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Prime Minister comments on the economy, petrol prices, private health insurance, family payments, Peter Reith, foreign aid and tobacco sponsorship.



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1 November 2000

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP RADIO INTERVIEW WITH JEREMY CORDEAUX, 5DN

Subjects: economy; petrol prices; private health insurance; family payments; Minister Reith; foreign aid; tobacco sponsorship.

E&OE……………………………………………………………………………………

CORDEAUX:

Prime Minister, good morning sir.

PRIME MINISTER:

Good morning Jeremy. Always nice to talk to you.

CORDEAUX:

Well sir welcome to the program.

PRIME MINISTER:

Thank you.

CORDEAUX:

We were talking with the Morgan and Banks people earlier today about their hiring intention survey which is a very very good one. In fact since they started doing these hiring intention surveys back in ’96 this is apparently the best one for the next quarter.

PRIME MINISTER:

Yes, the economy is still very strong and the employment outlook is still very good and that is the best news of all from what’s happened since we’ve been in government. We have delivered the lowest unemployment rate in ten years and if we can keep the present level of economic growth, and that’s very dependent on things like interest rates, if we can keep the present level of economic growth then we have a good chance of seeing even lower unemployment.

CORDEAUX:

Well I guess it’s not all completely rosy because when you look at the Australian dollar and the cost of petrol and things like that, I mean this Australian dollar went down yesterday, I think it was an all time low was it? It went down to 51.10 cents. It’s up a bit today I know but that must be a big worry for you.

PRIME MINISTER:

I follow it rather closely Jeremy. But you know Prime Ministers don’t give running commentaries on the level of the dollar from day to day. It’s a level against a very strong American dollar and you do have to take the long view about the value of your dollar when you have a floating exchange rate. Some people like lower exchange rates, others like higher exchange rates. Our exporters are certainly benefiting from a more competitive exchange rate. On the other hand people have contrary views about it. I’m not going to make any prediction and you’ll understand why I can’t or shouldn’t do that. Obviously it’s an issue that we keep a very close eye on. The fundamentals of the Australian economy are very good and the best indicator of that is that we have strong growth, we have high employment, and if we can maintain that strong growth then the prospect is that employment will continue to grow and we may next year see lower unemployment than we have now. Now that is crucially dependent on maintaining strong economic growth and that means the government must act in every way not to put upward pressure on interest rates.

CORDEAUX:

When they say this morning that we should be prepared for it to fall below 50 cents, and that that fall may be imminent, I mean they are punishing us for some obscure reason but they nevertheless are punishing us.

PRIME MINISTER:

When you say ‘they’ you’re talking about international currency dealers….

CORDEAUX:

Yeah, screen jockeys.

PRIME MINISTER:

Well once again I’m not going to join the speculation. I just can’t do that Jeremy. I don’t think it’s helpful for me to get drawn into day to day commentary on the level of the dollar and I just won’t do that.

CORDEAUX:

Let me try and draw you into this. I understand that there are now two members of your party who are putting pressure on you to…putting pressure on you publicly to freeze the fuel excise adjustment that you’ve got scheduled for February. Are you starting to change your mind about that?

PRIME MINISTER:

Well Jeremy I know that everybody’s unhappy about the high price of petrol. I understand that and I sympathise with people who are unhappy and I understand how precious petrol is to the Australian motorist and how important petrol is to people living in a big country like Australia. But the reason petrol is dear now by our standards is because the world price has gone up. I can’t control the world price, nobody can. We must hope that the world price will stabilise and come down and there are some encouraging signs on that front. But the people who are asking me to do something about it, what they’re really doing is asking us to cut the excise, freeze or cut the excise. Now if you do that you are going to run down the budget surplus. And if you run down the budget surplus there are two consequences. One consequence is that you have less money and less capacity to spend money in areas like defence and roads and other areas such as science where people are calling for additional resources. There are many people who say that if the budget is in a stronger position then the money should first be applied to other things rather than a cut in excise. And overall any run down in the budget surplus, any irresponsible run down in the budget surplus will put upward pressure on interest rates and that will do more than anything else to imperil the strong growth we need in order to maintain such a strong employment figure.

CORDEAUX:

You’re still convinced that there’s no windfall involved in all of this for the government?

