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Budget 2011: Transcript of interview with Sabra Lane: ABC AM: 11 May 2011: Budget 2011



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Transcript of interview with Sabra Lane, ABC AM WED 11 MAY 2011

Prime Minister

Subject(s): Budget 2011

HOST: Prime Minister, thanks for joining AM.

PM: Thank you for the opportunity.

HOST: Isn't this just a good old fashioned Labor budget - take from the rich and give to the poor?

PM: This is a budget with Labor values in it. No doubt about it. We're a political party that values jobs and opportunity and that's what this budget is all about. This is about getting our budget back into the black, back into surplus. That is what our economy needs now but it is also about getting Australians into work. We have got a proud track record of creating jobs - 750,000 of them.

Now in this budget we look forward to creating half a million more over the next couple of years and getting into work Australians who are at real risk of being left behind and not having the benefits and dignity of work.

HOST: For many families though, the Government is freezing eligibility thresholds and many benefits and tax concessions for higher income families. Those families will eventually lose those benefits altogether over time.

PM: Well, this is a tough budget. We said it would be and it is. We are delivering what we promised - the return to surplus, back in the black in 2012-13 and that has required the making of tough choices. We've had to work through, make cuts in order to get into surplus and to prioritise spending on the things that really matter for Australia now and our future and a big thing there is getting more people into our workforce as our economy expands and grows.

I don't want to see a situation where the economy is booming but we still have long term unemployed people who don't have a job, single mums who could work who don't have a job, with older children, children in high school. People with disabilities who want to work who haven't got the opportunity of a job.

Now on family payments, what we're doing is we are not taking direct dollars off families. We have paused indexation arrangements and that will impact some families at the upper end of eligibility for family payments.

HOST: And over time those payments will completely disappear for those families. For a family on $150,000 in Western Sydney that does help quite significantly.

PM: Well, what I would say to families generally about family payments is yes, we are pausing indexation. That's true but we are providing new benefits as well. If you are a family with a teenager, what's been happening to you under the family payment system is when your child turns 16 the system somehow assumed they cost less than when they were 15.

Now that's a crazy assumption in the modern age, particularly when we want kids to stay at school. So we are changing family payments so if you have teenagers in your family, you can be eligible for up to $4,000 more a year if your child stays at school.

We don't want them wandering away from school and wandering away from a life of opportunity. To get that life of opportunity they've got to get through education.

HOST: The newspaper coverage this morning has been pretty mixed for you. The Australian has a cartoon - Wayne Swan dressed like Crocodile Dundee with a headline that says, "This is not a knife Treasurer". The economist Craig James says this hits with the force of a feather

and I think independent Rob Oakeshott even said that this was Tonka tough.

PM: Well, and there has been plenty of commentary on the other side too acknowledging that this is a tough budget, referring to me as a person with guts. I have seen that commentary too but the commentators will say whatever is on their mind. That is a matter for them.

It is, in terms of this budget, the real figures in it, let's have a look. We are talking about growth in spending at an average of 1 per cent. That compares to the Howard government having an average growth in spending of more than 3 per cent.

We've got a year in 12/13 where expenditure will actually go backwards. The figure is a minus. The Howard government never delivered a budget with a reduction in expenditure in it. So we've got to get these statistics in their context. This is a budget where we will see expenditure growth at an average of 1 per cent while the economy is growing at 4 per cent.

HOST: How will this take pressure off interest rates and inflation? The $22 billion in savings that you talked about has pretty much been matched in program spending the same amount.

PM: Well, that's not true either. There is $22 billion of savings in this budget. There is more than $5 billion more of savings than there are new spending initiatives and the spending initiatives are very targeted on what our economy needs now - on getting people into work because our economy will be hungry for workers, on getting people new skills because our

economy will need people who are skilled, on investing in infrastructure because we don't want the lack of infrastructure to be a capacity constraint.

HOST: But how does this take the pressure off those families now?

PM: Well, let's go through it. It is important for families at this time that the Government does not add to inflationary pressures in the economy. That's why it's vital to get the budget back into surplus and back into the black. That's what this budget has done. That is the best

thing we can do to help families with cost of living pressures - not add to inflationary pressures and in this budget we don't.

Then of course what drives inflationary pressures too, when your economy is coming to full capacity is not enough working people, not enough skills, not good enough infrastructure. These things become capacity constraints and that puts upwards pressure on inflation.

The budget addresses each of those areas and this is a pretty stark contrast to the Howard government too that got warning after warning from the Reserve Bank to do something about capacity constraints in our economy and instead just went on a spending spree.

HOST: There isn't much of a buffer for 2012-13 - $3.5 billion. If China sneezes or we have another unforeseen disaster like at the start of this year, your previous estimates for deficits have been out by 20 per cent, that surplus could well be non-existent.

PM: Well, we've lived through an extraordinary period. The floods in Queensland, the cyclone in Queensland, the floods in the rest of the nation, the earthquake in Christchurch, the earthquake and tsunami in Japan, you know more than 10,000 people dead and an equal number missing. We've lived through an extraordinary period and the budget figures show

some of that.

On terms of trade, the terms of trade assumptions in this budget are conservative assumptions and they're assumptions that the terms of trade will slightly decline over the budget period.

HOST: What is negotiable here? The Greens have already flagged that they want changes to some of your welfare to work measures; the independent Tony Windsor has raised concerns about your efforts again to have the private health insurance rebate means tested. Every budget is tinkered around the edges. What is up for negotiation here?

PM: Well, before we get there, what level of responsibility is Mr Abbott, as Leader of the Opposition going to show in the face of this budget? This is a real test for Mr Abbott as to how big a risk he is to the Australian economy and the jobs and services that Australians rely on. This is the budget our economy needs now.

Mr Abbott and Mr Hockey appear to be wandering around saying ‘we can create a surplus at the same time as oppose every cutback that the Government has in its budget.’

Well, my challenge to Mr Abbott is a very simple one. If he says he doesn't like a cutback in this budget, nominate an equal cutback in another area. If he is not able to do that, he should vote for this budget as is.

HOST: The challenge for you though is to get it through Parliament so what is up for negotiation?

PM: Well, I'm not getting there until I see whether or not Tony Abbott is going to stand before the Australian people and say yet again he can't make budget figures add up.

He has already failed the test three times: an $11 billion black hole in his election commitments, a shambles when they tried to put together their own flood package earlier this year and then the farce we saw last budget last year when Tony Abbott said, I don't know anything about the figures. You'll have to ask Joe Hockey about that and then Joe Hockey said, oh I don't know anything about the figures, you'll have to ask Andrew Robb about that and then Andrew Robb went out for a press conference his own press secretary couldn't bear to watch. He was trying to bring it to an end.

Shambles, farce - well now is the time for Tony Abbott to say can he add figures up. Track record is he can't. This Government can so he should be supporting this Government's budget.

HOST: Prime Minister, thank you.

PM: Thank you.