MITCHELL: First though, for his regular spot on the program. On the line, the Prime Minister. Mr Rudd, good morning.
PM: Good morning Neil.
MITCHELL: In a moment the recession, but first given what's happened in Pakistan this week with the terrorist attack on the cricketers, are you comfortable about Australian athletes going to Delhi next year for the Commonwealth Games?
PM: What we do Neil is all the time, we are engaged with discussion through our security agencies and each of these sporting bodies, constantly with Cricket Australia and we've been doing that for a long period of time as far as their engagements with Pakistan are concerned.
More broadly, we'll do the same as well with all sporting bodies. Our fundamental concern for all of our sports men and women going overseas is to make sure we've got the best possible advice for any security trip to them, convey that to the sporting organisations that provide and to make sure that we make the best preparations as possible as well.
MITCHELL: Given what's been happening, you have to say the Commonwealth Games would be under close scrutiny, there would be some jeopardy wouldn't it?
PM: Well I'd rather not publicly speculate until I've been through the exact and precise security assessments. These are very complex and detailed matters. As you know, the world's awash with terrorist organisations and frankly in many parts of the world, you've got risks and threats.
And while I'm talking to your listeners this morning, again if people are travelling, please, please always go to the Department of Foreign Affairs travel website to see what the terrorist threat warning, security threat warning is if you're planning to go anywhere in the world. It's really important people are informed.
MITCHELL: Fair enough. If the Games are called off, do you think Australia should take them over. Should we have them here?
PM: You know something Neil, I think that will get me a whole lot of strife as of first thing this morning. And -
MITCHELL: Sorry, what did you mean?
PM: Well if you begin to speculate now that X country's about to move away from those things, the Commonwealth Games, then we're going to step into the breach. One step at a time mate. I think the key thing, the key thing is to get the security analysis right and we'll be working closely with other international authorities to do that. Because we take security of our sports men and women very seriously. All of us are horrified by the events most recently in Lahore.
MITCHELL: Another aspect that concerns me, I was talking to Steve Davis, our umpire, one of our umpires yesterday. They were abandoned by the security forces. They were left in a van for at least eight minutes while the security forces went off with the Sri Lankan players. There were bullets flying. Those blokes could not, they could have been kidnapped or killed or anything, they're very angry about it. Will we be raising that issue with Pakistan?
PM: Yes. I read those reports this morning as well and I'm unhappy about them. So we will get to the bottom of what actually happened from go to whoa, with the provision of security in this particular motorcade. I read those reports and I'm sufficiently concerned about what's been said by the Australians that we need an explanation and we intend to get one.
MITCHELL: It did reach some analysts saying they now believe Pakistan is more important and even more volatile than Afghanistan or Iraq. Do you agree with that?
PM: I think if you're being honest about it, there are real problems with terrorism in Pakistan itself. It's next door to Afghanistan and what's happened over the last period of time that we've had the military conflict in Afghanistan itself, there's a whole lot of Taliban and Al-Qaeda have pushed over the border. And it's not just a safe haven, but also arguably they're beginning to develop their own networks there as well.
This is massively complex and it's also bear in mind that population in Pakistan is into the hundreds of millions. And it is a very large country which is an Islamic state. I think this is a big challenge for all of us in the future.
MITCHELL: Just another issue, do you believe that people who lost houses in the Victorian bushfires but were uninsured, should they get government help or compensation to help rebuild?
PM: Yeah Neil, this is a real tough one. I understand all the arguments from both sides of this one, which is, you know, people should make preparations for themselves and why should everyone else look after them in these circumstances.
My attitude is this. This has been an appalling, let's say a once in a century event, just appalling. And therefore I think we've got to be appropriately compassionate in the way which we respond. I mean like yourself, I would have run into so many people out there who aren't properly insured, who aren't insured at all. Then we've got to look I think at what investigations like the Royal Commission may come up with in terms of what should be the best form of insurance arrangements for Australia for the future.
MITCHELL: Like compulsory insurance, you mean?
PM: Well, all those sorts of options. But let's see how this is (inaudible). In the meantime you've got independent decisions being taken by John Landy and his team about how to help individual households in different circumstances. I think they're in the best position, compassionate and appropriate judgments right now given each individual's circumstances. I mean you would know yourself having spoken to so many people, you know, what do you do when you're confronted with this, you know this visit from hell.
MITCHELL: There is, there are obviously there is so many involved, both insured and uninsured, that there's not going to be enough money despite the generosity. There's not going to be enough money in the Bushfire Fund. Will the Federal Government look to putting money towards this?
