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Prime Minister discusses Warren Entsch; ethanol; Esplanade project; Salvation Army grant; Reserve Bank; interest rates; beer prices; GST; veterans' pensions; insolvent companies.



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18 May 2000

TRANSCRIPT OF THE PRIME MINISTER

THE HON JOHN HOWARD MP

RADIO INTERVIEW WITH JOHN MCKENZIE

AM 846 RADIO NORTH QUEENSLAND Subjects: Warren Entsch, Ethanol; Esplanade project; Salvation Army Grant; Reserve Bank; Interest rises; Beer prices; GST; War Veterans pensions; Insolvent companies

MCKENZIE:

Yes, with me in the Studio, Prime Minister of Australia John Howard good morning.

PRIME MINISTER:

Good morning, very nice to be back again.

MCKENZIE:

Yeah you get up actually, what it is, about every eighteen months?

PRIME MINISTER:

Well I have been into the Leichhardt Electorate, Warren Entsch’s Electorate five times in the four and a bit years that he’s been a Member of Parliament. He’s a very good representative. He fights for the area, he gets things that the people of this district need.

MCKENZIE:

Yeah, I think he has been very well received. I remember your comments shortly after the last election. He was the only I think candidate of yours to actually extend his lead in that last election.

PRIME MINISTER:

He did very well in the last election, particularly against the background of One Nation eral in this part of Queensland.

MCKENZIE:

John Howard, you have just been down to the Sugar Convention I understand. There was the suggestion that you may be making an announcement that hasn’t come to fruition. But there is the hint that there will be the possibility of some package forthcoming in the next couple of days in the..

PRIME MINISTER:

Well we have already announced there won’t be any excise on Ethanol, which is a very important boost to the industry because it will allow them to explore the alternatives that Ethanol offers. I did say to the industry that I understood how it had been knocked around by the very low sugar price and a very corrupted world market and also the very bad season, the flooding and so forth for the last three or four years. The industry is putting together a request for the Government. It hasn’t assembled that package yet. When it does, we will look at it sympathetically and give a response. I didn’t make any promises, but I said we would look at it very carefully. I do understand the importance of the industry to this part of far north Queensland and I also pointed out to them that Governments get requests from all parts of the country in all sectors. We will look at it sympathetically. I am not going to pre-empt a response. I haven’t seen the submission yet so until I do, its silly to say whether we can or can’t support them.

MCKENZIE:

Yeah, I suppose the most prominent issue here in recent months has been the prospect of Federal assistance for the Esplanade Project. Did you see the Strand in Townsville when you were there?

PRIME MINISTER:

Yes, I did see that. I thought that was pretty impressive. Once again every provincial city in Australia, every area has its own set project. Some of those things are clearly the direct responsibility of the State Government or the local Government. Some sort of fall between two stools and the Federal Government gets bought in to it. We can’t fund every local project, that’s not our job. Particularly as under the GST arrangements the States will be getting a lot more money and they will have a growing access to the GST revenue.

MCKENZIE:

Yes, just a brief issue, it’s a local issue but I am hoping you are across it. It must be a challenge from time to time to be across all these local issues. But Warren Entche’s has bought up a very important subject and that is this brutality on Aboriginal Communities based on alcoholism strengthening. We have just had three murders in our Arakun over recent weeks. So he’s now suggesting we need these detox centres on the Cape so these people can get treatment and we can basically improve the situation for women and children in those communities. Are you going to be giving him a sympathetic ear?

PRIME MINISTER:

Well he has raised it with me and we will have a look at that. I am not sure once again where our responsibility starts and that of the State Governments starts. I mean normally these sorts of things are

provided by the State Government. Domestic violence is a problem in some Aboriginal Communities. It’s a problem in some non Aboriginal communities as well. Warren has raised it with me and anti-drug rehabilitation centres are very important. Only yesterday in Townsville, I announced a grant to the Salvation Army in Townsville that will enable it to expand its services in that area and I will have a look at Warren’s point.

MCKENZIE:

Just a point to that came up too. The time before last you were here we had a fairly energetic discussion about the child support agency.

