MOORE: I spoke with the Prime Minister Kevin Rudd a short time ago.
Prime Minister, no change in the unemployment rate, which is good news, but if you look behind these numbers, is the picture a little less pretty?
PM: I think if you look objectively at the numbers, which is what I was saying in the house today, there are areas of concern.
You see full-time employment coming down, being offset by part-time employment coming up. You see a slight drop in the participation rate, and you see a fairly significant increase in the number of Australians registering their interest in working more hours than they currently are working. In fact, I think that latter figure is something like a 31-year high.
Put all those things together - we are doing better than other economies around the world when it comes to unemployment, in part because of the nation building for recovery plan we've implemented, in part because of the strong actions by business. But there are still signs out there which cause us to be concerned, which is why I continue to say we are not out of the woods yet.
MOORE: After today's numbers though, and looking, I guess, at the trend of the last couple of months, where do you think unemployment is going to peak now?
PM: Well, of course, the Government, advised by the Treasury, will put out our estimates come the time for the mid-year financial and economic outlook.
MOORE: But do you think 8.5 is still realistic?
PM: Ali, I have been around long enough to know that you don't pluck a number from space. We have had some encouragement in terms of these most recent numbers. Remember the unemployment rate in the United States at present is tipping 10 per cent.
And also bear in mind Treasury's advice that had we not engaged in our stimulus strategy, our nation building for recovery plan, that we, too, would have been headed in the direction of 10 per cent and right now we'd be in the depths of recession, but we still have a long way to go.
MOORE: Do you still rate as a chance, a double-dip recovery, a W-shaped recession?
PM: Ali, we have to be very mindful of the global economy. One of the reasons we are so active in the G20 is because we know that our national actions are important, but they pale into insignificance against global actions.
If I'm looking across the global economy, both in terms of what's happening in Europe and the United States, there's a long, long way to go. In the United States where you still have unemployment going through the roof; there are still concerns about the wash-through effect of credit-card debt and the impact on commercial property, and it's a huge slice of global economy.
Some parallel concerns with the European banking system. That's why we have got to implement the measures agreed upon at the London summit of the G20 back in April, and we are looking forward, of course, to Pittsburgh in the weeks to come.
MOORE: You've made the point that unemployment, of course, is a lagging indicator. What risk do you think that we'll see interest rates rise before unemployment has peaked?
PM: Well, I said some weeks ago when I wrote that longish essay on where to now for the Australian economy that our nation building for recovery plan is under way to cushion the impact of the global recession on Australia, the worst event in 35 years.
But, secondly, it follows that once these emergency measures in monetary policy, and interest rate policy put in by the Reserve Bank, that there will be some withdrawal of those measures in the period ahead.
MOORE: Could that happen, though, before we see unemployment peak?
PM: What I said in that essay is that you are likely to see interest rates rising, you are likely to see unemployment continuing to rise as well, and I think it's far better to be frank about these things than to try and gild the lily with people.
We've been in this extraordinary challenge - the worst set of global economic circumstances in three quarters of a century, emergency measures through Budget policy and through monetary policy and through financial market interventions and, therefore, when we unfold a recovery phase there'll be a lot of bumps in the road, and that's just two of them.
MOORE: That will be difficult though, won't it, with interest rates still going up and unemployment going up at the same time?
PM: Well, assuming that's the way in which it unfolds.
MOORE: But that's what you're assuming will happen.
PM: My essay indicated that's a likelihood, that you'll see interest rates going up, and I think the Reserve Bank Governor has indicated these emergency measures that he's put in place with a 425 basis-point cut in official interest rates since the end of last year are emergency measures, and they won't be sustainable.
And similarly, of course, our fiscal interventions, that is our stimulus strategy is tailored to peak in '08/'09, '09/'10, and then to drop off quite quickly. So the whole idea being through official policy to step in to keep the economy going while the private sector is in retreat and then to step back as the private economy is recovering.
MOORE: Last night the Senate knocked back the legislation which would apply a means test to the private health insurance rebate. Will that legislation go back to the Senate in three months time unchanged?
PM: That is our absolute intention, and the reason is that part of our economic strategy is, of course, once we have dealt with the emergency circumstances of this global economic recession, we have also said in the Budget we have a medium-term fiscal consolidation strategy to return the Budget to surplus. Part of doing that means, for example, in the case of that one measure, PHI, that you mentioned, that's worth some $9 billion in the decade ahead.
Yet the Liberals and Nationals who on the one-hand say, 'well debt and deficit is a problem', notwithstanding it's frankly the lowest of the major advanced economies, yet on the other-hand say, 'Oh, by the way, we are not going to allow you to actually obtain support for this in the Senate', which means that's $10 billion more nearly onto bottom line.
MOORE: But it also means, of course, it would give you another trigger for a double dissolution election, and I wonder how palatable a trigger that is because of course that legislation is a broken election promise in itself. Is it palatable as a double dissolution trigger?
PM: Ali, the challenge we have as a Government is, first of all, my own instincts have always been for a government to serve out its full term. I don't believe the Australian people like government going to elections early.
I also have responsibility for the proper, prudent financial management of Australia. Conservative economic management means you expand the activity of the official economy when the private economy is in retreat, and then the reverse - as the private economy recovers, so you contract what Budget and other things do and you return the Budget to surplus.
That means you've got to be serious about your fiscal consolidation strategy and serious about large measures like this-
MOORE: - So you are leaving your options open as to whether you'd use it?
PM: Which add up to billions of dollars. That's part and parcel of our strategy of returning the Budget to surplus. Therefore these are serious matters. I do not take them lightly. Let me say again - this legislation will be back in the Senate by year's end.
MOORE: Another issue Prime Minister, the decision by the Federal Police to open on investigation into the death of the Balibo Five. Given the Indonesians say they have no intention of reopening that case, what can that inquiry achieve?
PM: Well this is an independent decision by the AFP itself, and the way in which our system of justice works is that they make their own decisions. Secondly, you'll recall the coronial inquiry which was held some years ago into the tragic events of Balibo a long, long time ago. But the AFP, having deliberated upon that coronial inquiry over a long period of time now have concluded this is it the way forward, and it is not for us to interfere with that process.
MOORE: Are you concerned, though, about any potential impact on relations or indeed giving families false hope?
PM: Well again I'm very mindful of the independence of the AFP process here in Australia. Secondly, in terms our relationship with Indonesia, obviously our friends in Jakarta have been surprised by this because it's been quite a long time, but I believe we can manage these challenges.
There are bumps in the road with most relationships around the world, and I think we'll have to manage this one as well. I know the Foreign Minister has been dealing with the Indonesian officials on this and I believe we can see our way through this effectively.
MOORE: Finally, very briefly, we are almost out of time, but a less weighty matter. You like to Twitter. What do you think of Joe Hockey tweeting during Question Time? Is that appropriate behaviour for politicians?
PM: Well, you are right, I mean I don't mind the odd tweet or twitter or two, and I probably send out a message each day or two myself.
MOORE: But during Question Time?
PM: Question Time, and I don't necessarily cast the first stone at Joe - who knows what people on our side of the house have been doing? - but I actually think Question Time we should be focusing on what's going on.
And I think it would be good if all Members, whatever side of the House they are, left the phones outside for those purposes. Maybe you need your mobile phone communication to get stuff to be sent in to you, that's a different thing, but to provide a rolling commentary on Question Time, I find that a bit bizarre. I thought that was your job, actually.
MOORE: Prime Minister, thanks for joining us.
PM: Thanks for having me on the program.