PM:Like many Australian's, I've woken up this morning to this appalling news about what happened in Sydney overnight. This is every parents' nightmare, I just am stunned by this. It's just terrible news and for parents, this is, for the parents of those who have lost their lives, this is just a terrible, terrible day, just terrible.
CARLTON:They all appear to be very young too, in their 20's and 30's. We don't know how they are on the harbour, but a harbour tragedy always affects us here in Sydney.
PM:Well, I can understand, because when I'm in Sydney, and I am in Sydney a lot and so much of Sydney's life and activity happens in and around the harbour, or the harbour foreshores or on the harbour itself.
And so many young people go out on the harbour on cruises and the like. And people go out to celebrate and have a good time and for this to be the end of it, it's just breathtaking really. I had to be told twice this morning, this is what had happened, because I thought I had misheard.
MIKE:(inaudible) Prime Minister, thanks for those words there.
The business of the day, business of the nation, and I guess the economy first. You've got a budget coming up. Are you confident you can keep the lid on inflation and in fact get it back down below three per cent with Government policy?
PM:Inflation is caused by a range of different factors, one of which is influenced by the resources boom abroad. Another is influenced by capacity constraints in the economy like infrastructure bottlenecks, our ports, another thing is caused, another cause, of course, is labour shortages. But another one is what we do in terms of the amount of activity we pump out into the economy through the Government sector itself (inaudible) the Budget.
So, on that front, we intend to deliver a responsible Budget. I have said before, in January of this year, we had a five point strategy to deal with inflation. One of those involves coming up with a responsible Budget surplus. We're on track to do that. That's one part of an overall strategy.
CARLTON:Can you tell us what the surplus is going to be? (inaudible)
PM:That's a good try, I know it's early in the morning but, no.
CARLTON:Oh right, okay.
ALOISI:Prime Minister, there are suggestions this morning that it will be a Robin Hood Budget, where basically, the high earners are going to be hit hardest and you're going to make some serious cuts in government spending. So, can you give us an idea of which way you're going to go?
PM:Well, Sandy, the challenge we've got is responsible economic management, that's number one, because we've inherited a Government, with inflation running at record highs over 16 years.
CARLTON:It's not record highs is it?
PM:Well it's the highest inflation rate this country has had in 16 years.
CARLTON:Oh, right.
PM:In sixteen years. And secondly, we face a period of global economic turbulence coming off the back of the financial crisis coming out the US. So these are a very difficult set of circumstances in which to frame a Budget.
But if we can responsibly produce a budget, which we intend to, with a substantial Government surplus to make sure that we don't fuel the flames of inflation, our responsibility then is to support working families under financial pressure and that remains core to our concerns.
We intend to honour our pre-elections commitments. And those pre-election commitments included making sure we're going to deliver tax cuts to working families, and, another practical measure, which is to increase the child care tax rebate.
If you're a working family on $50,000 a year, it means, or a worker on $50,000 a year, you'll be about $20 a week better off. And, in terms of the child care tax rebate, if you're a working family with an income of $50,000 with one child in long day care for 40 hours a week, that means that you'll get about $1000 in additional assistance each year.
These are practical measures to help working families who are finding it really difficult to balance the weekly budget right now.
MIKE:Alright. The top end of town did pretty well under the Howard Government. These humungous executive pay packets and huge tax breaks, for example, on these share options. The Herald is reporting this morning that you are going to get rid of some of that, particularly that loophole where share options are used by the executives to minimise your tax?
PM:Well if we're going to honour our pre-election promises to families under financial pressure through these tax changes that I referred to before, and through increase the child care tax rebate, we've got to make sure that we end up with a responsible budget overall.
Therefore when you look at the sort of tax measures which have benefited many of the super wealthy, share options for example, and their taxation treatment, then of course you would expect the Treasurer to seek to crack down on those sorts of measures and the one you just referred to is important. It delivers back to revenue, we understand, something in the order of $70 million dollars. That's one step in the right direction, producing a balanced overall budget outcome.
CARLTON:So you're going to take a bit of a stick to the top end?