PRIME MINISTER:

Well the impact of the higher petrol price, it cuts both ways. We do collect more money through the Resources Rent Tax how much I don’t know. There could be some more GST collections. The dimension of that I don’t know. But on the other hand because of the indexation arrangements that apply to pensions, if the higher petrol price increases the rate of inflation, and there’s some evidence that it has, then you’ve got to pay out more in relation to pension indexations. And there are two other things that I should mention and that is that there are more people now in private health insurance then we calculated at budget time and that means that we could be paying out up to $400 million or $500 million more this financial year in the health insurance tax rebate. So that is money we didn’t think we would have to pay out in May but we believe now we will have to pay out. And I’ve also been told that the amount that will be made available for the savings bonus for pensioners and self funded retirees under the new tax system that it could be up to $600 million more, $600 million more than was planned at budget time.

So even if you do collect some more money as a result of the increase in excise….not an increase in excise, the increase in the price of petrol, the excise is fixed. Even if you do you’ve got to take into account before you start talking about windfalls, you’ve got to take into account the extra outlays, all good, all going to the community generally. I mean that health insurance rebate has been hugely popular and the savings bonus has proved to be, how should I put it, more expensive, more extensive than we planned. I mean that’s a good thing. It means people are getting benefits and I’m pleased they are. But I’ve got to take all of that into account when I look at the shape of the budget. And I’ve got a lot of things to take into account. I’ve got to take into account the need to maintain a healthy surplus because if you don’t have a healthy surplus you’ll have upward pressure on interest rates and that will do more damage than anything. I mean in the end we can’t control interest rates. They’re set by the Reserve Bank which responds to market forces. But we can influence those forces and if we put upward pressure on interest rates we’ll be doing a great disservice to not only the motorists of Australia, but we’ll be doing a great disservice to people generally.

And I say to all of those people who are grandstanding on this issue like the motoring organisations and some of the Premiers, they’re not being very responsible, they’re being very narrowly focused. I mean the Premiers, it’s easy pickings for a Premier to say well the federal government should cut excise. To start with they’re asking us to provide the federal resources to cut the excise. They could cut the cost of fuel in their own State by copying Queensland and having a fuel subsidy. Fuel in Queensland is cheaper than in any other State because the State government provides a subsidy.

CORDEAUX:

Prime Minister, just a couple of quick things, I see that the Financial Review this morning says that you have warned that there are going to be no big tax cuts ahead of next year’s election, next year’s poll. Did you actually come out and say that?

PRIME MINISTER:

Well I don’t talk about what I say in the Party Room. There were a variety of reports. Jeremy, our position is that we first and foremost see a responsibility to maintain a strongly growing economy and that means you need a surplus so you can keep paying off Labor’s debt. And if you do that you can keep downward pressure on interest rates rather than upward pressure. So the first obligation I have is to deliver that strong jobs growth of which Morgan and Banks spoke and you mentioned at the beginning of the interview. And you don’t do that by reckless spending either in relation to expenditure programs or in relation to tax. Now we delivered $12 billion of tax cuts on the 1st of July and all governments would like to be able to deliver further tax relief. But we did deliver the biggest tax cut in Australia’s history - $12 billion - on the 1st of July, and I think it’s strange that people should be speculating, and I’ve certainly never speculated about further tax cuts and I’m not aware of any speculation of any substantial form from any of my senior colleagues. But I’m not speculating about what’s in next year’s budget. I can assure you and your listeners that we’ll do everything we humanly can to maintain a strongly growing economy so we can keep reducing unemployment because in the

end that’s more important than anything else. If you’ve got a job you’ve got hope and you’ve got capacity. If you don’t have a job it doesn’t really matter in a sense what the level of interest is because you’re in a relatively, very disadvantaged position and I regard it as a great achievement of this government that it’s got the lowest unemployment level in a decade and it’s generated over 800,000 new jobs since it came to power.

