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Prime Minister discusses Newspoll; election timing; budget; Mitsubishi; cricket; infrastructure; Iraq; and petrol prices.



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PRIME MINISTER

17 May 2004

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP INTERVIE WITH JOHN MILLER AND ROSS DAVIE, RADIO 4BC

Subjects: Newspolls; election timing; federal budget; Mitsubishi; cricket; infrastructure; Iraq; petrol prices.

E&OE……………………………………………………………………………..

JOURNALIST:

Joining us now from our studios in Sydney, Prime Minister of Australia Mr John Howard. Prime Minister, good morning.

PRIME MINISTER:

Good morning, John. How are you?

JOURNALIST:

Very well, Sir. Prime Minister, the newspaper polling - not kind on the budget over the weekend saying that the budget might not have been the hit with a bullet that you would have expected.

PRIME MINISTER:

John, polls taken that soon after a budget do not give a long term indication. I don’t think any poll taken within a week or two of the budget gives you much of a read on whether it’s had any impact and that applies in relation to that poll. I think it will apply in relation to any poll we see in the next week or two. It takes a few weeks, perhaps a month, before a budget if it is going to shift public opinion has an impact.

JOURNALIST:

That same poll, Mr Howard, found that Labor would have won an election if held late last week. You had assumed underdog status for the upcoming election.

www.pm.gov.au

PRIME MINISTER:

Yes, I’ve said all along Ross that we’re behind. Now that’s not because of that poll, the other polls have indicated that. I think the situation has tightened a bit in the last month or two but at the moment it’s more likely that the Labor Party will win than it is that the Coalition will win at the moment, but there’s still a distance to go and in the end people will have to decide between a number of choices. They will have to decide first and foremost whether they want the economy run by a Government led by me with Peter Costello as Treasurer or the economy run by Mr Latham with Mr Simon Crean as Treasurer and that is a choice and a comparison and a difference that the Government naturally will be pointing to over the weeks and months ahead because economic management is very important to the stability and future of this country. We are in a strong economic position; that is not accidental. It is the result of good policy and if people who can’t manage the economy will take charge then we can’t assume that our prosperity is going to go on.

JOURNALIST:

And Mr Howard after the election it will be a Government run by you with Mr Peter Costello as Treasurer?

PRIME MINISTER:

I have no doubt about that.

JOURNALIST:

Right. John Anderson is actually quoted in The Australian newspaper this morning pledging that he will serve a full term as Deputy Prime Minister if your Government retains office. Can we expect a similar pledge by you?

PRIME MINISTER:

We’ll I’ve already indicated that I’ll stay Leader of the Liberal Party for as long as the Party wants me to and it’s in the party’s best interest. You must remember, of course, John’s been in Parliament about half the time that I have. John’s a great bloke. I’m delighted at what he said. We work together very closely. In fact, one of the strengths of this Government is that at the top we all work together very well and very effectively. But I’ve made my position about my future clear and I’m not going to be altering that response. I understand the natural ambition of Peter Costello and he’s got a… made an enormous contribution to this Government and it’s very understandable that he should one day want to lead the Party. And, as I’ve said time without number if I were to go under a bus tomorrow, I have no doubt that he would be installed as Leader and I think he’d do a very good job.

JOURNALIST:

Alright, Prime Minister, meanwhile back at the budget, the… given that the truth I suspect of the old saying that if you laid all the economists in the world end to end they wouldn’t reach a conclusion.

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PRIME MINISTER:

That’s dead right. Yes. Nothing has changed.

JOURNALIST:

I think we’ve been subjected to a veritable blizzard of analysis of the budget with people I heard on the weekend saying oh if you actually analyse the figures down people on lower incomes as a proportion of their earnings are better off.

PRIME MINISTER:

Well, of course, they are.

JOURNALIST:

But then you have the Australian Council of Social Services coming out saying that the Federal Government will increase the divide between rich and poor.