PM: Well, on the question of insurance, first responsibility of course lies with the insurance companies themselves. Then you go onto the question you've just raised. What we've said, remember I've said this I think from the very beginning, when it comes to the overall reconstruction effort, our commitment is uncapped. And we're partners with the Victorian Government.
I just think Neil, what we've got to do is work through each individual case that's going to be so vastly different. Then, in terms of policy for the future, let's try and clean that up on the back of recommendations of the Royal Commission. I think that's the compassionate way to go, but also the rational way to go for the long term.
MITCHELL: Prime Minister, on the economy and I understand, I see yourself and your various frontbenchers and backbenchers avoiding the word recession because we need technically two quarters of negative growth. However, isn't it a reality that we are living in recession at the moment?
PM: Look Neil, I reckon I've been brutally upfront with the Australian people for the last six months about the global economic cyclone we're facing. People are going to argue till the cows come home about the technical definition of a recession - two consecutive quarters of negative economic growth, and Australia's just had one.
But the practical reality is that we all know it's bad. I've said that the risks are on the downside and the practical question which people constantly put to me is, what are you doing about it? What's your plan of action? How can you reduce the impact? And that's the business that I'm in.
MITCHELL: But why the sensitivity about the word?
PM: Well as I've said is that debate I've just described to you about definitions of a recession. The other thing is this Neil, is that I'm the Prime Minister of the country, I'm not here as a commentator. I'm here to say ‘it's bad, here is our plan of action to steer Australia through, this is what we're doing about it', and on the basis of that, to continue to rebuild confidence in the economy given that we are in the midst of a global economic cyclone.
I think that's the core of it. You know, you can sit back and you can wait and you can talk about recession, or you can get out there and act in order to reduce the impact of the global economic -
MITCHELL: Well yeah, but it's not inconsistent to do both, to accept that we are in recession and this is what we're going to do about it. We went through this in the early ‘90s with Paul Keating. I remember having exactly this debate with him, and then finally he said yeah it is a recession, it's the recession we had to have. Now I guess, would you accept that the next sort of figures are going to confirm we are in recession because surely nobody could argue that the position we are in the moment is better than it was in December. Will the next figures confirm recession?
PM: I think it's really important Neil just to be upfront about how bad it is and how difficult the challenges are and what we're doing about it. But I'm not in the business of being paid as a commentator.
A recession, as you know, there's technical debate how one quarter or two quarters of economic growth. I'm in the practical business of being upfront and saying it's bad, people are losing their jobs, I want to make sure we've got a program of action to act on it, rather than have a rolling sort of talkshop about the definition of terms. I want to get on with the business of dealing with the reality, acting on it, and through that as Prime Minister of the country, act responsibly to rebuild confidence given this global economic cyclone everyone's being battered by.
MITCHELL: Well what would you expect for the next set of GDP figures?
PM: Well, we're still a quarter away from that. I said consistently all the -
MITCHELL: A quarter? They're out next month?
PM: Yeah. Well the next quarter's growth. You're talking about the March quarter, well they'll come out some times around about the Budget or just after.
MITCHELL: Yeah and if we get those and it's another, it's another quarter of negative growth, will you then accept we're in recession?
PM: Neil, you know the debate about the technical definition of recession, we've just been through.
MITCHELL: Well I'm asking what you will call it and what do you expect from the next set of figures?
PM: Well what I've said consistently is that all the risks are on the downside. I've said that for months and months and months and since we put out the Nation Building and Jobs Plan a month ago, all the global economic data that's come out has been negative, including our biggest export market Japan which went through the floor in the last quarter of last year.
Despite all of that, Australia as of now remains among the top five performing economies in the advanced economies of the world. But you know something? All the risks are on the downside. I'm on a practical business of what action I take and to reduce the impacts this global economic recession on Australia.
MITCHELL: Well fair enough. You've used the words of analogy, it's a cyclone. If it's a cyclone where is Australia? In the middle of the cyclone or where is it?
PM: Well it's, the way to look at it Neil is this. Global economic cyclone as you know, begins in America, switched to Europe, affects everywhere else in the world. Secondly, what you can do when you know a cyclone's on the way is to try and harden your defences in order to reduce the impact of the cyclone.
MITCHELL: But the cyclone -
PM: But hang on, hang on. You cannot say to people and I've never said to people, that any government can get out there and say, well I can stop a cyclone from coming. What you can do is reduce the impact of it. The alternative which some others argue is do nothing and just let people be buffeted by this wild storm.
