LEIGH SALES, PRESENTER: Since Kevin Rudd was restored to the Prime Ministership he spent most of the past six days behind closed doors with his colleagues planning how he will run the country and fight the coming election.

The economy will be front and centre of the campaign as both parties wrestle with how to play for multibillion dollar plans, how to restore the budget to surplus and how to dump or rework the carbon tax without plunging the Budget deeper into the red. Today the Reserve Bank kept interest rates on hold in response to volatility in the stock market and lower levels of mining investment.

The Shadow Treasurer Joe Hockey, is the man in the hot seat for the Coalition, and he joined med tonight from Canberra.

Mr Hockey, the new Treasurer Chris Bowen, today called out the Opposition for its use of the term 'fiscal emergency' to describe Australia's economic position. And he pointed out that Australia has low interest rates, low inflation and unemployment, solid economic growth and a triple A credit rating. Do you agree that overstating your argument undermines it?

JOE HOCKEY, SHADOW TREASURER: Not at all, Leigh. If everything was going so swimmingly why isn't Labor delivering a much promised surplus? It is because they don't know how to live within their means. And that means that we are facing greater challenges in a weakened position. A weakened position because Labor is leaving a legacy of deficits, ongoing deficits and over $340 billion of debt.

LEIGH SALES: Prime Minister Rudd has invited the Opposition Leader Tony Abbott to debate him at the National Press Club on debt and deficit. Why are you scared to do that?

JOE HOCKEY: We're not scared.

LEIGH SALES: Why don't you do it?

JOE HOCKEY: This is the same old Kevin. This is the same old Kevin Rudd. A leopard doesn't change his spots, he won't tell us what the debt is, he won't tell us what the deficit is.

LEIGH SALES: You've seen the Budget papers.

JOE HOCKEY: And last Thursday in Parliament, Leigh, Kevin Rudd wouldn't stand by the Budget.

LEIGH SALES: Well today Chris Bowen, the new Treasurer, has said, "I stand by the Budget predictions that were put out in May, that is the Government's Budget and all the forecasts in there are the forecasts that we stand by."

JOE HOCKEY: That's right, it's taken seven days for them to stand by the Budget. But even so Kevin Rudd has not done it himself. Yet he wants to have a debate about deficit and debt. Well bring it on. He is the master of deficit and debt.

LEIGH SALES: But he has brought it on, so why don't you go and meet him? If you're on such strong ground as you say, you must be loving the opportunity to debate him.

JOE HOCKEY: We look forward to it.

LEIGH SALES: In the National Press Club you accept that invitation?

JOE HOCKEY: I'm happy to debate anyone, any time.

LEIGH SALES: Is Tony Abbott happy to lead this debate? So yes that debate's going to happen?

JOE HOCKEY: Yeah it will happen, but they've got to call the election. They've got to call the election. Labor is creating uncertainty by not giving Australia an election date. We had one a week ago, apparently now we do not have an election date and as the head of the Business Council, Tony Shepherd said today, this uncertainty is destabilising business. It's undermining business and consumer confidence and I say to Kevin Rudd "if you care for Australia more than you care for yourself call an election now."

LEIGH SALES: If Kevin Rudd heeded that and he called an election tomorrow you could be the Government in a month. So let me explore some of your policies. On the fifth of March you said that if there is no carbon tax there is no need for compensation but now the Opposition Leader says there's will be compensation, even if you get rid of the tax. Who's right?

JOE HOCKEY: Well, we've been able to find, identify $13.6 billion of savings which Tony Abbott announced in the Budget in reply which pays for cuts in income tax and pension increases without the carbon tax. So we've done that.

LEIGH SALES: But if there's no carbon tax why do you need compensation for it? That's the very point you made?

JOE HOCKEY: And now what we're saying is, instead of it being compensation for the carbon tax, the tax cuts and the pension increases are going to remain in people's pockets because overwhelmingly, Leigh, we are concerned about the costs of living challenges that every day Australians are facing. And we want to ease some of that burden. And one way to do it is to get rid of the carbon tax and leave the present taxation and pension system in place.

LEIGH SALES: I heard Tony Abbott refer to it as compensation on the weekend. He deliberately said we'll get rid of the carbon tax but you will get to keep the compensation.

