PRICE: Good morning, how much trouble are we really in?
PM: Real challenges lie ahead. We intend to deal with each of them as we have so far. That means for example, on basic things like the bank guarantees for all the mums and dads out there, knowing that their deposits in banks, building societies and credit unions are safe and guaranteed.
And similarly other actions that we have taken to provide stimulus to the economy and to jobs. And that is the $10.4 billion package we announced recently which helps pensioners, which helps families and which supports first home buyers.
PRICE: I want to talk to you about that in a moment and about whether that funding might have been more closely targeted, but first can I just ask you, the Deputy Governor of the Reserve Bank, have you seen his comments this morning, Ric Battellino, who says we can avoid a recession. Do you agree with him?
PM: I certainly agree with what the Deputy Governor has said because this is the core challenge of the government to do whatever is necessary to support positive economic growth. I think the other thing to say though Steve in levelling with people is this will be tough, very tough because most other developed economies around the world are either in recession or heading there right now.
And we are part of a global economy. That underpins the reason for what the Reserve Bank did recently in bringing down interest rates by one per cent and that underpins the reason why the Government two weeks ago introduced this $10.4 billion stimulus package.
PRICE: He is also confident housing prices won't plunge. You move around the country more than anybody, is that what you feel?
PM: Look it is a different picture, Steve, wherever you go in the country. But we wanted to provide a buffer for the housing industry as well and that is why we've doubled the first home owners grant for first home buyers and tripled it to $21,000 for those who are buying their first home as a new home. Because we believe it is important to provide that extra shot in the arm to the housing sector.
It is important for overall growth in the economy, not just building the houses but the things that go in houses and on top of that it is also important for first home buyers trying to realise the Australian dream.
PRICE: Your stimulus package, the theory is that the money injected back into people's pockets will trickle down through the economy. Is there any proof that that will actually work? I mean are you confident for example that a family on Tax Benefit A that will get $1000 for each child might not waste that money?
PM: Well Steve at the end of the day I can't predict what each individual consumer is going to do with their money. I mean again let's just be frank about what you can know and what you don't know.
But what we are confident of is that if you are putting the equivalent of about $10 billion into people's pockets - pensioners, carers, those who are on veterans pensions as well, together with families on low and middle incomes with kids - we are confident that a fair whack of that will be used to pay the bills and to do other things.
PRICE: Well you can't preach but you would hope that that money doesn't just go on Christmas gifts or at the bottle shop or you know, into a poker machine.
PM: Look you are right Steve, I can't preach what people do with their individual consumption.
I think working families and pensioners and carers from my overwhelming experience spend their money wisely. And at a time when you are faced with a global financial crisis which poses a real threat to jobs, and a real threat to growth in the future, having met with the leaders of business in Sydney last night, at the Business Council of Australia annual dinner, I think this is one of those times when the entire nation will try very hard to pull together.
Business leaders doing their bit, consumers doing their bit, and I see evidence of that in various parts of Sydney and the sort of reports I have seen in the Sydney Daily Telegraph for example and beyond that it is important for Government to do its bit as well.
But you know something? It is not going to be easy, it's not just going to be one set of decisions. We intend to take a calm, measured, methodical approach to this and as I have said before whatever further action is necessary for the economy to help support positive growth and jobs and to maintain the stability of our banking and financial system. Those decisions the Government is prepared to take.
PRICE: Speaking of business you spent time yesterday with two of our leading businessmen - Rupert Murdoch and Andrew Fortescue, what are they telling you about China?
PM: Yesterday we talked only in part about China because Mr Murdoch and Mr Forrest together with -
PRICE: I should have said Andrew Forrest of course, not Andrew Fortescue. Andrew Forrest of Fortescue mines.
PM: You're absolutely right, his company's name is Fortescue. Don't worry mate, I regularly do this. We had about 100 or so leaders of industry to support the Australian Employment Covenant to provide jobs for Aboriginal people, real jobs, real businesses, supported by tailored Government training programs.
But on your question about China, it's clear that there is evidence of some slowdown in the Chinese economy and that will affect us as well and again that's one of the international challenges we face. But at the same time, and based on my own discussions with Chinese leaders in recent weeks, you begin to see evidence also of the Chinese providing stimulus to their own economy.
