12 November 1997
E&OE.........................................................................................................................
MITCHELL:
Good morning, in the studio with me the Prime Minister, Mr John Howard.
PRIME MINISTER:
Good morning Neil, very good to be with you again.
MITCHELL:
Could we start with tax. Is some sort of consumption tax now inevitable?
PRIME MINISTER:
It would only come in as part of a total tax package that involves very big reductions in personal income tax. What I have said is that you can’t seriously reform the Australian taxation system without looking at and, I think inevitably if you are going to have big reductions in personal tax, having a better indirect tax base. Now everybody agrees that the wholesale tax system, which doesn’t tax caviar but does tax orange juice and has got all those anomalies, everyone agrees that ought to go. The only way you can get rid of that is to have a broadly based indirect tax. But I want a total tax package. There is no way that I would have a broad-based indirect tax without personal tax relief. And that really will be the cornerstone, as well as reform of the business tax system.
MITCHELL:
How broad the suggestions...?
PRIME MINISTER:
We haven’t made any final decisions in this area. We are working on the tax reform plan at the moment. The Treasurer and I and some of our senior colleagues are working in a regular way on it. And I have said before, and I will repeat it this morning, that we will unveil our plans to reform the tax system, reduce the personal tax burden and that is really the cornerstone of it, before the next election.
MITCHELL:
OK, so you will go to the election on the basis of that? There is no chance of any change before the election?
PRIME MINISTER:
What, in relation to having...
MITCHELL:
On a tax system.
PRIME MINISTER:
No, no, no. It will be part of our policy for the election. We said we would essentially leave the existing tax system free of major change during our first term, that is what we promised the public. What we are saying is that we will go to the next election with a visionary comprehensive tax reform plan and the public can make a decision, whether they want a modern tax system for the 21st Century or whether they want to stick with the present failing ramshackle system.
MITCHELL:
It is a huge change, isn’t it, from saying that a GST was dead to saying well we need change and part of it has to be a consumption tax?
PRIME MINISTER:
Well we are putting another election between that change and its implementation. Surely it is open, transparent and frank of a Government to say well, we used to have this view, we have now changed the view but before we implement the change we are going to let the people pass judgment. I mean that is as fair and open and as democratic as you can possibly be.
MITCHELL:
Tax reform is essential for Australia, correct?
PRIME MINISTER:
Yes.
MITCHELL:
And part of that tax reform will have to include, as part of a package, a consumption tax.
PRIME MINISTER:
I believe you have to have a broad-based indirect tax if you are serious about comprehensive reform.
MITCHELL:
Will you look at some exemptions?
PRIME MINISTER:
Well we are looking at all the details of it now. I don’t want to start responding bit by bit to particular questions otherwise...
MITCHELL:
No, but you did say at the weekend you thought the broader the better in a sense.
PRIME MINISTER:
Yes, that is undeniably true. But when you say the broader, there is a lot of breadth in the broader. You can still have some things exempted or zero rated. We haven’t made any final decisions in that area and we won’t be announcing it piecemeal.
MITCHELL:
When will you be announcing it.
PRIME MINISTER:
Well before the election, well before the election so people have got an opportunity to look at it. But I am not going to commit myself as to time.
MITCHELL:
When will the election be?
PRIME MINISTER:
I don’t know, I haven’t made up my mind yet.
MITCHELL:
So if there is the possibility of an early election, if there is a double dissolution, will we have a tax policy then?
PRIME MINISTER:
We will certainly have a tax policy before the next election. Other people keep talking about a double dissolution, if that is in relation to Wik.
MITCHELL:
Wik, yes.
PRIME MINISTER:
I am focused at the moment on getting that through the Senate. I don’t want a double dissolution over Wik, I don’t think anybody wants a double dissolution necessarily over a particular piece of legislation. I want that legislation passed because we need to restore certainty of the system. And this attack that is being made on the legislation that it is racist is complete nonsense.
MITCHELL:
Well do you find that offensive personally?
PRIME MINISTER:
I do, I find it deeply offensive when you bear in mind that what we are doing in this legislation is less than what Paul Keating guaranteed the position to be at the time of the 1993 Native Title Act. Paul Keating said in 1993 that the grant of a pastoral lease extinguished native title. He said that in the Parliament, he said it in numerous interviews, he said it in correspondence to State Premiers. And the reason why I got into trouble, if I can put it that way, with some people on my own side of politics is that they said I wasn’t going far enough with my amendments and now the other side are attacking me and saying that I am a racist.
MITCHELL:
Well so is Paul Keating.