PRIME MINISTER:

We did and it did not fall on deaf ears and this is something that Warren has campaigned for very strongly and he will have noticed and you would have noticed and many of your listeners will have noticed that in the last Federal budgets we provided some major changes in this area that meets many of the legitimate concerns that were expressed by the non custodian parents about the operation of the child support agency. Very difficult area this John because you are dealing with shattered relationships and very fragile human emotions and people with a great sense of injustice and no matter what you say to them and no matter what the process has been. When, marriages break up and children are involved but people react very emotionally and that is very understandable and nobody thinks that justice is being done by them and we have tried in the budget to recognise some of these things whilst we have put more taxpayers resources into it and it has given some relief to some of the none custodial parents and I think that’s fair.

MCKENZIE:

I think the [inaudible]. I said last week to Warren Entsch its certainly a turning point and your government has shown more courage than any other since 1988 in addressing it.

PRIME MINISTER:

Well we it had to be confronted. It kept coming up in our party room. People like Warren kept getting up and saying you got to do something about this because you are treating a whole group of people, non custodial parents mainly but not only men very unfairly.

MCKENZIE:

But anyway, the turning point has been reached. The major hurdles still in front of your Government, but Warren tells me works been done on that formula now.

PRIME MINISTER:

Well we are working on the formula yes. But we have dealt as it were with stage one and I think that pretty, quite rightly well received.

MCKENZIE:

Now I know interest rates is fairly taboo as far interviewers in Australia are concerned but you did venture to the suggestion yesterday that the Reserve Bank need not follow that United States lead. The information’s been rife in this mornings media of course but those comments of yours yesterday could have been responsible for the overnight drop in the value of the dollar.

PRIME MINISTER:

Ridiculous. The idea that that would have been responsible is quite absurd. There seems to be a view in the minds of some people that because you have an independent Reserve Bank that the Prime Minister or the Treasurer of the day can never talk about monetary policy. That was never intended when the Reserve Bank was given independence to set interest rate levels and it would be plainly absurd if the democratically elected Prime Minister of Australia could never say anything about monetary policy and those who peddle that nonsense of course have their own political agendas to pursue.

The Reserve Bank’s set interest rates in Australia. What I said yesterday was exactly what the Secretary of the Treasury had said the day before and that is that although Australia is heavily influenced by the rest of the world, we do have a certain amount of economic independence. We don’t have to react in a knee jerk reaction to everything and its also the case incidentally that the Governor of the Reserve Bank, he himself some months ago made the same sort of observation. It was in a different context but the principal is the same and that is although we are very heavily influenced by the rest of the world, that doesn’t mean to say you don’t have some independence of movement. But those remarks weren’t necessarily tilted one way or the other in relation to what the Central Bank next does. But they were an observation and I don’t apologise for saying that. I would say it again and I say to those people who suggested the Prime Minister of this country can’t talk at all about monetary policy that, hey this is a democracy. I’m the person who in the end has the ultimate responsibility for the health of the Australian economy and of course I will continue to talk about monetary policy and of course that is entirely proper and of course that is entirely consistent with the arrangement for independence of action that was concluded between the Reserve Bank and the Government when we came to power over four years ago.

MCKENZIE:

I have got to acknowledge its not all bad news. Of course the sugar industry people love it. People in tourism in North Queensland are quite happy about that new low fifty-six six-five overnight.

PRIME MINISTER:

Well I am certainly not going to make predictions about the future level of the dollar. I don’t think that is the least bit helpful. Only because that’s in the realm of exciting speculation one way or the other and I think that is irresponsible but the general point I make is that talking about monetary policy is of course the sort of thing that Prime Minister’s from day to day naturally can, should, and will always do.

MCKENZIE:

We have got a few minutes left. Can we go to an open line caller too. We’ve got a gentlemen who wants to talk about small business. Now either of those headphones should be OK, just see how your volume is going. Have you got anything yet?

PRIME MINISTER:

Yes I have…..

MCKENZIE:

Lets go to John who wants to talk about small business. John good morning. You are talking to the Prime Minister.