In the last few weeks we have seen two decisions by the Chinese to reduce their own interest rates. That's important and I believe we are going to see further action from the Chinese on what we would describe in this country as fiscal policy to add to growth in that economy. They need to do that domestically for themselves to continue to generate jobs and what they do domestically is important for the rest of us because it is such a huge market for the goods and services of the world.
PRICE: Mr Murdoch's Daily Telegraph today, I am not sure if you have seen it yet, calls on your Government to slash small business taxes. Do you agree that small business is paying too high a burden?
PM: The first thing I would say about small business is that they are the cornerstone of the Australian economy. Absolute fundamental in terms of jobs and in terms of keeping the economy ticking over.
Secondly on broad tax reform one of the reasons we established in the Henry review of taxation in the last Budget, a comprehensive review of all taxes including those affecting small businesses, is to make sure that we have a comprehensive tax reform agenda for the future. That includes business tax and those taxes which affect small business.
But that has got to be done systematically. The reason I say that is that every element of business tax and for that matter personal tax is invariably connected to something else. Therefore you have got to deal with it as a job lot.
PRICE: But you are responsive to cleaning up some of the taxes that we find ourselves burdened with, are you?
PM: Exactly. We believe that the taxation system now, particularly as it affects small business in complexity and detail, is just right over the top. That's one of the outcomes of the 2020 Summit that we had in March was the business community said to us loud and clear there - hey look there are two things you can do for business in the future, one is comprehensively review the absurd complexity of the Australian tax system as it affects business and secondly make sure that we appeal as much as possible to international tax competitiveness.
The other thing they asked for us is in the 21st Century Australian economy, we need to have a seamless national economy rather than different rules and regulations for small and medium businesses in six states and two territories. That's what we're working on. We've got 27 areas now of business regulation under review by the Council of Australian Governments with a view to realising that objective. A seamless national economy, a seamless better business regulation, so the business can go on out there without the government getting unnecessarily in its hair.
PRICE: Two of your predecessors are not helping you much today. I notice Paul Keating criticising the way we've embraced Gallipoli, and Gough Whitlam saying wait until the Queen dies before a referendum on the Republic. Is Paul Keating right on Gallipoli?
PM: I haven't seen what Paul has said, but on the question of Gallipoli, can I say, for me it is absolutely fundamental to the Australian national identity.
I've just finished reading, by the way, Andrew Fisher's biography, the Labor Prime Minister at the time of Gallipoli. This was such a searing national experience at the time and thousands upon thousands upon thousands of brave Australians lost their lives. That's part of our national consciousness, it's part of our national psyche, it's part of our national identity. And I, for one, as Prime Minister of the country, am absolutely proud of it.
PRICE: Well, he said the motives of Australians visiting Gallipoli were misguided. He said he'd never visited Gallipoli and never would. He says without seeking to simplify the bonds of the empire and the implicit sense of obligation or to diminish the bravery of our men, we still go on as though the nation was born again or redeemed there. So you would disagree with those comments?
PM: Yeah, I think Paul is completely wrong on that. Completely and utterly absolutely 100 per cent wrong.
The bottom line is our men and women in uniform, whether it's on the shores of Gallipoli or the trenches of the western front, on the jungle track of Kokoda, at Milne Bay, or at Buna or at Gona, and in other theatres of war right through to our troops today in Afghanistan and those still serving in parts of Iraq, each of them does this nation, each of them causes us enormous pride. And the reason is they are engaged in ultimately a selfless act - putting their lives on the line for the rest of us.
We may quibble as politicians and as the political community about some of the decisions which led to particular military engagements. But that's for politicians and that's for historians.
The sheer naked act of courage of Australian men and women in uniform, putting their lives on the line on behalf of all of us, that is core to the shaping of the Australian national identity for more than 100 years.
And certainly that's my view, and I'm proud of each and every one of them, including those who have paid the ultimate sacrifice - the 100,000 who have paid the ultimate sacrifice in 100 years of our federated history.
PRICE: I'm sure all Australians will be pleased to hear you say that. Just finally, do you think, or will you be told me the Indonesian Government in advance of the execution of the Bali bombers?
PM: I don't know the answer to that, Steve, is my honest response. And I haven't seen any communication from the Foreign Minister or others on that. And that'll be a decision I presume will be taken independently by the Indonesians.
PRICE: Appreciate your time. Thanks very much.
PM: Thanks, Steve.