PM:Well, we think it is important to make sure that those who need, really need, the support of Government through the tax system and through the family payments system and through the childcare system, get all the support we can responsibly provide. While, not pretending that any of them add up to a silver bullet to deal with family budget problems, but all practical helps.
But at the end of the day you have then got to produce responsible savings. One of which is to ensure that when it comes to measures which we think artificially advantage those who are at the highest end of the income spectrum, share options for corporate executives, that is one area in which you can move.
But of course we will be tackling other savings measures as well and I will comfortably predict that there will be a fair number of complaints come budget night about some of these measures.
CARLTON:Good, we need that. It's going to be a Labor budget then is it?
PM:We are of the view that if you, we had a Community Cabinet out in Penrith only a few weeks ago and listened very carefully to what people were saying to us out there.
And I remember a gentleman standing up and describing his circumstances and the sort of pressure he's under, given the number of interest rate rise we have had in a row, and just juggling the family budget to be able to afford you know, nappies each week for their smallest child. I mean this is real stuff, and our job as a Labor Government and as a responsible national Government is to make sure that those who need that practical level of assistance get it.
CARLTON:The ‘Nappy Budget'.
PM:Well people are just trying to balance their budget.
CARLTON:No it's fair enough, I am not being sarcastic.
PM:If you have got mortgage price, mortgage rates which have gone up now 12 times in a row. You have got petrol prices going through the roof. You have got grocery prices going up. And childcare costs, always a big part of the family budget. We have got to act in areas where we can help. That is why we are doing what we are doing on tax and what we are doing on childcare.
ALOISI:Prime Minister can I just take another subject and put it in front of you, Afghanistan. With another soldier killed just this week, many Australians will want to know why we are there and exactly what we are trying to achieve and I have to say, if I were a family member of one of the thousand soldiers we have in Afghanistan, your words this week about it becoming much more dangerous would send a chill through me.
PM:Well my responsibility as Prime Minister is just to be upfront and direct with the Australian people, and not to mince words about how difficult and dangerous and bloody it is.
I went there and visited the troops just after being sworn in as Prime Minister, just before Christmas last year and was briefed by the field commanders there about the nature of the operations, it is difficult, it is dangerous and it is bloody, I mean we are up against the Taliban and these people are experienced fighters and they are fuelled with mad messianic zeal.
So it would be wrong for me to say that things are going to get better in terms of the security environment just now. I think it is important just to be practical about it. I spoke on the phone with the field commander, just the night before last, and he reported back to me that the morale of the troops is high.
They are a highly committed group, particularly the commando group who come from Sydney and the attitude that they have got to the job that they have been given is highly professional, I have got to say. It makes you proud to just hear of their professionalism.
The Defence Minister has been up there with them and he reports exactly the same.
CARLTON: Now one last topic if we can, I know you have got to leave us. Down home, back here in NSW, electricity privatisation here. Morris Iemma wants to do it, the unions are dead against it.
It looks like a giant split coming up at the ALP conference this weekend, whose side are you one?
PM:Well I have been absolutely clear cut in my support for Premier Iemma and I do not back away from that one bit. But this is a very difficult negotiation and what I have encouraged all sides of this argument to do is to try and find a reasonable compromise through this.
CARLTON:But you either sell it off, or you don't. Is there a compromise?
PM:Well I will leave that to negotiators, because this is a very complex matter concerning the detailed inner workings of the NSW electricity industry.
But what I have said to all sides, to this deeply felt dispute is that they need to try and find a way through this. Whether they do or not, I don't know. It is very difficult, the positions are very entrenched and as you know in the NSW, the politics are usually very colourful.
CARLTON:Oh yes. Yes, mate.
ALOISI: Prime Minister, just to recap, the Premier has your full support, does he?
PM:Absolutely. I have said that before and I will say it again. And this is a very difficult set of decisions, that he and the Government confront in terms of the future of electricity generation in NSW. These are very tough decisions, they are very hard decisions. But at the same time I would be encouraging everyone to take a deep breath and try and find a way up the middle of this.
ALOISI: Alright Prime Minister, thanks for your time this morning
PM:Appreciate it Sandy, thanks very much.