CALLER:

Good morning Mr Howard, how are ya?

PRIME MINISTER:

How are you John?

CALLER:

Ah not bad mate, struggling.

PRIME MINISTER:

Yeah? What are you in?

CALLER:

Ah, we got a little cabin up in the tablelands mate and I am speaking on behalf I guess of a lot of people that are struggling to make ends meet at the moment. With cash flow the way it is and with the GST coming in.

PRIME MINISTER:

Well you get a bit more cash flow.

CALLER:

Yeh that’s right.

PRIME MINISTER:

You’ll be able to hold it.

CALLER:

Yeh, we’ll be able to hold . . .

PRIME MINISTER:

You’ll be able to hold it for what up to three months. At least you - have you got a turn-over of more than $20 million?

CALLER:

No.

PRIME MINISTER:

I didn’t think so, well you’ll be able to hold it for three months.

CALLER:

I appreciate that. But then, what we’ve got now at the moment is people that are leaving the bar getting take-aways, now that’s the trend that’s happening and it’s going to get worse with the price of beer across the bar, can only go up.

PRIME MINISTER:

But the people will have more money in their pockets from the tax cuts.

CALLER:

I hear what you’re saying, you know I mean.

PRIME MINISTER:

You want to wait and see after the 1 st of July whether the tax cut is really there. I understand that and that’s a natural, the reserve and caution that Australians have but I can assure you they are real and people will find after the 1 st of July that the way in which the GST affects them in the main, this is 80% of the population is the price of some things will go up, the price of some things will stay the same and the price of some things will come down, but every taxpayer will have a tax cut.

CALLER:

Yeh, I appreciate where you’re coming from there Mr Howard but I still want to get to the point is that when you take off the excise, with the 10% on, you are going to have the excise back on again.

PRIME MINISTER:

We didn’t say otherwise.

CALLER:

No, I appreciate that but it wasn’t going to be seven per cent either.

PRIME MINISTER:

What do you mean seven per cent?

CALLER:

Seven per cent excites added on so the price of beer across the bar is going to go up.

PRIME MINISTER:

Well, the price of beer across the bar will go up higher, probably seven or eight per cent, compared with a slab, a carton because there’s a service component in it in the same way that the price of restaurant meals is going to go up, there’s a service component in that. That’s the difference.

CALLER:

Bear in mind my problem again the slab’s not going to go up.

PRIME MINISTER:

Well it’s going to go up somewhat but not as much.

CALLER:

People sitting bums on the chairs makes money rather than slabs and a little business, that’s what I’m

trying to get at, I’m not trying to relate my situation to like a big hotel that’s got a big liquor outlet or liquor barn, where their turnover’s massive and their cash flow is a lot bigger than mine, bums on seats don’t represent their little business. It does for me. And it’s a family business, we don’t employ anybody else but the family. If we go down then the family. . .

PRIME MINISTER:

What’s the mix of your bar and bottle shop sales?

CALLER:

Currently?

PRIME MINISTER:

Yeh, what’s the mix?

CALLER:

Right now it’s probably thirty seventy. Thirty bums on seats, seventy take-away.

PRIME MINISTER:

Seventy take-away and thirty. . .

CALLER:

People sitting at bars.

PRIME MINISTER:

I see. Well thirty per cent of your customers will pay a somewhat higher price for their beer than the other seventy per cent and you think it will twenty-eighty.

CALLER:

Yeh. See that fouls up your cash flow for a start. I mean. . .

PRIME MINISTER:

Well I mean, if the volume of beer bought is the same.

CALLER:

Volume of beer take-away will go up.

PRIME MINISTER:

Yeh, I understand that.

CALLER:

Yeh, but your profit margin’s not in your take-away beer is it?

PRIME MINISTER:

No. You’ve got a grave problem, I see what you’re getting at. Well, the comfort I can offer you is that those people who are sitting at the bar drinking, they will have a significant tax cut and I’m not sure it’s going to be much of a change in the consumption pattern. I mean people tend to make decisions about whether they take beer away or they drink it at the bar, not according to the last cent of the cost of the beer but for other sort of social and non-economic reasons.