JOE HOCKEY: Well that's another way of saying you're going to keep the income tax cuts and pension increases, yes.

LEIGH SALES: Do you stand by the statement that you made in April last year in London that all government funded pensions and over such payments must be means tested so that people who do not need them do not get them?

JOE HOCKEY: Well my bottom line has always been that you've got to try and help those people most vulnerable, most vulnerable in our community. Now there was a great report on 'Four Corners' last night. I was moved by it, about people most vulnerable in our community. And the best way to help those people, Leigh, is to have a government that has enough money in the bank to be able to help those people. And you can't do that if you're running deficit after deficit, which Labor is doing. You can only do it by having a surplus and having excess capacity to help those most vulnerable in the community.

LEIGH SALES: If you want to help those people would you consider, for example, deferring your paid parental leave scheme that would help highly paid women like me and increasing the Newstart allowance that we saw on 'Four Corners' last night living off $45 for a couple of weeks?

JOE HOCKEY: Let me say something about that, Leigh. Our paid parental leave scheme is being paid by a levy on the largest businesses on Australia who are also the beneficiaries of our paid parental leave scheme which is going to increase productivity.

LEIGH SALES: Productivity Commission doubts that, but would you be interested in increasing the Newstart allowance?

JOE HOCKEY: In relation to Newstart it's a huge figure associated with increasing the Newstart allowance. Now I note on the Kevin Rudd campaign vehicle which is under way now where he's promising everything to everyone without any accountability, he apparently is going to increase the Newstart allowance. He's also going to cut company tax, he's going to change the carbon tax, he's going to get rid of the mining tax, all these things. You've got to have the money to pay for it and the problem is that Labor doesn't have the money to pay for it. We would only contemplate increasing Newstart allowance if we had the capacity in the Budget to do it but there is none there, Leigh, there's none there.

LEIGH SALES: Let me ask you some basic yes and no questions. Will your costings be checked by the Parliamentary Budgetary Office.

JOE HOCKEY: We've already submitted over 140 policy initiatives to the parliamentary Budgetary Office.

LEIGH SALES: And all the new ones after here will also be sent in?

JOE HOCKEY: We're submitting them all. We're working closely with the Parliamentary Budgetary Office. But we've been going to a range of different sources, Leigh, which is interesting, because only a few days ago the Secretary of Treasury said the Budget numbers were incorrect, or he said that the terms of trade assumptions were wrong in the Budget. So even the Budget numbers are not right. There is no oracle here. We are going to use the best available information.

LEIGH SALES: Speaking of whom, does Martin Parkinson have your confidence as Treasury Secretary?

JOE HOCKEY: Well he is the Treasury secretary under this Government. I'm not going to speculate on who has confidence and who doesn't.

LEIGH SALES: People will read that as you refusing to say that you have confidence.

JOE HOCKEY: The one person I have no confidence in is Kevin Rudd as Prime Minister. And every one of the ministers. And there's been, you know, Leigh, there's been 70 front benchers on the Labor Party in six years. There's only 102 members of the Labor Party...

LEIGH SALES: You could be the Government very soon, yes or no. Do you have faith in the forecasts that are produced by Treasury?

JOE HOCKEY: Well the Treasury doesn't have faith in their forecasters.

LEIGH SALES: I think they do.

JOE HOCKEY: No, I think they don't. Because in Senate estimates the Secretary of the Treasury reflected on the terms of trade and said they weren't quite what he was expecting.

LEIGH SALES: Treasury always revises their forecasts, it doesn't mean they don't have faith in their forecasts. I'm asking because there was some suggestions around the budget time that you were suggesting that Treasury politicised their forecasts to suit the Government's agenda?

JOE HOCKEY: Well a few years ago I said Labor would never deliver a surplus, that was in the Budget papers and I've been proven right.

LEIGH SALES: But do you think - just be really clear, do you think that Treasury politicise their forecast to suit what the Labor Government wants?

JOE HOCKEY: I think the Treasury provides information to the Government, the Government publishes the Budget papers.

LEIGH SALES: Joe Hockey, thank you for joining us.

JOE HOCKEY: Thanks very much, Leigh. Thank you.