PRIME MINISTER:

I can’t understand how they can reach that conclusion. The point you made a moment ago is right. A family on $33,000 a year with two children will get out of this budget on a one off basis in relation to those two children eligibility of another $1,200 and then on an annual basis starting probably in July or August depending on when they put in their tax return another $1,200. Now that is worth a lot more proportionally to that family on $33,000 than it is to a family say on $50,000 or $80,000. So as far as the family benefits are concerned, low income families are proportionately better off and on top of that the withdrawal rate - that’s the rate at which you lose some of your benefits as you go into a higher income bracket - that the rate of withdrawal has been changed. So on both of those scores the low income family is much better off. True, there are tax cuts for middle to high income earners but, of course, there were meant to be those tax cuts in the tax package and they were blocked by Labor and the Democrats in the Senate after the 1998 election despite the fact that the Australian public endorsed the entirety of the tax package.

JOURNALIST:

Whilst still on the budget, we hear that the tax man now has a few more dollars to work with and there will be some cracking down on tax evaders, if you like, or minimisers. Who will be the people that the tax man is looking more closely at?

PRIME MINISTER:

Well, Ross you’ll have to ask the tax commissioner that. He operates independently in the administration of the tax act. And I don’t have any knowledge beyond what is in the newspapers on that. That is a decision he’s taken. It’s not something I was briefed on and if people want to find out more information about that they should talk to the tax commissioner. Quite properly, the tax commissioner operates independently of ministers in administering the tax act.

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JOURNALIST:

Okay. Alright. Now Bob Brown has said on the Sunday programme, I believe it was, the money pledged for babies should have gone to be spent on infrastructure, education.

PRIME MINISTER:

Well, look, we are in a position now John that we do because of our economic strength we have a capacity in a sense to do a certain amount of both. We did put an emphasis on families in this budget and we don’t apologise for that. And we also believe very strongly that you can’t have a society where if somebody earns over $52,000 a year they’re effectively regarded by the tax scales as rich and start moving into a 42 cents tax bracket and then if it goes a bit higher into a 47 cent tax bracket. We all believe in a fair go, but we also believe in incentive, we also believe in encouraging people to work harder and we’ve now got a situation, once these new tax scales are legislated that a person’s income could go from $21,600 to $63,000 without that person going into a higher tax bracket, the top rate they would pay on any dollar in that huge band of $21,600 to $63,000, and this embraces millions of Australian taxpayers, would be 30 cents in the dollar. Now that will give people more incentive, it’ll give the fireman, the police officer, so many other people the incentive to work a bit of extra overtime and I think all of that is desirable. Now as far as infrastructure is concerned, there’s a lot of money going into road and rail in this budget, the detail of it hasn’t been released yet, just the aggregate figures but in June, John Anderson will be releasing a white paper on Auslink which is the new national plan in relation to road and rail and people will find the detail of that additional expenditure, we are putting a lot of extra money into road and rail including of course the extension of the roads to recovery which is another $1.2 billion into local roads, particularly for country areas and a lot of extra money into rail which is going to help in that northern area of New South Wales and will have consequences in relation to the impact on traffic and road usage into Queensland.

JOURNALIST:

Alright Mr Howard, just moving on a little, by the time the federal election does come around one would think the Budget may have faded in people’s minds and they’ll be thinking more about things like Iraq, I notice an interesting story this morning in the Herald Sun that we’re losing some of our SAS officers to private contractors in Iraq, that I guess has to be worrying, if not a little dangerous, and I also believe that you have a speech to make on the situation in Iraq this week.

