Mr CAUSLEY (2:01 PM) —My question is addressed to the Prime Minister. Has the Prime Minister's attention been drawn to recent comments particularly from state premiers about petrol pricing and its relationship to the Commonwealth budget?

Mr SPEAKER —The member for Grayndler!

Mr HOWARD (Prime Minister) —I thank the member for Page for the question.

Mr SPEAKER —The member for Grayndler is warned.

Mr HOWARD —There have been a number of calls made on the Commonwealth government to freeze the excise on petrol. Those calls have come from some state premiers and they have also come from motoring organisations, and I want to take a moment of the House's time to respond to the question asked by the member for Page. All of these calls are based upon the erroneous proposition that the Commonwealth's budget is already clearly in some net windfall position as compared with what was brought down in May of this year. That is not the case. It is true, as I have acknowledged on a number of occasions over the past several months, that the higher price for petrol caused by the almost doubling in US dollar terms of the price of crude oil means that there will be an increase in collections of resource rent tax, although I take the opportunity, based on the advice I have received from the federal Treasury, to reject the estimate put forward today by the Australian Automobile Association.

Mr Crean —What figure do you put on it?

Mr SPEAKER —The Deputy Leader of the Opposition will have a further opportunity to ask questions.

Mr HOWARD —Moreover, if you are looking at the Commonwealth's net budget position, you have to take all of the outlays and revenues into account. You do not have, as organisations like the AAA have, the luxury of a narrow focus on one issue. You have to take into account all of the Commonwealth's expenditures and all of the Commonwealth's revenues. For openers in that context, I inform the House that it is calculated that, because of the huge success of the campaign to get people back into private health insurance, the private health insurance tax rebate will consume about $400-500 million more in the current financial year than was estimated at budget time. That is because our policy has been even more successful than it was at the time of the budget.

The second comment that I would make is that, on current advice I have from the Treasury, it is calculated that the value or the cost, whichever description you wish to employ, of the aged persons rebate for pensioners and self-funded retirees under the new tax system will be in the order of $500-600 million more than was calculated at the time of the budget. In other words, that section of the Australian population is going to be $500-600 million better off as a result of our tax policy. This is not something that concerns the government: that in these two critical areas people are better off is something that gives great satisfaction to the government. We have seen a historic turnaround in private health insurance usage in this country as a result of policies that have been pursued by this government. So, if you are looking at the government's net budget position in advance of the release of the mid-year economic and financial overview, which will be some time in the next few weeks when all of the details will finally be available, and at this stage if you are trying to speculate in some way about the budget position, if you are talking about gains on one side, you have to make allowance on the other side.

Mr Crean —So there is a windfall.

Mr HOWARD —Any suggestion at this stage of some kind of net windfall is completely erroneous. I would also remind the House that the lower than expected CPI could have an impact in relation to the half-yearly indexation of excise different from what has been calculated by some of the government's critics. I have made it plain on a number of occasions, and I make it plain again, that the worst and most irresponsible thing this government could do at the present time is embrace a rundown of the Commonwealth budget surplus.

The reason I regard that as irresponsible is that it would exert upward pressure on interest rates. Our predecessors ran up huge budget deficits. We have no intention of doing that. The Labor Party talks about pain being felt by Australians. The most painful thing for Australians in the current economic context would be for a government to pursue a policy that put upward pressure on interest rates. If I have to make a choice between avoiding putting upward pressure on interest rates and embracing some ad hoc approach to the level of excise on petrol, I will always opt in favour of reducing pressure on interest rates. Australians are asking of this government that we do not embrace policies that exert upward pressure on interest rates, but that is what we are getting from the Labor Party. What the Labor Party is saying is, `Grab hold of a policy that puts upward pressure on interest rates.'

That is also the effect of the policies being pursued by a number of the premiers around Australia, who are calling for either a freeze on or a reduction in the excise on petrol. I would say to all of the states other than Queensland that, if they believe that there is some capacity within the governments of Australia to reduce the price of petrol through a reduction in excise or some kind of subsidy to the consumers in their states, let them look to the example of Queensland. Let them look to their own capacity out of their own revenues to cut the price of petrol in their own states.

That is not a course of action that I am initiating. I am arguing why there is no capacity at present to make the sort of commitment being asked of us by the AAA or by the opposition. I am saying to the states who argue that we have the capacity, `First, look to your own capacity.' If you look at the arrangements that were concluded when the new tax system was introduced, it is very revealing that effectively, when you take into account that the new arrangements included the guaranteed minimum amount that the states would receive—and that included a component described as revenue replacement payments, which in effect was the equivalent of the 8.3c a litre of petrol excise collected by the Commonwealth on behalf of the states under the old financial arrangements—there is on that basis an amount of $1.7 billion available to the states of Australia, effectively replacing the excise that we used to collect on their behalf, available for the deployment of subsidies to reduce the price of petrol within their own jurisdictions. In other words, every state in Australia has the capacity to do what Queensland has done. Let me go through it: New South Wales has available $647 million, Victoria $461 million, Western Australia $291 million, South Australia $154 million and Tasmania $47 million. I say to those states: before coming to the Commonwealth in a grandstanding political exercise which is not based on principle but is based on political point scoring, you look to your own capacity to provide relief within your own jurisdictions.

I am as unhappy as anybody about the impact of increases in the price of crude oil on petrol in Australia, but I have no intention of embracing the irresponsible calls being made at the moment which will have the effect of driving up pressure on interest rates, and that will cause infinitely greater pain for Australians than any of the concerns that they have regarding the price of petrol.