family with one child under six on $30,000, even after these changes, that family will continue to get almost $19,000 from the taxpayer. So, I think the fair go principle, which is very important for our country, continues in this Budget.
What we also want to do though, Fran, is encourage people to have a go. We do have to reduce unsustainable expenditure. We do have to reduce what's been described as middle-class welfare if all of us are going to prosper in the years ahead.
FRAN KELLY:
Sure, but again it comes down to who bears the load. When we put out the notice that you were going to be on the programme, we had a few letters and calls from pensioners, unhappy. One pensioner particularly unhappy at you cutting the Pensioner Education Supplement – or payment – several very unhappy about you cutting the pensioner bonus. Why are you picking on pensioners in this Budget?
PRIME MINISTER:
Well, we are not picking on anyone but we ...
FRAN KELLY:
They feel you’re picking on them.
PRIME MINISTER:
…we said pre-election that the Low Income Bonus would go. We said pre-election that the Schoolkids Bonus would go…
FRAN KELLY:
You said pre-election ‘no change to pensions’.
PRIME MINISTER:
And there are no changes to pensions in this term of Parliament.
FRAN KELLY:
Well that's not how they feel it because they were getting these payments and now they’re not going to be getting these payments.
PRIME MINISTER:
The Low Income Bonus, we were quite up-front with people before the election, that that was going to go. And we were also quite up-front, Fran, that we would get the Budget back under control. You might remember the mantra – it was Stop the Boats, repeal the carbon tax, build the roads of the 21st century and get the Budget back under control. So, people I think were on notice that we were going to do what was necessary to ensure that we were not being a burden on our children and grandchildren.
FRAN KELLY:
I wonder how you think though that people were on notice that they weren't going to receive cuts to their pensions or they weren't going to see cuts to health or cuts education when you said there would be no cuts to health, there would be no cuts to education. You said it over and over again. Why did you think you could get away with saying that if you weren't going to deliver that?
PRIME MINISTER:
But Fran, again, we have a very serious problem here; a problem where we were living beyond our means. The first duty of Government is not to do what's easy but to do what's right and necessary for our country and we could not go on running up massive debts for our children and grandchildren to pay. That would be a form of inter-generational theft.
Now you ask about health and education. We promised that there would be no reductions over the forward estimates. What's happened is that the first of the out years has now come into the forward estimates and we never said that we were going to maintain Labor's pie in the sky promises in the out years. We never said that. All these claims of massive cuts to health and education, none of that money was ever in the Budget and what we've said is that there will be a slower rate of growth in what were the out years than Labor promised.
FRAN KELLY:
I think you've got a problem, though, in terms of trust. I mean, you are saying now – I think what you're saying – is that the promise to restore the Budget was always paramount, but I don't think that everybody heard all those other promises thought that. And so now, how do we know, in the future, what to believe when you say things and what not to believe?
PRIME MINISTER:
Well, I know that people hear different things. Someone can say something and ...
FRAN KELLY:
Well you said them.
PRIME MINISTER:
…people hear different things. But, we constantly talked about Labor spending like a drunken sailor. It was always obvious that we were going to have to rein back unsustainable spending. We constantly talked about Labor indulging in a cash splash with borrowed money and now we’ve done what is necessary.
Now look, we could’ve continued to try to fool people and say, "You don't have to change" but that would, frankly, have been pretending to people that our country could somehow go on living on borrowed money. You cannot endlessly live on borrowed money and that's what our country had been doing for the six years of the Labor government.
FRAN KELLY:
I will move on in a moment because I know you’ve been asked about the broken promises a lot this week, but before I do, I just want to, just following on from what you said there, play back to you something you said on ABC Radio before the election. Let’s have a look.
PRIME MINISTER:
I've seen the disaster that this government has created for itself by saying one thing and doing another and, John, I don't want to be like that. I really don't and if we do win the election and we immediately say, "We got it all wrong, we've got to do all these different things", we will instantly be just as bad as the current government has been and I just refuse to be like that.
FRAN KELLY:
With respect, Prime Minister, you are being like that.
PRIME MINISTER:
Well that's in the end for the people to judge, Fran, but I believe that we have fundamentally kept faith with the promises that we made pre-election. Yes, I accept that the deficit levy will impact on the top 3 per cent of taxpayers. Yes, I accept that the fuel excise indexation will cost, in the first year, the average family 40 cents a week, I accept all of that, but we did say that we were going to get the Budget back under control and I believe that this was what the people of Australia elected us to do. If I'm wrong, they will cast their votes accordingly at the next election. But why would I be doing this, why would I be exposing myself, Fran, to a world of political pain ...
FRAN KELLY:
Expending your political capital.
PRIME MINISTER:
Why would I be exposing myself, why would my colleagues be exposing themselves and ourselves to a world of political pain if we didn't think it was absolutely necessary for the long-term good of our country?