My job is not to delude people and say that I can prevent a cyclone from coming. My job is to do this. As a Government, we can reduce the impact and had we not acted with the measures we've taken, and we were generating instead the collapse in economic growth we've seen in places like the United States in the December quarter, we'd be looking up to a hundred thousand more Australians who'd be losing their job in the upcoming financial year than what would otherwise be the case.
MITCHELL: What do you expect from the next set of figures?
PM: Well, we don't have the next set of figures.
MITCHELL: I understand that. What do you expect?
PM: I said all the risks are on the downside.
MITCHELL: What does that mean. Another negative term?
PM: All the risks on the downside and it's not responsible to pluck a speculative figure out of space. We have to respond to data as we are given it. But, as I said to you before, you can either sit around and have a discussion about the definition of a recession, you can sit back and talk about it as others are doing, or you can get on with the practical business of simply saying ‘situation's bad, here's a practical cause of action, here's how we protect people's bank deposits, practical action taken, here's how we try and stimulate the economy through jobs, through a $42 billion Nation Building and Jobs Plan, $15 billion into the schools, practical actions like that'.
MITCHELL: Is it reality to say we're either in recession or heading into it?
PM: Well right now, we've experienced one quarter of negative economic growth.
MITCHELL: Okay so you're rejecting that we're in it. Are we heading into it?
PM: Well as I said all the risks are on the downside. And it will continue to be that way based on the global economic data.
You know something Neil, you can either play the game which some others are playing, which is to basically engage in a bit of a political strategy on these questions, and I know the Liberal party's been predicting recession since the beginning of last year and at the beginning of this year.
Well you know something, out there people want to know what is a rational basis for confidence in the future, what are you doing what's already bad, and how can you rebuild confidence.
That's what I'm on about as Prime Minister, rather than playing a political game which others may be playing at the moment, all about the leadership of the Liberal party.
MITCHELL: Okay, so you deny you're avoiding the word. Is the word such poison -
PM: Absolutely not.
MITCHELL: You're not avoiding the word recession?
PM: I've been talking about global economic recession for the last six months. And secondly -
MITCHELL: Australian recession. What about Australian recessions?
PM: And secondly I have said we in Australia are not immune from the impact of this global economic recession. For Australia itself you can either have this rolling technical debate about definitions or you can get on and simply say upfront to people, it's bad and the risks are on the downside, here are the practical courses of action for dealing with it.
That's the responsible thing to do as the leader of the country, not to have some sort of rolling talk test about what one set of data means over the other. Everyone knows it's bad, everyone wants to know whether - the tradies listening to your program this morning want to know when will the school building program begin in my local primary schools and high schools so I can get a job as a tradie? They want to know the practical course of action that I'm engaged in to try and reduce the impact. That's what I intend to do.
MITCHELL: We'll take a break, come back with more including calls for the Prime Minister in a moment.
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MITCHELL: It's nine to nine, the Prime Minister is with us. We'll take a call, Chris go ahead please Chris.
CHRIS: Morning Neil, morning Mr Rudd.
PM: Morning Chris, how are you?
CHRIS: Not too bad. I work in Nunawading HoleProof and I'm just wondering what you feel about the company getting so much money from the Government and then just abandoning Australia.
MITCHELL: Have you lost your job Chris?
CHRIS: Yeah.
MITCHELL: So you're one of the Pacific Brands workers that have lost their jobs?
CHRIS: Yeah.
MITCHELL: Okay. Prime Minister?
PM: Well I think what Pacific Brands has done is frankly you know, in so many respects, beyond the pale. In terms of the monies that they've got from the Government, we'll go through all of that in terms of what can be extracted back from them.
The key thing for you mate, Chris, is to do whatever we can to support you right now and that means assisting you and all your other fellow workers who have lost their job through no fault of their own because of the decision of this company.
That means what we do to support you in terms of NewStart, what we do for you in terms of support through access to any further training or retraining you need to find a new job and support in getting that job.
MITCHELL: Chris.
CHRIS: Yeah but I look at it, all the ripple effect that this company is causing, it's not only the 1,800 workers at Pac Brands, it's the suppliers of everything, how many of those companies are going to go down? It'll be much more than the 1,800 workers.
MITCHELL: Do you agree Prime Minister?
PM: Well as Chris is right to be concerned. I've been concerned about what's been happening in the car industry for example for a long time. One of the reasons we've been out there working with the car industry is to reduce the impact of this global recession. In the textiles, clothing and footwear industry, it has been really, really hard.
