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Prime Minister Julia Gillard speaks with Chris Uhlmann.


CHRIS UHLMANN, PRESENTER: I spoke with the Prime Minister earlier and asked Paul's question: what
happens to the Government's surplus if the resources boom falters?

JULIA GILLARD, PRIME MINISTER: Well, Chris, we base the Budget on the best projections available to
us from Treasury. We've made conservative assumptions about the price of commodities in this
budget, with the terms of trade slightly falling away during the duration of the four years that
the Budget covers.

CHRIS UHLMANN: In the 2007 election Kevin Rudd liked to say quite a lot, "Well, are you planning
for the end of the mining boom?" It was a question he was asking of the Howard Government. Are you
planning for the end of the mining boom?

JULIA GILLARD: Well certainly we believe that this mining boom, mining boom mark two, will last for
some period of time. This is a very special opportunity for our nation to make a difference,
particularly to long-term disadvantage in getting more people into the workforce.

CHRIS UHLMANN: Now one of our panellists, Sarah, says that freezing family benefits payments puts
$2 billion back in the pockets of government, but of course then takes $2 billion out of the
pockets of families. Is that a fair comment?

JULIA GILLARD: Well, I'm not sure what income level Sarah is on, but let's be very clear here:
family payments received by people are going up in the next financial year. If you are receiving a
payment for your child now, that rate of payment will go up. We have paused indexation of the
income thresholds. That's obviously affecting a limited number of people at the upper end. We
needed to make some tough choices in this budget because it was important to get the budget back to
surplus in 2012-'13 as promised, and that's about families and their cost of living, including the
costs of raising children, because we didn't want government to be adding to the inflationary
pressures in the economy.

I'd also remind too there's a special new payment for families with teenagers because there's been
an historic anomaly where the family payment system assumed a 16-year-old cost you less than a
15-year-old, and I think we all know that's not right.

CHRIS UHLMANN: Back in 2007 you made much too of kitchen table economics and cost-of-living
arguments rather than large economic arguments. Are you sorry that you did that now, because it
seems that everyone believes that they deserve some sort of handout from government?

JULIA GILLARD: I think the two are connected and they're connected in people's real, lived
experience and they're connected in our minds too. I understand that families out there are under
cost-of-living pressure. I understand that people get utilities bills and they look at them and
they wonder, you know, how are we gonna make all of this add up? So, I get that there's pressure
out there on the shoulders of Australian families. But what we're doing in this budget is saying to
Australian families: our priority is keeping the economy strong. In order to do that we do need to
bring the budget back to surplus. That's, you know, about not adding to inflationary pressures
which would worsen those cost-of-living pressures for Australian families. But it's also about
spreading opportunity, and families want an opportunity - get a job, get a training place, get a
better job, see their young son get an apprenticeship, see their young daughter perhaps go on to
university, see their younger children in a great school, see their baby in supported childcare if
they need to to return to work, and all of that's in this budget.

CHRIS UHLMANN: Is a family on $150,000 a year rich? Because it seems that the means testing is
settling about there?

JULIA GILLARD: Well what I would say is I understand families on $150,000 a year still feel
cost-of-living pressures. We have to target government payments to people in the most need. But for
a family on $150,000 a year, I mean, let's be very clear: they'd continue to receive childcare tax
rebate if they've got a child in childcare and many families would. For those families we'd be
working with them to make sure that their children go to a great school. We've almost doubled the
amount of money going into school education. They, if they had an emergency medical situation,
would be down at the local public hospital. We're investing to make that public hospital better,
and of course, we don't wanna exacerbate their cost-of-living pressures by adding to inflationary
pressures, and that's what a budget in surplus is about.

CHRIS UHLMANN: And the people on our panel are pleased about the spending on health, but they do
note with things like mental health that some of this is back-end loaded, that a lot of payments
start coming in later years.

