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Transcript of press conference, Parliament House, Canberra: Mitsubishi; trade relationship with Japan; medical indemnity; Rio Tinto subsidy; community service wages; Bruce Ruxton.



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26 April 2002

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP PRESS CONFERENCE, PARLIAMENT HOUSE, CANBERRA

Subjects: Mitsubishi; trade relationship with Japan; medical indemnity; Rio Tinto subsidy; community service wages; Bruce Ruxton.

E&OE………………………………………………………………………………………

PRIME MINISTER:

Good afternoon, I haven’t seen you for a while. There’s been a bit in the papers this morning, I just first of all wanted to announce that Mitsubishi Motor Corporation has accepted a proposal from the Commonwealth Government for $35 million of support. And in return for that there will be a major new investment in Mitsubishi’s Adelaide plant and also importantly the establishment of a global research and development centre in South Australia. I’ve spoken to the South Australian Premier this morning and I understand that his Government is in the course of announcing some assistance also and that means that as a result of this response from both the Commonwealth and the South Australian Government this very important manufacturing facility, which is so critical to both employment and the economic base of South Australia, will continue and it will continue in an expanded form.

It is a good outcome for the workers, this is good news for the workers in South Australia, it is good news for the motor manufacturing industry in South Australia and it is an indication of course of the good climate for investment in this country generated by, in part, the Government’s economic policies. I welcome the decision that’s been made by Mitsubishi, I pay particular tribute to the work of the local manager of Mitsubishi, Tom Phillips, and this has been a case of the Government working very co-operatively with the Government of South Australia. Now I don’t have any other announcements but if you wanted to ask me any questions about anything else that takes your fancy I’d be happy to respond.

JOURNALIST:

PRIME MINISTER

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(inaudible).

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PRIME MINISTER:

No.

JOURNALIST:

It is not another bail out or - ?

PRIME MINISTER:

Oh no that’s an entirely, look this is not a company that’s failing and in return for this…

JOURNALIST:

(inaudible) pull out if it didn't -

PRIME MINISTER:

In return for this contribution they are doing two things, they are committing a larger level of investment and they are also going to establish an R&D facility in South Australia. Now that is a vastly different thing from bailing out a company that needs a financial lifeline from the Commonwealth in order to survive. I mean you’ve got a world industry, the motor vehicle manufacturing industry is a world industry now and we have to decide whether we want some of the action in Australia or whether we’re allowed to be scattered to the four winds and go elsewhere. And as I’m concerned I want a certain amount of the action in Australia and so do the workers in the motor manufacturing industry in Adelaide. They will welcome this announcement.

JOURNALIST:

Could other global industries expect similar help?

PRIME MINISTER:

Dennis, I never give generic promises.

JOURNALIST:

Well everyone in the motor vehicle industry has received some help over the recent years.

PRIME MINISTER:

Well the motor vehicle industry historically in this country has received a lot of Government protection, but that level of protection has steadily declined. I mean by the year 2005 the general level of tariff will be down to 10 per cent. And there’s no proposal to put that up. So we have seen over the years, I mean I can remember way back when I had responsibility in my first ministry for the industry assistance commission, in the late 1970’s the level of protection for the local motor manufacturing industry in Australia was astronomical. Now it will be down to 10 per cent for tariff protection by the year 2005.

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JOURNALIST:

What has Mitsubishi said in terms of the size of the investment it is prepared to make and what other conditions has the government put on this money and how long have they said they -

PRIME MINISTER:

Well what we have said is the commitment of $35 million in conditional on them meeting certain benchmarks, certain achievements which are set out in the correspondence between myself and Mr Eckrodt. And providing that is met - it involves a certain level of investment of the establishment of the R&D capacity - and once that’s met the money will be paid. But those things have to be met before it is paid and the money will be available from 2004/2005, it is not immediately available, it is conditional on these benchmarks being reached. In particular the assistance is conditional on the creation of an extra 900 direct jobs in Mitsubishi’s Adelaide manufacturing operations and the establishment of a global research and development centre in South Australia with ongoing employment of approximately 300 people. So it is quite a tightly targeted piece of assistance.

JOURNALIST:

- seem to be a growing queue over the last 18 months to two years of approaches to the Government for the Government to take some up some area that presumably ought to be left to business, whether it be the payment of workers' entitlements, whether it be refloating Ansett, in the insurance area the Government has been asked to take an active role in a commercial area, isn’t that list particularly long, longer than normal?