The Industry Minister Kim Carr is working with this company and other companies now. But mate, that doesn't make it any better for you. And all I can say is that in terms of your needs, your circumstances and those of your fellow workers, we're going to be doing everything we possibly can to assist you, given the decision by the company.
MITCHELL: Thanks Chris, thanks for calling. You mentioned Kim Carr who said to me that nobody's job in Australia was safe, including mine. That's been addressed since but do you accept that there will be a lot more jobs to go yet?
PM: Well what we said in our most recent economic forecasts Neil was that unemployment would rise to seven per cent. And.
MITCHELL: That's optimistic now though isn't it?
PM: Well that means you are looking at the prospect of a lot of people losing their job.
MICTHELL: But isn't that seven per cent optimistic now?
PM: A lot of people are also not being able to enter the workforce, or voluntarily leaving the workforce in some cases because it's just too hard. Look as I said to you before, all the risk here is on the downside.
MITCHELL: What does that mean? Everything is on the downside, we are likely to go into recession? Unemployment is likely to go higher than seven per cent? Is that what it means?
PM: Look Neil if I had any fresh economic data to give you, I'd give it.
MITCHELL: I'm asking you for an interpretation as the man in charge.
PM: Yeah but I'm saying if I had fresh economic data I'd give it to you and interpret it but I don't. I can act on the basis of what I have. And secondly, what I can do is, this goes directly to your listeners, what can I do to make sure that another 100,000 individuals, another 100,000 Australians don't lose their jobs? And had we not acted with our economic stimulus package, the impact if we were showing the same figures as we've seen in America and in parts of Europe in the December quarter, would have resulted in a much worse outcome along those lines.
MITCHELL: Okay well look, Wall Street is down again overnight, the Bank of England has dropped interest rates, what is the next shot in your locker? What do you do next? You've had the ten billion before Christmas, you've had the new stimulus package, we are - everything is this on the downside as you say, what's your next shot?
PM: As I've said from the beginning in this Neil, there's no silver bullet but let me try and step you through how I think this is best dealt with in the year ahead, which is going to be a very tough year for Australia and for Victorians.
Firstly, these stimulus packages that we've referred to are to provide extra injections of investment into the economy during the course of 2009 to reduce the impact on jobs.
You know what's coming in terms of schools, in housing and in energy efficiency programs, that's about $30 billion worth of investment in those programs, in the period ahead.
Secondly what we're trying to do is to support those in the housing industry by this trebling in the first home ownership bonus and if you look at the economic statistics which came out in the last quarter of last year, we've seen a ten per cent increase in those who are using, those who are out there investing in new homes as a result of that bonus and this is a good thing.
MITCHELL: But Prime Minister we know these things are going into place. What I'm saying is what else have you got? Is there anything else or are we relying on what you've declared so far?
PM: No, what I was going to say is, as appropriate what we will then work our way through is longer term infrastructure needs for the State and for the nation. You and I have discussed these on your program before. But let me just turn to one final factor which is what underpins all of this.
You see, what I can do Neil as Prime Minister of the country and with partnership of Government like the Victorian Government, is reduce the impact but what's underpinning this is what you just correctly referred to just before. That's the sickness in global banks, so at the upcoming meeting of the Group of 20 countries in London, I'm going to that on behalf of Australia, these are the 20 effectively biggest economies in the world.
Our job is this, to work with the US, the UK and a couple of other European governments who have these major banks in their systems which have real problems in them, because they are strangling the global supply of credit and that in turn ricochets back to Australia in our economy and the money available to lend to businesses and to households. That's the core of the problem and that's why we've got to deal with that internationally.
MITCHELL: Just on banks and I know you took the decision - well accepted - to guarantee deposits, so you've got a bit of moral power here. Australia's banks' latest figures show that fees are 22 per cent higher than the UK, 11 per cent higher than the United States, they're taking in $5 billion in fees from us in a time we can't afford it. Will you impress on them that they should try and cut their fees?
PM: Absolutely. The Treasurer and I meet, or we've met again with the banks in recent weeks and we have raised expressly the question of bank fees and charges. We are fully aware of what impact this has on people in the community.
The Treasurer has already reflected his view in terms of ATM charges and we will continue on this because everyone out there - businesses, households, everyone - is facing a really tough time and we don't want see anyone adding to that burden by unnecessary charges.
MITCHELL: Thank you for your help. Peter Costello wants to help. Do you want to hear from him?
PM: I think Mr Costello wants to help Mr Turnbull by replacing Mr Turnbull in the job. But you know something Neil? That's a matter for them.