PRIME MINISTER:

Well as far as the employment of people in private security firms is concerned, that kind of thing has always gone on. The answer that you have to increase levels of remuneration to prevent the people leaving the military and going into private industry is often advanced. The levels of remuneration have been constantly revised and they will be and I believe that our military people should be very well paid and in a sense you can never pay them enough because of the enormous dangers they undertake but I think it’s also true that when you have particularly dangerous situations arising there’ll always be a premium paid by the private sector no matter how high the wages go in the military there’ll always be an extra premium paid by the private sector and that applies whether it’s security, it’s commercial airlines getting pilots out of the Royal Australian Air force, it’s, in a sense, it’s a bit of a dog chasing its tail situation but I certainly am one who is very keen to see that our military are very well paid and I’ve always taken a very keen interest in that and I’ve seen to it in relation to

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particular deployments that there have been adequate additional payments for the danger that these men and women have undertaken. Now as far as Iraq is concerned I will be making a speech later this week in Melbourne on Wednesday to lay out again in detail in a formal way our position and to deal with some of the more absurd arguments that are being advanced at the present time suggesting that we should walk away from our responsibilities and really making the point that if the coalition were to retreat from Iraq it would deliver an enormous victory for international terrorism because whatever link people may have said did or didn’t exist between international terrorism and Saddam Hussein there’s no doubt that the terrorists are investing an enormous amount in success of the insurgency in Iraq at the present time and there’s no doubt that whenever there’s a backward move by the coalition the terrorists put that in the victory column against the west.

JOURNALIST:

Let’s move onto something that is associated with it and that is the 15 year high in oil prices over the weekend. Now that’s got to be of concern for us.

PRIME MINISTER:

Well it is, it does concern me, I hope it doesn’t go on for too long.

JOURNALIST:

They’re reassuring us that whilst these oil prices are above the levels of the recession inducing 1970’s oil crisis to quote the Australian this morning, economists point out that in real terms prices are nowhere near that high, are you however concerned that this is going to have a major impact, when you are coming into an election where clearly the positioning of the government is on strong economic management. It’s a situation out of your control I know.

PRIME MINISTER:

Well John it is completely out of our control, completely. And could I remind your listeners that three years ago this government removed the automatic indexation of petrol excise and it’s as well that we did that because that, you know, would have, if it had still been there the price of petrol would have been higher. Now this is something beyond our control, I don’t expect it will last indefinitely, I certainly hope it doesn’t and there’s already talk that supplies will be increased by the OPEC countries and that is to be welcomed. But it is something that if it were to last for a very long time, well of course it would have a damaging effect but I am optimistic that it won’t last for a long period of time, but certainly the difficulty in the short term is producing higher prices. I understand that and I regret that. But it is, as you rightly say, a world development affecting other countries and not something in any way under our control.

JOURNALIST:

Mr Howard, whilst we’re talking automotive matters, Mitsubishi’s Adelaide plant in all sorts of trouble viewed by the parent company as nothing much more than a boutique operation. But, of course, many Australians employed there. Is there anything that can be done?

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PRIME MINISTER:

Well, we already have a very generous industry support scheme, which has given incentives for Mitsubishi to invest in the Adelaide plant and to stay there. This, once again, is a consequence, the difficulty is a consequence of the world wide financial troubles of the parent company. Right at the moment we have the Federal Industry Minister, Ian Macfarlane and also the relevant minister from the South Australian Government together co-operating in Tokyo putting a case to the parent company that the operation in Adelaide should remain. I hope they are successful. There is certainly a lot at stake and I feel for the workers in Adelaide. I want them to know that the Federal Government is concerned. We’re doing all we can and we’re working closely with the state government. This is an occasion for governments at a state and a federal level to work together very closely and to put aside any other differences because our main concern is the welfare of the workforce and the continuity of their employment.