PRIME MINISTER:

No, people are always asking the Government for help Malcolm.

JOURNALIST:

No but Governments always respond and you represent a Government…

PRIME MINISTER:

No, we respond in the national interest and it is clearly in the national interest to maintain a motor manufacturing capacity in South Australia. Now you have to understand that the critical mass of the South Australian economy is different from the critical mass of the economy in other parts of Australia and you do have to take that into account. And as far as the other examples that you have quoted, well we have responded appropriately, we gave a guarantee in relation to the workers' entitlements for Ansett and it was a very reasonable and proper guarantee. It is a question of looking at each individual approach according to the circumstances but where you have clearly have an investment and an employment advantage in maintaining an activity in a particular part of Australia, which is more dependent on a narrower industry base than other parts of the country, you should respond appropriately. And that has always been my view and it always will be.

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JOURNALIST:

Prime Minister, the Shale oil development, Southern Pacific Petroleum asks for urgent assistance, they say they will fail without it. How do you view that application?

PRIME MINISTER:

Well that will be considered in the normal way. It will go through a process. I am not going to pre-empt that consideration. It will go through a process of assessment.

JOURNALIST:

- meeting with Koizumi next week to progress on free trade and the ASEAN plus five.

PRIME MINISTER:

Can I say that I am looking forward very much to Mr Koizumi’s visit to Australia. The relationship between Australia and Japan is very important. You would remember that I had a very valuable visit to Tokyo last year, not long after Mr Koizumi had become Prime Minister and I welcome very much the remarks that he is reported as having made over the past 48 hours as a generic statement of his determination to further strengthen the economic relationship between our two countries. By making those remarks he is signalling that he wants an even closer relationship between Australia and Japan. Let me reciprocate by saying I want an even closer relationship between Australia and Japan. Japan for 30 years has been Australia’s best customer and I think in recent months, the United States may have just edged ahead. But over the long period Japan has been certainly our best customer and whilst the details of future relationships in the economic area we will discuss next week, I welcome very warmly what he has had to say.

JOURNALIST:

Mr Howard given the long-standing refusal of Japan to substantially open their markets to agricultural products, would you be sceptical about the prospect for any free trade agreement including farm produce in the short or even medium term?

PRIME MINISTER:

I think what you have got to do when you have a statement of such extensive and generous commitment to a better relationship, you take it for what it is. And that is a very genuine and generic statement of a desire for a closer relationship. Then you sit down and you work through the detail of it. You certainly don’t immediately start finding some fault in it.

JOURNALIST:

Can I ask about medical indemnity. You said the other day that you wouldn’t let doctors go unprotected should UMP fall over, but the Commonwealth wasn’t putting up more cash. Is a consideration being given to lightening the prudential rules and prudential load on some of these medical indemnity companies or is the Government looking at picking up the liability itself?

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PRIME MINISTER:

We don’t have any proposal to lighten the prudential load because that would put the public at risk. It would expose the public, and we are not going to do that. The reason why I am being careful in what I say is that I don’t want by my statements to unduly influence the decisions taken by individual directors. We obviously would like to see UMP continue. We did offer a guarantee of $35 million. It is a difficult area. There are a lot of reasons why there are challenges for medical indemnifiers. One of them is the size of court verdicts. The other is the growing propensity of Australians to sue at the drop of a hat. I think we have to as a community rethink some of our attitudes in this area. Something has eventually got to give. You can’t have an escalating claims profile, the same level of premiums, it is just not possible. Something has to give.

JOURNALIST:

That would take time. That is, as the medical indemnifiers say they need a transition period. UMP says it won’t be able to keep going unless it has got some sort of financial injection.

PRIME MINISTER:

Well I am not going to engage in - I think what UMP should do is talk to some people we have indicated inside the Government they should talk to. There is nothing to be gained by a public dialogue on something like this where commercial decisions have got to be made. I mean no Government can sort of respond in a yes/no fashion to those sorts of claims. But I would say to the indemnifiers and I would say to the medical profession, in a sensible, responsible way we wish to assist and we don’t want to see doctors unprotected and we don’t want to see them without a capacity to offer their very valuable services. But there needs to be a coming together of a whole lot of people and we had a good meeting in Canberra last week chaired very ably by Senator Patterson and I think we are making progress on that front and we are working fairly cooperatively with the States, though they can score their political points on this if they want to. But in the long run that is not going to really help anybody either.