CALLER:

In the bigger areas I agree, but this is in a little community area that I’m servicing up here our turn-over not as big as a. . .

PRIME MINISTER:

No, no I realise that but then I do understand that but I don’t think it sort of alters the equation but well we haven’t long to go, I’d like to have a talk to you a couple of months after it’s operating so if next time I’m talking to John if you ring him up we’ll have a chat and you let me know whether it’s turned out as you thought or perhaps closer to what I predict.

CALLER:

Yeh, okay.

PRIME MINISTER:

Good on you. Good luck. Bye.

MCKENZIE:

It’s an interesting comment too in the light of what Peter Reith said at a dinner the other day about the GST, he said it’s going to, by the end of the year he said it’ll all most not be an issue, people will be used to it. You’ve also said yesterday that it’s going to be embraced far better than predicted.

PRIME MINISTER:

I believe that the hue and cry that has gone on over the last few months means that people are probably expecting something far worse than what’s going to happen. I don’t think people really accept at the moment that there are going to be big personal tax cuts because this will be the first time in more than a decade where there’s been a genuine cut in the personal tax rate. I think when people get their pay packets in the early weeks of July and they find in many cases thirty, forty, fifty dollars a week less tax, then they’re going to think it’s a lot different. At the moment people are sort of fixated by the fact that there’s going to be GST and they think that means a lot of things are going to go up by ten per cent, that’s not right either. So I’m quite optimistic and anyway, we don’t have long to wait. It’s now the 18 May and it’ll come into operation on the 1 July. So bring it on as quickly as possible. Unless people - the people will decide this, they’ll decide whether it’s a good thing or a bad thing. We believe it will be good and we believe it will be well embraced and then if we’re wrong well we pay the, we get the blame for that and I accept it because it’s something I’ve championed for years and something I took to the last election but I believe it is good for Australia and I believe it will work and I believe in six months time people will think it was the right thing for the Government to have done.

MCKENZIE:

Still no wind up from your minders, so we’ll talk to John about war veterans’ pensions. John go ahead, you

talk to the Prime Minister.

CALLER:

Good morning Prime Minister.

PRIME MINISTER:

Yes, I’m here. I haven’t gone, I haven’t left for Korea yet.

CALLER:

I’m a Vietnam veteran and I have to say since my breakdown my dealings with the Veterans’ Affairs Department have been exceptionally good. However, it really disturbs me that the Minister, Senator Scott and his Department seem to be very, very keen on making this whole process an adversarial one. And also I’m very, very concerned at the proportion for the relativity between the pension and the living wage that people get. I’m not asking for any immediate solutions from you but I believe that in the light of . . .

PRIME MINISTER:

Are you on a full rate. Are you on a full disability pension or what?

CALLER:

Not at this stage.

PRIME MINISTER:

No. Do you have a job?

CALLER:

No. I haven’t worked for eighteen months. As I say, because of my breakdown I was rather slow in getting the process going myself and as I say this is not just a plea for one it’s a plea for many that you perhaps encourage the Minister and his Department to be a little less adversarial about the process and also to look at the way that the full pension has been eroded compared with average weekly earnings.

PRIME MINISTER:

The pension has gone up in accordance with the cost of living.

CALLER:

Oh yes.

PRIME MINISTER:

And it will go up again on the first of July by four per cent along with all other pensions in advance of the impact of the GST. Look I take on board what you say. Just say I’ve found Bruce Scott a very sympathetic Minister, you’ll know in the Budget we allocated I think $32 million to deal with the implications of that recent report into the health of Vietnam Veterans and their dependents and that was an additional allocation. But I’m not of course immediately certain from what you say is, what the point of the adversarial point was without knowing some of the background details. If you like to send the details of your position to me care of this station or just write to me, Parliament House Canberra, it will get me.

We’ll have a look at it and if you could mark it to the attention, no just send it to me Parliament House, Canberra.

CALLER:

Thanks very much indeed.

PRIME MINISTER:

Thank you.

