O'BRIEN: Kevin Rudd on interest rates first, two of the big four banks have already indicated - one, NAB, not passing on the rate cut at all; the Commonwealth are only passing on 0.1 of one per cent. That's in the face of your plea to pass on the full rate. But it would seem to me there is nothing you can do about that.
PM: Well Kerry, I would urge the banks to reconsider. And you're right, the banks ultimately set their own rates here. And if we look back at the more than four percentage point cut in interest rates since last September, the bulk of that has been passed through.
In the case of the Commonwealth Bank, I think of the 425 basis point cut, they probably passed on all but 20 or 30 basis points of that.
At the same time, however, this decision is disappointing and I would urge them to reconsider.
O'BRIEN: Well, you are doing a lot for the banks as the Government. Wouldn't you be expecting them to reciprocate?
PM: Yes I would Kerry and that's why I am urging them to reconsider. At the end of the day this is a competitive market and we will see what all the banks do in response to this decision. And as I said -
O'BRIEN: Well the expectation of the market is that they will all go pretty much the same way and in the end they might tell you yes, we've reconsidered, and stiff, can't do it.
PM: Well they may do that, I am urging them to reconsider. And as you know, we are in constant dialogue with the banks on a range of things.
For example, one of the measures that I announced over the weekend was negotiated between the Treasurer and the banks in recent times about what to do with people who lose their jobs through no fault of their own. What can the banks do for those people in terms of providing some sort of a deferral period for the payment of mortgage payments, should they be made redundant?
Now the banks have been cooperative on that, and I thanked them over the weekend for this.
For the decisions announced by two of them today, I don't thank them for that, one bit.
O'BRIEN: Kevin Rudd, you are touting this broadband plan as the greatest infrastructure project in Australian history. But it's true, isn't it, that it has been forced on you after the nation's biggest telco was thrown out of the ring, and after the collapse of the tendering process. If this proposal is so great, why didn't you go straight to it more than a year ago?
PM: When we framed our policy prior to the last election Kerry, we went to the people and said that we would put forward a project or a proposal to do fibre optic to the node and that we would do so in cooperation with the private sector.
Having been elected, we honoured that commitment. We established our own expert panel to call for submissions from around the country. They did so. And the advice of the expert panel to us was that none of those adequately gave value to the taxpayers' dollar. And as a consequence, the panel's advice to us was to go to the next stage and then to invest instead in fibre optic to the home, the business or the premises.
That's what we are doing here. We are following this one step as we go along the way and this comes up off the back of our predecessors having spent 12 years doing nothing.
O'BRIEN: But this is just another way of acknowledging that your original proposal had deep flaws, so much so that the tendering process collapsed.
PM: That's absolutely wrong Kerry. What we are now dealing with is a financial market which is grossly stressed by the global economic recession. As a consequence, and we are advised of this as well, the relative unavailability of capital out there in financial markets was a factor in causing them to conclude that those participating in the bid process or the tender process were not able to deliver an outcome which met the national economic interest or the specifications put forward by the Government.
Therefore, that's the reality. The Government now, in our case, is stepping into the breach to deal with this challenge. We believe we've got the right solution, because broadband has to be done, the 21st Century economy.
The alternative is to sit back and do nothing.
O'BRIEN: You're offering 49 per cent of this project to private ownership, but it's guesswork right now isn't it, how much of that 49 per cent will be taken up, because that 49 per cent ownership would have to inject $20 billion into the proposal?
PM: Well first of all this is a project which we believe represents the best technology for the 21st Century. It is the railway network of the 21st Century. It is where all countries around the world are going.
Secondly, we will spend between now and the end of the year completing an implementation study on all those technical aspects and other aspects we would need finally to be resolved.
Therefore companies interested in investing will have an opportunity to examine their own financial circumstances during the course of the year, and what we have put forward as the final business case.
We are confident that we will get some response from institutional investors, from corporations within the telecommunications sector.
We are also leaving open the opportunity for the public themselves to invest through Australian Infrastructure Bonds. We think this is the right way to go.
O'BRIEN: Okay, but the bottom line is, there is still a lot of ifs and buts, a lot of uncertainties about who will take up what, and still a very uncertain market for the superhighway that you are proposing because there is no way of knowing how many people will be content to take up fast wireless technology by then.
PM: Well again our advice from our technical advisers is that fibre optic systems, fibre optic technology, and in this case, fibre optic to the premises, to the house, the small business, the school, the hospital, it is by far and above the superior technology for the foreseeable future.
So therefore we can either sit back and wait for some resolution of a future technology capable of delivering 100 megabits plus per second, or you can act on the advice, the technical advice which we have today from the expert panel, from the CSIRO, from others, and get on with the business of doing it.
Other countries around the world are doing it. We believe this is the right step for us.
O'BRIEN: But you are obviously, I mean any Government, you are obviously putting the best gloss on this and I suppose I am testing how good the best gloss is, because in the end it's true isn't that you might end up with 70 or 80 per cent ownership of this project, which means that instead of the $23 billion, you could be up much more towards that $43 billion?
PM: Kerry, we are determined that this piece of critical national economic infrastructure is done. That's why we have said that the public trading enterprise which will be set up like Australia Post will get on with the business of doing it.
We are at the same time making it absolutely clear that we will welcome private sector investment up to 49 per cent and once the thing is up and done and operating for five years, within that period of time, that we would then sell it because our objective is to get the infrastructure done.