I want to keep generating those jobs and I can only do that if we’ve got a strongly growing economy and you won’t have a strongly growing economy if you run down a budget surplus irresponsibly and put upward pressure on interest rates and that in effect is what the state Premiers who are calling for an excise reduction, an excise freeze, that’s what they’re doing. What they’re really saying is that that is more important than reducing pressure on interest rates. Well I say to them it is less important. I say to them that it is irresponsible for politically opportunistic reasons to call for a freeze in excise when they well know that if that is funded out of an irresponsible run down in the budget surplus that will put upward pressure on interest rates. I’m not going to do that and I don’t mind what political complexion the Premier may be, any Premier that calls in the current circumstances to run down the budget surplus is really saying that he doesn’t mind if there’s upward pressure on interest rates. Well I do and I’m opposed to that and I think most Australians are opposed to it.

CORDEAUX:

Prime Minister, Lee from Reynella would like to speak to you.

LEE:

Good morning Prime Minister and good morning Jeremy. Mr Howard I would just like to give you and your Government a bouquet for giving a rebate on private medical. My husband and I were overseas in California for two years and when we came home we found our Medibank Private was less costly than it was when we left and it gave a lot of pensioners the incentive to go back on private medical. Thank you very much sir.

PRIME MINISTER:

Well I appreciate that and the indications are that it’s been taken up in a big way, this rebate, and I don’t mind the fact that we will probably have to pay out another $500 million a year than we planned. I regard that as a very good use of taxpayers' money to give people an incentive to go back to private health insurance. It’s been a hugely successful policy of the Government and thanks for your compliment.

CORDEAUX:

Leanne, here’s the Prime Minister.

LEANNE:

Oh good morning. I’m ringing regarding I’m a non custodial mum of four children with 19% care of my children. I was on New Start and also the family payment and since the GST has come in my New Start has been reduced and my family payment has been reduced and therefore I’m worse off because of the GST.

PRIME MINISTER:

What explanation were you given for that? That doesn’t automatically follow to me. I’d want to know details of your case to be convinced that it’s due to the GST. Why would it be so because there was nothing in the GST arrangement that automatically reduced those entitlements.

LEANNE:

Because since the GST came into effect you need, you now have to have 30% care of your children to be able to …

PRIME MINISTER:

Could I get all of the details of that from you, if you could give your address and everything, and I’ll investigate it. I understand now the point you’re making, I’d just like to do some further investigation of it.

CORDEAUX:

Alright Leanne, just hang on there for a second would you. Hi Peter.

PETER:

Hello.

CORDEAUX:

Are you there Prime Minister.

PETER:

Hello Prime Minister. It’s Peter here.

PRIME MINISTER:

Yes, Peter.

PETER:

I was just wondering if you could explain something to me concerning the housing trust.

PRIME MINISTER:

That’s the State housing trust?

PETER:

Yes.

PRIME MINISTER:

It might be difficult. It is a State Government matter but I’ll try.

PETER:

I was initially allocated a housing trust house, right, and I had to change housing trust houses because of medical reasons.

PRIME MINISTER:

Yes, I understand.

PETER:

And to get a place near the person who (inaudible) my tablets, there is another place, right but the person who had it, they’ve basically poured petrol on it and burned it down. And then he’s going to be reallocated in it.

PRIME MINISTER:

Well Peter, could you possibly take that up with your local State Member of Parliament. I’m not unsympathetic to your position but it is something entirely under the control of the South Australian Government and I can’t fix it, if it can be fixed. But your local State Member of Parliament, whoever he or she may be, can probably do that. They can certainly give you advice.

CORDEAUX:

Six minutes to nine here at 5DN. The Prime Minister is my very special guest. Has your Government been able to put the Peter Reith telecard affair behind it or is that still going to be around for a while?

PRIME MINISTER:

Well that ultimately is a matter of judgement for the public. Mr Reith has paid the money in full. He has expressed his personal apologies and regrets for what happened. There’s no evidence of any dishonesty on his part. He did breach the entitlement and he’s paid a very high price for that. He was investigated by the police and there was no suggestion of any criminal behaviour. He was cleared of any civil liability by the Solicitor-General but he still paid the money in full, even though he himself didn’t get any money. I mean people keep talking about him having repaid the money. He wasn’t paid it in the first place. Now it was a mistake - he should never have given those details to his son. He knows that and I don’t defend that. The question of whether it is behind us or so forth, that is not for me to judge. That’s for the public to judge. I don’t talk in presumptuous terms about how long I think the public will hold a view about a particular matter. That’s something for the public to decide. I think Members of Parliament who say, well you know the public’s not going to think about this beyond such and such a time, that’s very presumptuous. I will leave that to the Australian public. They will make up their mind. They’ll weigh all of these things into account - take them all into account. But I do stress that he’s paid the money in full, even though there was no liability to do so. He has expressed his great regret and he has paid a very heavy price. He is a competent Minister and he’s achieved a lot. An excellent Minister.