JOURNALIST:

Prime Minister, there’s been a lot of speculation in the last few days as well about, are we going to have an election as early as August. Now, given…

PRIME MINISTER:

The person who started that was Mr Latham when he said he was going to cancel his trip to the United States. I can promise Mr Latham we’re not going to have an election in June. I don’t know why he cancelled his trip to the United States. I think the reason is that he probably thought it was going to be a bit of a dud and used the possibility of an early election as a cover. Well, I can’t reach any other conclusion. I’m still going briefly to the United States. I’ll be lobbying Congress to pass the Free Trade Agreement, which is overwhelmingly in Australia’s interest. I’ll also see President Bush and other people in the administration and then I’ll go briefly to Europe to take part in the 60th anniversary celebrations of the Normandy landing. And I see no reason in the world why Mr Latham couldn’t have gone. There’s no domestic reason. I know he’s still got to work out his tax policy and I know the Australian public will be very interested to hear exactly what Mr Latham is going to offer in that area. The rubber has got to hit the road, to use that old expression, eventually with the Labor Party. It’s all very well to swan around and make speeches about how you love everybody but, in the end, you’ve actually got to explain what you’re going to do.

JOURNALIST:

Mr Howard, we know that you’re a dedicated cricket follower, our blokes are in Zimbabwe at the moment. But there has been a bit of comment about your comments re Mr Muralitharan and being a chucker.

PRIME MINISTER:

Well, my understanding that there were some tests carried out in Perth, weren’t there?

JOURNALIST:

There were.

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PRIME MINISTER:

And there was some conclusions that came out of that and those conclusions were adopted by the ICC. I don’t know that I’ve got anything to add to that.

JOURNALIST:

Okay, fair enough. Alright Prime Minister, so certainly not an election in June. Is August or thereabouts?

PRIME MINISTER:

John, I don’t know when it’s going to be except that according to the law, it has to be held not later than the early part of next year. Now it’s pretty unlikely that we’d have it in the early part of next year because it’ll be three years since the last election in November. The more likely time naturally is in the second half of this year. Exactly when I don’t know, I have not made up my mind. I will not make up my mind for some time yet. Naturally, you take a lot of factors into account. But this idea that the budget was brought down with a view of rushing to the polls in August, well I can understand why people will put that around. But, it was a budget designed to return to the families of Australia in particular the dividend for good economic management. It is not our money. This country has very low debt and it would have been absurd if the Government had squirreled all of the extra revenue away. I mean, the revenue has not come from higher taxes, the revenue has come from a stronger economy. A lot of the extra revenue came from additional company tax and we’ve in fact cut the company tax rate from 36 per cent to 30 per cent but because the economy’s done so well we collected more revenue. Now what else should we have done with that money other than to return it to the families of Australia? And that’s what we’ve done, very deliberately. We did give a preference to families in this budget because if you’re on $45,000 a year and you’ve only got yourself to support, your financial commitments are nowhere near as great as the bloke next door who might be supporting a wife and a couple of children. I mean, that just stands to reason and that is why you must always give in all of these things a preference in help to families because family men and women have greater financial responsibilities. Bringing up children is costly, it’s a priceless asset for the country. We need children and we therefore need to give some extra help to people who are parents of young children. That’s just a very logical piece of nation building.

JOURNALIST:

Alright Mr Howard, finally then are we likely to see anymore tax cuts or any more spending between now and the election, whenever that may be, just in response to those voters who feel they’ve been left out?

PRIME MINISTER:

Well, I notice a couple of newspapers have picked up on a comment that I made yesterday where I said that I would not rule out further announcements. I don’t want people to think from that that we have any further major tax announcements in the pipeline. We obviously put down our position generally in relation to tax and family benefits in the budget. I was simply making the point that between now and whenever the election is held I don’t preclude Government policy announcements in other areas, of course I don’t. But I don’t think people should infer from that that we’re only part heard, so to speak, as far as the majority of our tax and family benefits statements are concerned. We’ve obviously laid out a very detailed

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programme and we’ll be going to the election arguing the enormous benefits of that programme to the Australian people.

JOURNALIST:

Prime Minister, we’re going to have to clear the decks now for some network commitments. Thank you very very much for your time this morning. We look forward to speaking to you again soon.

PRIME MINISTER:

Thank you.

[ends]