JOURNALIST:

Your Industry Minister announced this week $125 million subsidy for Rio Tinto to build a smelter in the south west of WA. What was the rationale for that money, and that’s an awful lot more than you’re giving Mitsubishi.

PRIME MINISTER:

I didn’t hear the first part of your question.

JOURNALIST:

Your Industry Minister announced a $125 million subsidy for Rio Tinto to build a smelter in Western Australia this week. I’m wondering what the rationale is for that money. It is an awful lot more than you’re giving Mitsubishi. What was the rationale behind that subsidy?

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PRIME MINISTER:

Well that particular decision was taken in the context of the strategic investment policy that I announced way back in 1997 which is designed to bring new technology. I mean that’s very much related to the technology. That’s the rationale. I mean I don’t have the statement. My recall of that is that it is particularly related to the new technology. That was always one of the things to be borne in mind.

JOURNALIST:

Which budget does that come from then, which section of the budget?

PRIME MINISTER:

I’d have to look that up I’m sorry, I don’t know. When you say which budget, you mean which year is it going impact? Look I would need to check that. Obviously it is probably next year or the year after. I’m not quite sure without checking. But Mr Macfarlane can I’m sure fill you in.

JOURNALIST:

[inaudible] grants is the R&D, doesn’t that contradict what’s happening at the moment with the freeze on start money for R&D? Isn’t that cutting off your nose to spite your face?

PRIME MINISTER:

No they are two separate programs.

JOURNALIST:

[inaudible] government to make money allowable for R&D if the interest is there rather than freeze it, just saying well [inaudible] that money?

PRIME MINISTER:

Well it is not being frozen. It is going to be delayed in relation to new applications. In relation to current applications my advice a short while ago was that there would be no delay on that but in relation to a new application there could be a short one. There is no inconsistency in that. They are two quite separate programs.

JOURNALIST:

Are you discouraged by their business investment in research and development, the freeze?

PRIME MINISTER:

I don’t think so. What it means is that it is an extremely popular program and it was right on the money when it was introduced.

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JOURNALIST:

Mr Howard, Mr Koizumi has also talked about an increased regional security role. Is that something that could or should alarm its neighbours and notably China?

PRIME MINISTER:

Well the question of Chinese reaction to anything that Japan proposes if really a matter for China. I don’t presume to tell China how to react to something that Japan does anymore than I would say the opposite.

JOURNALIST:

[inaudible] greater role for Japan?

PRIME MINISTER:

Can I just finish. I don’t think it is for me to suggest either way what they do. China can respond for itself. I’ll be very happy to hear what Mr Koizumi has in mind in so far as it is relevant to Australia and I think we have to take a longer term view about Japan’s role in security matters. There are Japanese peacekeepers now in areas where we would not have thought that likely a few years ago and all of us in the region have to move on in a careful but progressive fashion so far as our relationships with Japan are concerned. Japan is a major economic power in the world and it is obviously a country that’s going to have an impact on the security of the whole region and I tend to see Japan’s future involvement in the region in a very positive light and I would encourage it. I mean I’m a long time supporter of Japan’s admission to the permanent membership of the Security Council. It has been a policy of the Australian government to support Japanese admission to the ranks of the permanent membership and I’ll be repeating that commitment to Mr Koizumi when he’s here in Canberra next week.

JOURNALIST:

[inaudible] acceptance of the offer by Mitsubishi represent from them a guarantee that they’ll continue to operate in South Australia to 2005 and beyond putting an end to the year to year speculation about their…..

PRIME MINISTER:

Well I certainly see it very much as that guarantee, very much. It would certainly be seen as putting an end to that speculation. That is certainly the view of the Premier of South Australia. It is certainly the view of the local management and I believe also of the workforce in South Australia. Let me repeat that the delivery of the additional Commonwealth help is conditional on Mitsubishi meeting those conditions, the conditions that I laid out. So it is not an open ended commitment. It is conditional on those things and that’s why its payment does not occur until the year 2004/2005.

JOURNALIST:

Rio Tinto [inaudible], the Industry Minister said that part of the reason for the subsidy was that the company might be going to move the operation offshore. The company’s already said

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that it had dropped any plans to do that because of the low Australia dollar and its deal with a company offshore had fallen through. How do you rationalise….?

PRIME MINISTER:

That wasn’t the advice we had.

JOURNALIST:

Your advice was that it still….?