PRIME MINISTER:
Well he is a hypocrite. Because he said, in 1993, he said that the grant of a pastoral lease extinguished native title. He is now saying that a piece of legislation of mine that falls short of blanket extinguishment of native title; it does not contain blanket extinguishment of native title, he says that is racist. Well if what I am now doing is racist, what he was promising the Australian people in 1993 was super-racist.
MITCHELL:
Are you reviewing the legislation because of constitutional doubts around it?
PRIME MINISTER:
No. What we have said is that we will accept any sensible amendments at the margin. I have never said that we would not amend it at all, all I have said is that we won’t amend it in way that undermines the 10-point plan, undermines the essential elements of the legislation. If there are amendments at the periphery that can better promote the objectives of the Bill well, obviously, we will entertain those.
MITCHELL:
Well where is it going to end. We have got members of the Aboriginal community saying it is racist, calling your Government racist scum, we have got the Governor-General being critical of it?
PRIME MINISTER:
No, hang on. To be fair to the Governor-General, The Governor-General has spoken strongly in favour of reconciliation. Reconciliation is quite separate from Wik. People can simultaneously support reconciliation, as I very strongly do, but have different views on the Wik legislation.
MITCHELL:
But, does the Wik legislation threaten reconciliation? It would seem to with the rhetoric that is being used.
PRIME MINISTER:
Well, what you are seeing happening now is that my critics are trying to create the impression that this is racist in order to defeat the amendments to the legislation. I mean you have, it’s a political stunt to call this racist. Under this legislation it will still be possible for Aborigines to lay Native Title claims on 79 percent of the land mass of Australia. Seventy-nine percent. The only areas that they cannot make Native Title claims are on freehold and other exclusive tenures. Now how in the name of reason you can call a piece of legislation that guarantees that you can make native title claims on 79 percent of the land mass of Australia, how you can call that racist is beyond all comprehensive reason.
MITCHELL:
But does it threaten the process of reconciliation in the angst it seems to be causing?
PRIME MINISTER:
Well, the people who are generating the angst in using the extreme language, with respect, are the Government’s critics. You haven’t heard any extreme language from me. You haven’t heard extreme language from others who are supporting this legislation.
MITCHELL:
But people like Mr Dodson are a fairly important to the reconciliation process aren’t they?
PRIME MINISTER:
Yes, but it doesn’t alter my point though, Neil, that the strong language, and I don’t think in fairness if you are talking about Pat Dodson, that he has used the extreme language of some others. His comments, although he has been critical of the Government’s position, have been more restrained. But I just invite your listeners to remember again that the extreme language has all come from those who are trying to defeat the legislation. People who are talking about a racist election are my opponents. People who are saying that this Bill is racist are my opponents. Yet when you look at the facts, when you remember when Paul Keating said in 1993 that the grant of a pastoral lease completely extinguishes Native Title, I read the words again this morning on the way in this studio so that I was absolutely certain of them. Now this man is turning around and saying it’s racist. Well, if what I’m doing is racist, what he was doing was super racist.
MITCHELL:
Was it raised with you in the United Kingdom? Because it is reported today that Members of the British Government are even concerned.
PRIME MINISTER:
No.
MITCHELL:
No?
PRIME MINISTER:
No.
MITCHELL:
Germaine Greer concerned about it.
PRIME MINISTER:
Oh, yes.
MITCHELL:
That doesn’t concern you?
PRIME MINISTER:
No it doesn’t.
MITCHELL:
Can we get on to the Republic. Your speech last night. An expectation has been created in the community of change. Do you think that some form of change is inevitable?
PRIME MINISTER:
I don’t think anything in life is inevitable, except the old saying of Benjamin Franklin about death and taxation.
There is certainly a lot of people who are interested in change. What I want to do in this debate is to be constructive. I have a personal view and I have never been reluctant to express it. I’m quite satisfied with the present Constitution. I think it’s very good. It’s given us a lot of stability. We should be very careful before changing it. What I want the Convention to do is to try and define what the Republican alternative might be so that the public can then have a clear choice. I think it’s my role as Prime Minister to be honest with the public, to tell the Australian people where I stand personally. I think they are owed the candour of their Prime Minister saying his own piece on it but also not to stand in the way of change if the majority is moving in another direction.
MITCHELL:
But do you think a referendum is likely?
PRIME MINISTER:
There will be a vote at some stage, yes.
MITCHELL:
Sooner rather than later?
PRIME MINISTER:
Well it will depend a little bit on, firstly, the outcome of the ballot for the Convention. I do encourage people to vote whatever their views are. I think people should always, in a democracy, participate. Secondly, the Convention process itself. If a clear consensus emerges around a particular Republican model then the vote might come a little sooner. If it doesn’t, then it could be delayed. We still have quite a few miles to walk on this. We should take it carefully. It is a very big step. We should not be frightened of change if we are satisfied that the change is a good one. On the other hand, we should not embrace it just for the sake of change.