CORDEAUX:

I can understand you not wanting to sort of …

PRIME MINISTER:

When he told me about it I was obviously, thought he’d been involved in a big error of judgement but I took the view that something he’d done in 1994, when he wasn’t a Minister, we weren’t even in Government, I wasn’t Party Leader. For me, six years later when he told me about everything then and agreed, in fact encouraged the establishment of a procedure to deal with it, for me to have turned around and sacked him would have been not the appropriate reaction.

CORDEAUX:

No but you must.

PRIME MINISTER:

I did insist, as he wanted, on a police inquiry and he has paid the money in full despite not having a legal liability. I think he’s done what he can. The question of whether the public want us to move on or whatever, that’s a matter for the public. I will deal with any questions on the matter from journalists or the Opposition. There’s nothing to hide.

CORDEAUX:

But you must despair. I mean you must in the back of your mind really want to take them all out the back and bang their heads together because there are enough things to contend with without bringing that sort of thing upon yourself and your Party.

PRIME MINISTER:

I obviously wish it hadn’t happened. We all do. But when something like this happens you’ve got to deal with it up front and you’ve got to take decisions. And when you’ve taken those decisions you stick by them and you defend them and you explain them. I took my decision, I decided for the reasons I’ve explained that it wasn’t appropriate to remove him from the Ministry when he told me about it in May. I insisted, as he wanted, on a full police investigation, and that was done. I then sent it to the Solicitor-General and before the Solicitor-General had reported on whether or not he was legally liable to pay the money, Mr Reith came to me and said I’m going to pay this money whether I’m legally liable to do so or not. And he’s explained his own contrition on the subject to Parliament on Monday. Now I can’t take it any further and the public will make it’s judgement about him and about the handling of it and will take that into account with all the other assessments it makes of the

Government. In the end, I’m in the hands of the Australian people. They will decide my fate and the fate of my Government on the basis of everything that we’ve done and everything that’s happened to us when we go to the election which is scheduled at the end of next year.

CORDEAUX:

Two minutes to nine and a quick call from Frank.

FRANK:

Oh yes, good morning Jeremy. Good morning Prime Minister.

PRIME MINISTER:

Hello Frank.

FRANK:

Just a quick question. On foreign aid, why is it we have to send money? Why can’t we send goods and chattels?

PRIME MINISTER:

Well we don’t always send money. I announced when I was in Kiribati the extension of the patrol boat program for the Pacific Island countries and that involves, over a 25 year period, $350 million. That’s a very good investment in the long-term security of the region. That is targeted, delivered assistance. We don’t really hand out much cash that people can spend in a discretionary way. We hardly do any of that at all now, for the reason that I suspect you believe we shouldn’t, and I agree with you. It’s always better to say well look will you take this assistance in kind or if we do give you the money you’ve got to spend it on something that’s identifiable and can be monitored and where possible can see some order placed in Australia, with some of the benefit flowing back to this country.

CORDEAUX:

Just very quickly, I just have 45 seconds before the news. This bill controlling tobacco sponsorship. It seems to control everything except tobacco companies sponsoring political functions. Why don’t we include those as well?

PRIME MINISTER:

Well it’s been a long … it’s really the advertising that’s involved in the sporting endeavour and both sides of politics have had sponsorship of political conventions for a period of time. I don’t know what the Liberal Party’s plans are for the future. Maybe not so much in the future, I’m not quite sure but we think, and the Labor Party does not disagree, that it’s probably taking the thing a bit too far where there’s no overt public advertising involved in quite the same way as there is at a sporting event.

CORDEAUX:

Prime Minister, I’ve got to leave it there but again, thank you very much for your time.

PRIME MINISTER:

Thank you.

CORDEAUX:

I really appreciate it. Thank you sir.

(ends)

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