PRIME MINISTER:

Our advice was that there obviously a tension between the locations.

JOURNALIST:

Environmental groups in Western Australia say that you shouldn’t be subsidising those kinds of industries to that degree, effectively a quarter of the full cost of the project when they’re still fairly greenhouse gas intensive. What’s your response to that?

PRIME MINISTER:

Well I would expect them to attack the decision.

JOURNALIST:

You don’t think they’ve got any grounds…?

PRIME MINISTER:

No I don’t, no I don’t because there are significant industry gains particularly in relation to technology and these are the sorts of things that we need to always be on the lookout for and we have to - we are constantly being exhorted to be a high technology, new technology country and when the opportunity comes to encourage the development of a new technology or a significant variant of an existing technology in Australia we should be willing to where we can to encourage that. I mean these are the sorts of things we should as a nation be doing.

JOURNALIST:

[inaudible] the medical lobby groups that after June consumers may not be able to access medical services?

PRIME MINISTER:

Look I think you have to be careful with the language you use. I think there are some statements that are being made which are unnecessarily alarmist and they are designed to intimidate governments and others into taking decisions they might otherwise not take. And I would just ask everybody to be calm. It is a difficult problem and the only way you’ll solve it is for people to talk to each other and not make exaggerated claims through the media.

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JOURNALIST:

[inaudible] they are going out of their way to scare patients, talking about high charges?

PRIME MINISTER:

Well I’m not going to say that. That only contributes to the very problem that I’m sorry oughtn’t to be there.

PRIME MINISTER:

Prime Minister, one final thing, Bob Carr has again raised the problem with non-government welfare workers. Community workers in New South Wales their organisations have to pay pay increases from last November and again next [inaudible]. He said the state’s contributed a fair amount of money over three years and he is asking for the feds to do it as well.

PRIME MINISTER:

Well we had an arrangement where by under the agreement we contributed, we set aside an additional amount for higher wages. What’s happened is that the New South Wales industrial tribunals have given a greater increase than we agreed to meet. I mean maybe Mr Carr should be looking at the operation of the tribunals within his own state. I mean my advice on this is that the agreement provided that for an indexation of the wages of the employees and that we would meet a certain amount of that, meet our share of that. Well we’re willing to do that. But what’s happened is it’s turned out to be much more so he should perhaps look to his tribunals. And I mean bear in mind that states under the new arrangements, I mean New South Wales is swimming with cash as a result of stamp duties, you know the boom in the housing industry fuelled by our home savings grant extension. I might remind you that when I announced that last year I asked the state premiers to sort of kick in a bit to help the then struggling housing industry by giving a bit of a let off on stamp duty and they, all of them, called us back - no we won’t do that. As a result of what we have done to stimulate the home building industry the states are now raking in the money, particularly, well Victoria is absolutely rolling in money as a result because they don’t index their stamp duties in any way. So the states are doing very well at the moment off the back of federally funded expansionist policies in the housing industry which they refused to join last year.

JOURNALIST:

Are you saying they should cut the stamp duty again?

PRIME MINISTER:

Well I mean the Victorians, I mean you’ve seen the analysis in your own paper, perhaps you wrote it, it is spectacular. I mean it is almost shameful that they could even bear to criticise us.

JOURNALIST:

Bruce Ruxton [inaudible] in retirement. They’re all talking about statues and scholarship funds. Do you have a view about how he should perhaps sail off into the sunset?

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PRIME MINISTER:

Well I think Bruce has been a fantastic advocate of the cause of returned service men and women in Australia and he’s also a great personality. I hope because he retired as President of the Victorian RSL it doesn’t mean we won’t hear from him in the future. I think he’s a wonderful character. How would you honour somebody like that? I’d like to think about it. I don’t think Bruce is into statues - if I know Bruce. I think Bruce would appreciate your ringing him up every so often for comment on something and I think he’ll continue to comment very colourfully. But can I say to Bruce you’ve done a fantastic job, you are a well loved Australian, and you’ve been a wonderful exemplar of some of the most lovable aspects of the Australian character.

JOURNALIST:

[inaudible] United States has not agreed to an Australian request to access to Australian citizen Mamdouh Habib who’s being held in Afghanistan by US military, nor has it complied with an Australian request that information on the circumstances of his transfer from Egypt?

PRIME MINISTER:

That matter is still under discussion and I have no further comment at this time. Thank you.

[ends]