FRAN KELLY:
Let's go to some of the measures. As I say your Budget’s about choices. You have walked away from the agreement with the states and territories over funding schools and funding hospitals into the future to the tune of $80 billion; it’s quite clear in the Budget. You say you want grown-up, adult states. What's grown-up and adult about breaking this agreement with the states with no warning?
PRIME MINISTER:
Well, we said pre-election that we were not bound in the out years. We explicitly said, time and time again pre-election, that we were bound by the forward estimates; we weren't bound by the out years. Now, of course, the first of the out years has come into the forward estimates and we have been totally up-front, we have said the money will continue to increase but it will increase at a slower rate than before.
FRAN KELLY:
$80 billion less is written in the Budget papers. The states say they’ve got a signed agreement and they are shocked, or are they feigning shock?
PRIME MINISTER:
Well look, I’m not going to run a commentary on the states.
FRAN KELLY:
They’re running one on you right now.
PRIME MINISTER:
What I am saying is that what we have done is precisely – precisely – what we said we would do before the election. We said we would honour the then government's commitments over the then forward estimates. We said we weren't bound by their pie in the sky promises for the out years. We said it was unsustainable. We said it was undeliverable and we are not going to try to deliver it.
FRAN KELLY:
But you also said "We're a unity ticket on Gonski”…
PRIME MINISTER:
For four years.
FRAN KELLY:
…“and there’s no difference between Kevin Rudd and myself for school funding".
PRIME MINISTER:
For four years.
FRAN KELLY:
Do you think people heard the four years?
PRIME MINISTER:
Well look, we always said – and this was the subject of argy bargy during the election, if you'll remember, Fran – we were accused constantly by Labor during the election of not continuing the Gonski funding. They said this pre-election and they’re right…
FRAN KELLY:
What about the $50 billion for hospitals?
PRIME MINISTER:
Well again, we said we would only be bound over the then forward estimates and the first of the out years has now come into the Budget.
FRAN KELLY:
So what happens now then to the schools and hospitals? What happens to those national agreements to lift standards of treatment and schooling?
PRIME MINISTER:
Well again, Fran, let's get back to the problem. The problem is that we were living beyond our means and we cannot keep spending money that we don't have. We cannot keep mortgaging the future. We cannot keep ripping off our children and our grandchildren and this Government won't do that.
Now, we also said pre-election – and I have repeated that regularly since – that we would have a federation white paper and that would be the opportunity for the Commonwealth and the states to sit down and work out what's going to happen in three years' time. We’re not talking about…
FRAN KELLY:
So you just pre-empted that though. Why didn't you wait for the white paper?
PRIME MINISTER:
…we’re not talking about next week or next month or even next year; we are talking about changes in three years' time. We've got an enormous amount of time to sit down and work things out, but what we are not going to do is continue unsustainable spending with borrowed money. That would be wrong. That would be an offence against the future.
FRAN KELLY:
You’ve also said that the states should run schools and hospitals – they run them, they should pay for them, they should fund them. But you’re taking away this $80 billion, so how should the states raise this money? Should they raise it from the taxes they have – the gambling taxes, the payroll taxes, the stamp duties? Should they lift those?
PRIME MINISTER:
Well, Fran, this $80 billion was never in any Budget. It was an unsustainable promise for the out years made by a government that knew it was never going to have to deliver.
FRAN KELLY:
So, are you saying then as you look forward, as Prime Minister of this country, you think we can do better in our schools and hospitals without that money? Or are you happy to be a Prime Minister of a country that has different standards of hospital care and different standards of school education in different states?
PRIME MINISTER:
Well I think we can be...
FRAN KELLY:
We can't have everything without the money, can we?
PRIME MINISTER:
Well money isn't everything, Fran, and this is part of the problem. Over the years we’ve thought that the only solution to school problems and to health problems was more money. Now, money is important, no doubt about that, but are you really saying, Fran, that we can't be more efficient in schools, that we can't be more efficient in hospitals?
FRAN KELLY:
No, but $80 billion is a lot of efficiency.
PRIME MINISTER:
But that money was never in any Budget; it was a pie in the sky promise by a Labor government that knew it wouldn't be around to deliver on it.
FRAN KELLY:
The states are meeting this afternoon. They say that money was in the agreements they all signed with the Commonwealth and they want you to stick to it. They say if you don't stick to it, then how else are they going to get this money? Are you considering giving them a share of Commonwealth-raised income tax?
PRIME MINISTER:
Fran, we always said that we weren't bound by those agreements in the out years and the first of the out years has now come on to the Budget and we’ve said to the states we will continue to increase your funding but not at the same unaffordable rate that Labor was promising. So, we’ve just been absolutely up-front with the states and now we’ve now got three years to sit down and have a mature, adult discussion about this and work out what the best way forward is.
FRAN KELLY:
Should a bigger, broader GST be part of that discussion?