MCKENZIE:

John Howard, the last time this bloke talked to you, in fact you were well and truly in Opposition so it’s quite a few years ago now. His name is Ron Crew, go ahead Ron.

CALLER:

Morning Mr Howard, how are you?

PRIME MINISTER:

I’m very well.

CALLER:

Well it’s my usual complaint.

PRIME MINISTER:

What’s that?

CALLER:

And that’s to do with the injustices that occur in the building industry and development industry regarding the situation with trade contractors, sub-contractors and general suppliers. In the last few days in Australia we’ve seen Avonwood, a Melbourne based company affect people inter-state and around Australia and just in the last couple of days again we’ve seen Mr Boleski who is the Director of various companies including Border Island proprietary limited, which have bought Double Island just off the coast of Palm Cove just over two months ago, paid cash for it and is now insolvent. Something has got to be done with these insolvencies. What needs to happen is that in many cases the companies are trading insolvent for quite long periods of time. Then when it’s discovered that they are insolvent that it can be proved they’re trading insolvent for quite some time, the ASIC turns a blind eye. They just don’t bother about prosecutions unless it’s about twenty million bucks worth.

PRIME MINISTER:

Well if they’re very small amounts of money, it costs more in legal expenses so that it can sometimes be justified but I’m not aware of any conscious policy of the ASIC to turn a blind eye. If Directors have been guilty of carrying on when they know that a company is trading insolvently, I’m not aware of that and I’ll, that’s a matter in fact, it came up in another context a few months ago and I’m certainly not aware that that’s the policy of the ASIC.

CALLER:

Well it may not be a policy of them but it’s certainly occurring and truly we’re being robbed you know, to the tune of two hundred odd thousand, two hundred odd million in Queensland, four hundred and something million in New South Wales, three hundred and something million in Victoria. It all adds up to. . .

PRIME MINISTER:

Look I do understand that but it seems to me that what you’re really arguing for is a situation where you have a risk free involvement of sub-contractors with building companies. Now I’m sorry but the only way you can guarantee that is to establish some kind of fidelity fund which all of the solvent, honest companies are obliged to contribute to, that will drive up their costs and make it less economic and less effective for other people to be involved in this industry. You’ve got the other alternative is, which is plainly out of the question is for the Government to pick up the tab when there’s an insolventry. Well no Government [inaudible] can possibly do that.

CALLER:

I’m not asking for charity. What we’re asking for is to be paid for the work we do.

PRIME MINISTER:

I understand that.

CALLER:

We don’t want charity.

PRIME MINISTER:

I understand your point but I’m going beyond your identification of the problem, I’m trying to find a solution and the only solution that you can have. I mean if the company that you’re dealing with becomes insolvent, it goes broke, it can’t pay you and the only way you can get paid is for either the Government to come in which is not going to happen, because it is not our responsibility. No Government can underwrite every commercial deal. It would be out of business in a couple of years. The other alternative is in advance require people in the industry to put money aside in a fund that basically ensures you against the default of the company. Now that might be attractive to some people but it would be very unattractive to those companies that trade solvently and effectively and I’m not sure that the industry would support that. But they certainly for example, many industries are very strongly opposed to even a very limited variety of that in relation to employee entitlements. We found that recently. They expect the Government to provide that. You don’t get any sympathy at all from people in business who are themselves trading ethically and solvently and honestly, they don’t want to put their hard earned money into a fidelity fund. I think it’s a very difficult problem, I take on board what you’ve said about prosecutions. I’m not aware of any conscious policy on the part of the ASIC, I’ll check that again and reinforce the Government’s view that there should not be. I think if you did have a couple of; if the circumstances supported it, if people were prosecuted for trading insolvently knowing that to be the case then they ought to be hit with the full rigour of the law and maybe that will deter others in the future and perhaps that will add to the deterrent.

MCKENZIE:

Ron, I’ve got to leave you there thanks for your call. It’s news time now and Prime Minister, John Howard

once again thank you for dropping in. I’ve just got a call from retired Lieutenant General Grey, and he’s threatening military response if you’re not there in ten minutes out at the university.

[ends]

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