You know something, Kerry, nothing in this life is certain, what is absolutely certain is that doing nothing for Australia's future -
O'BRIEN: Okay but let's assume you are going to do it. The question is that the Government may end up wearing the great bulk of the money to pay for this project, depending on how much gets taken up by the private sector, and secondly, you are not going to know how much you will actually be able to recoup of taxpayers' money when you sell it.
PM: Kerry, we anticipate that there will be a strong response from the business community to this. There have been positive responses from practically all in the industry today. We think the case will be pretty good for those who want to come on board. And as I've said for individuals, there's the opportunity to invest also in Australian Infrastructure Bonds.
And if you are around Australia today and concerned about where to put your money, this is a pretty good investment in the future. And therefore, we would have confidence that this is going to be well supported in the marketplace, but most critically, government has resolved to step into the breach, particularly a time of stressed financial markets, because we cannot afford to be left behind in the economy of the 21st Century.
O'BRIEN: But you're anticipating that there'll be a substantial take-up but you also anticipated 18 months that the Government would only be putting $4.7 billion into a project that you're now committing at least $23 billion and potentially much more. So anticipating is one thing, delivering is another.
PM: Kerry, prior to the last election, neither us or the Liberal Party went to the Australian people and said that there was going to be the worst global recession in three-quarters of a century. It happened. It's a fact. And it's directly affecting global financial markets.
O'BRIEN: But that is, sorry with respect, that is also one of the things that will directly affect how much companies are prepared to put in towards the $20 billion that you hope they take up.
PM: Yes and can I also say this point Kerry, that in terms of the roll-out of this National Broadband Network, delivering this super speed broadband service to the Australian economy and community, it will be done over a seven or eight year period, it's not one lump of investment in year one. Therefore, over that seven to eight year period, there will be obviously opportunities for us to attract investment from the private sector.
And secondly, we remain resolved on, determined on our resolve to sell down the company once it's up and running.
O'BRIEN: You've also released a discussion paper which seems to make very clear that, or very clear intent, that you're going to break Telstra into two separate operations, wholesale and retail, to reduce its domination of the telecommunications market in this country. Is that so?
PM: That discussion paper speaks for itself. That is, that we want to see what the response is from industry and the community for reform proposals for the broader telecommunications sector.
As far as broadband is concerned, it's quite plain that we are acting decisively to establish a wholesale network with an open access regime for retail providers across the country. That is a major breakthrough in terms of reform of the overall telecommunications broadband sector.
As for the rest of the telco sector, well, we're engaged in a discussion paper process with the community, and we'll reach our policy resolution on that once we have response back to the discussion paper.
O'BRIEN: Is it true as I'm told that you want to see Telstra restructured by the end of the year?
PM: How we determine final policy on this matter will be shaped very much by the response to the discussion paper. And can I say also relevant to that regulatory question, the broader proposal we've put forward through the National Broadband Network to go out and roll out this entire network across the nation, the Liberal Party today said that they will block it.
Now this is a significant statement from the Liberal Party as obviously elements of the proposal we've put forward, both of a regulatory sense and as far as the corporation itself is concerned, is likely to involve legislation.
I find it remarkable the Liberal Party on day one says they will block this piece of infrastructure for the 21st Century as part of some blind ideological pursuit of theirs, or continuing their policy when they were in Government, which is to do nothing to provide Australia with this technology for the 21st Century.
O'BRIEN: On another note Mr Rudd, your popularity went up after the revelations before the last election about your strip club visit in New York. Now it's gone up again today after adverse headlines about how you apparently reduced an RAAF flight stewardess to tears over a meal. What does that say about your fellow Australians and how they judge people?
PM: Kerry, I think I've said in previous discussions with you, if you want some human saint as Prime Minister, I'm not the person.
O'BRIEN: This is a question, not so much about you, but about how other people make their judgments. That your popularity's actually gone up.
PM: I just say a couple of things in response to that. Look, I'm me. I'm Kevin Rudd, warts and all. And I'm not perfect. I make mistakes. That's been clear in various discussions I've had with you guys in the media over quite some period of time. I've never pretended to be anything different to that. And no one's perfect. I'm certainly not.
On the broader question though of opinion polls, can I say that what really matters is whether you're fair dinkum about the business of getting on with charting a course of action through this global economic recession. We don't have a perfect plan for this, every government around the country, around the world is struggling to chart a way through this global recession. But we're having a go at it. And we believe it's the right course of action for Australia.
And can I say as this recession around the world deepens and its impact bites on Australia, then obviously the Government in the future will take a pounding. I fully anticipate that. But the right thing to do is to get on with the job. We're doing that and we're not going to engage in populist opposition politics on the way.
O'BRIEN: I was talking more about the kind of headlines that divert from the job that you're endeavouring to do. Veteran political journalist Laurie Oakes has written that you've actually been involved in what he called a long running spat with the Squadron that runs the VIP flights. He says this incident with the stewardess blew up because there was history. Has there been a build up of tension, is it true that you've been less than impressed with VIP services at other times as well?
PM: Absolutely not. And secondly, I'm unaware of what Laurie's referring to. Look from time to time, obviously there's going to be you know frictions between ministers, myself, staff, this government, previous governments and the public service, the Australian Defence Force, that's part and parcel of the business of government.
I go back to what I said before. That when you look at someone like me, I don't pretend to be perfect. I'm not. I make mistakes. And the key thing is to get on and do the job of trying to steer the country through these very difficult economic times, and I intend to do that.
O'BRIEN: Kevin Rudd, thanks very much for talking with us.
PM: Good to be with you.
[ends]