PRIME MINISTER:
Well look, that's a matter for the states. I don’t propose…
FRAN KELLY:
Do you have a view?
PRIME MINISTER:
…I don't propose changing the GST at all because the GST is a state tax. The revenue all goes to the states…
FRAN KELLY:
It’s a Federal tax but the revenue goes to the states. Under the legislation as it is, all states would have to ask. Now at the moment they are not going to do that, probably because three of them are facing election within the next eight months or so. But if the states came to you and said "Prime Minister, we need you to increase the GST", would you agree to that?
PRIME MINISTER:
Well, you’re asking me a hypothetical and I don't normally respond to hypotheticals, Fran. Let's wait and see what happens here. But we've got three years and this idea there is some kind of an emergency because things are going to have to be adjusted in three years' time is not right, but I'm looking forward to having lots of discussions with the states over coming months and years and I am absolutely confident that at the end of those discussions, we will continue to have good schools and good hospitals and we’ll have a better Federation as well.
FRAN KELLY:
And higher taxes?
PRIME MINISTER:
Well my objective is lower taxes. That's my objective. I didn't come into politics to put taxes up; I came into politics to bring taxes down. They should be lower, simpler and fairer and that's what will happen under this Coalition Government.
FRAN KELLY:
I'm glad you mentioned emergency because the states are unhappy and one state minister – the New South Wales state Health Minister – is already threatening to open the emergency wards in our hospitals to GPs so people can go there, not pay the co-payment and the Commonwealth bears the brunt of that through the Medicare rebate. It’s going to be chaos.
PRIME MINISTER:
No, I think that sounds like it’s a creative response by the states…
FRAN KELLY:
You like that idea?
PRIME MINISTER:
Well look, the states are perfectly entitled to do what's open to them as a sovereign government and I know in different states in the past, different states have taken advantage of the Medicare arrangement to deliver what they thought were better treatments for their patients and that's fair enough.
FRAN KELLY:
Prime Minister, it now goes to the Senate. The Senate will be a challenge for you – this one and the next one. You know that and you’ve said horse trading will go on. Where are you prepared to horse trade?
PRIME MINISTER:
Well what we aren't prepared to do is to sell our kids down the river by continuing to spend way beyond our means. What we have laid out for the Australian people this week in the Budget is a careful, considered, sensible path back to surplus and we’re not walking away from that. Obviously we are happy to talk about different details with minor parties and Independents in the Senate, but they've got to accept that we are the Government, we were elected to run the country, we've got to make tough decisions as well as easy decisions, we can't keep this cash splash with borrowed money going and let's have that discussion.
FRAN KELLY:
One of the toughest decisions – and Labor will oppose this and so will the Greens I understand – is the decision to keep young people under 30 off the Dole for six months if they’re not earning or learning, if they’re not training. People all across the community regard that as very, very harsh. Can you imagine how those people are going to live if they aren't capable of learning, if they aren't capable of going to training because their life is too chaotic or shambolic, or there’s many reasons why? What are they going to do?
PRIME MINISTER:
Well we’re not giving up on those people and just saying "Ok, here’s a cheque, we're going to forget about you". We’re not doing that at all. There will be services that will work with people to try to ensure that they are either earning or learning and the highly disadvantaged people will continue to get access to unemployment benefits. But work-ready youngsters won't be allowed to leave school and go on to the Dole. They just won't be, Fran.
FRAN KELLY:
But you can't stop them leaving school…
PRIME MINISTER:
We can…
FRAN KELLY:
…they will, because some people's lives are not anything like your life or my life, they will leave school. How do they live?
PRIME MINISTER:
Well, if they leave school and they don't get a job and they're work-ready, we expect them to go into some form of education or training.
FRAN KELLY:
What's your line in the sand here? You’ve talked double dissolution. Are you prepared to go to an election if you can't get this Budget through and is this a Budget to take to an election?
PRIME MINISTER:
Fran, whenever the next election comes, the people will judge us on what we've done. Before the election we said we'd stop the boats, we'd scrap the carbon tax, we’d build the roads of the 21st-century, we’d get the Budget back under control. This is precisely what we are doing and I believe that we will be able to say to the people at the next election, whenever it is – and I expect it in the middle of 2016 – we'll be able to say to the people "We said this is what we'd do, we've carefully, purposefully, methodically done it. Now, it's in your hands".
FRAN KELLY:
But you’re not threatening a double dissolution over this Budget?
PRIME MINISTER:
I am promising a strong and decisive government. That's what I'm promising and I am confident that the minor parties and the Independents in the Senate will understand that we could not go on living the way we were; we could not go on mortgaging the future. Now, if they don't like what we are putting up, what are they going to put up as an alternative?
FRAN KELLY:
Prime Minister, thank you very much for joining us.
PRIME MINISTER:
Thank you, Fran.
[ends]