JULIA GILLARD: Well this is unashamedly a 10-year road map for mental health. What mental health
stakeholders said very clearly to us is that they wanted a clear way forward. They didn't want to
be buffeted. You know, money this year, then no money next year and then a changed program the year
after. They wanted to get the settings right and build over a 10-year period so we fundamentally
improve our mental health system, and that's what we've delivered with a $2.2 billion package.

CHRIS UHLMANN: But when we look at that figure too - and this is something that Lindsay Tanner's
brought up recently, that's over five years, not four, which is the usual way that these things are
measured, it includes $600 million of spending that's already previously been announced. So, aren't
there accountancy tricks in doing that just to get a big headline number at the top?

JULIA GILLARD: Well there's complete transparency about this in the Budget papers, and yes, we have
amended a program that mental health professionals and the people who best represent the community
that relies on mental health services told us wasn't working equitably, and particularly people in
rural and regional Australia were finding it very hard to access. So we've made that program
better. We've counted it in the $2.2 billion because it will be a better program.

CHRIS UHLMANN: When you look at the way that you've designed this and getting back to surplus in
just a couple of years' time, even though it's a small surplus, have you been defined by what the
Coalition says: a good government is, a good economic manager is that you have to have a surplus,
because that's not always the measure, is it?

JULIA GILLARD: Oh, I must admit I don't define myself by anything the Coalition says. If I did, all
I'd do is listen to relentless negativity all day, every day.

CHRIS UHLMANN: And yet it appears so with this desperation to get into even a small surplus.

JULIA GILLARD: No, this is it nothing to do with the Coalition's critique. This is to do with my
understanding and the Government's understanding about what will best keep our economy strong. When
we had the Global Financial Crisis, you know, the biggest global economic challenge the world has
faced since the Great Depression, it was the right thing to do to have a deficit, to have a debt,
to keep supporting jobs, keep Australians in work. I'm glad we did that and we kept this country
out of recession. Now, as we're moving up and the economy is coming to full capacity, the right
thing to do is for government to reduce its footprint and not to add to inflationary pressures.

CHRIS UHLMANN: Over the next four years the amount of money you're going to spend on detention's
going to go up by $2 billion, so that's one real growth area in the Budget. How much closer are you
to a deal with Papua New Guinea?

JULIA GILLARD: Well we are continuing to have constructive discussions with PNG, and on the weekend
that's just past I released my joint statement with the Prime Minister of Malaysia about an
innovative transfer agreement working under the regional framework that was agreed by all countries
in the region at the Bali process. So we will continue to work on this. The Malaysian agreement
that Prime Minister Najib and I have said we will enter is one that would take way from people
smugglers the very product that they sell, which is a passage to Australia and entry into our
processing system.

CHRIS UHLMANN: And so in that you're admitting that there are pull factors and that they have risen
since you came to government, so doesn't that show that your first attempts at this were abject
policy failures, that you contributed to the rise in the number of boat people?

JULIA GILLARD: Well I'm gonna disappoint you, Chris, by not agreeing with the premise of your
question. We believe that there are push factors around the world, things that get people on the
move. Look at Sri Lanka. We were seeing numbers of people come from Sri Lanka, aftermath of civil
war. Now of course it's stabilising and numbers have gone down. So, people getting pushed by events
around the world.

CHRIS UHLMANN: And they were being pulled by Australia.

JULIA GILLARD: Well, I'm not agreeing with that. That might be your analysis, Chris, but it's not

CHRIS UHLMANN: So why the change of policy?

JULIA GILLARD: Well - but my analysis is we need to send a very strong signal to people smugglers
and to the people that they try to ply into boats and sell their product to that if you - if a
people smuggler says to you, "I can get you to Australia. If you're processed there you'll get
resettled in Australia." Well, that's not true, because there's a risk, a real risk that you'll end
up in Malaysia at the back of the queue.

CHRIS UHLMANN: Prime Minister, thankyou.