MITCHELL:
So you would see a specific referendum on the basis of a specific model?
PRIME MINISTER:
Yes, well that is the only way you can have a referendum. I mean one option in a referendum is the present system. We all know that. We all have a pretty good idea of how the present system works and it works pretty well. We don’t know the alternative yet.
I mean all we know is that a lot of people are arguing for a Republic. Now some people want the president in that Republic to be elected by all of the people. I think that would be a recipe for chaos in the medium to longer term. Others want it chosen by a special majority of Parliament; others by the Prime Minister; others by some kind of special committee.
What I think the Convention has to do is to work that out. It also has to work out whether any specific powers are laid down in the Constitution for the Head of State in a Republic or whether there is some kind of attempt made to transmute the reserve powers from the Governor-General. There is a lot of that... you have to have a clear alternative.
MITCHELL:
Accepting that, when would you say you would expect a possibility of a ballot?
PRIME MINISTER:
I can’t... I just at this stage Neil can’t say. I would be in a better position to answer that, or to be even vaguer, depending on the outcome, after the Convention.
MITCHELL:
Well that’s an important point. There is a possibility that this Convention will turn into a bunfight. We’ve got the Monarchists saying that at the moment we won’t cope any change. The Republicans are at war with each other to a certain extent.
PRIME MINISTER:
They certainly are. There is deep division in Republican ranks on what form.
MITCHELL:
And the Monarchists are just being negative aren’t they?
PRIME MINISTER:
Well, I don’t think anybody should be negative. I mean everybody knows my view. And I don’t care who does. They knew it when they elected me Prime Minister. But I want this Convention to be positive and constructive and to think of the future of Australia. What I will be asking people at the Convention to do is to think very seriously and very carefully as to what is the best system of government in the 21st century for Australia. We are making a system of government for a millennium. We’re not just tinkering at the edges and we want to be very serious about it.
MITCHELL:
So what if we get very little other than words out of the Convention. What happens to a referendum?
PRIME MINISTER:
Well I’m optimistic that we will get more than just words and that’s one of the reasons why I’ve been urging everybody, whatever their views are, to play a constructive role. Now, obviously, if we just get a jumble of words out of it, well, the government will have to propose a way of dealing with that but I don’t want to start talking about what you do if something fails. That only condemns it to a failure.
MITCHELL:
What about the reserve powers? Should they be part of change?
PRIME MINISTER:
Well, that is because the reserve powers are one of the great strengths of the present system. A lot of people argue that the reserve powers belong exclusively to the Crown and once you take the crown out of the Constitution you remove the reserve powers.
MITCHELL:
They are also one of the great fears though, about change, aren’t they? Because you are giving the Head of State the power to sack a government.
PRIME MINISTER:
That happened in 1975. Of course the person who did the sacking was not the Queen it was the Governor-General which is of course one of the arguments that anti-Republicans use to saythat, in reality, the effective Head of State of this country is the Governor-General and that is sort of part of their argument. At least on that occasion, his actions were immediately remitted to the Australian people for a judgment and the people made a judgment.
MITCHELL:
What sort of President...if we were to move to a President, what sort of person should be President?
PRIME MINISTER:
Look I’m not going to start debating that. I think that sort of starts suggesting that I think its a foregone conclusion that we’re going to change.
One of the great virtues of the present system, and I would hope that if we were to change it would be a feature of any new system, is that the Governor-General is subsumed by the character of the office and becomes apolitical ... look at Bill Hayden.
MITCHELL:
Yes, but the present Governor-General has been a little bit more outspoken, has he not?
PRIME MINISTER:
He has spoken strongly on issues that he feels strongly about.
MITCHELL:
Are you comfortable with that?
PRIME MINISTER:
Look, I think he is doing a good job.
MITCHELL:
Are you comfortable with him making such political statements.
PRIME MINISTER:
He feels very strongly about reconciliation. Both sides of politics support reconciliation. I mean nobody has a monopoly of moral commitment to reconciliation.
MITCHELL:
Is it the role...
PRIME MINISTER:
I think from time to time people in that position will make statements. I don’t really want to analyse every statement he has made because some mischievous journalists will then construe from that that I’m being critical.
MITCHELL:
What about the principle of it? Have you suggested to him perhaps that he should back off a little bit.
PRIME MINISTER:
Well, any discussions I have with the Governor-General are naturally confidential. But you shouldn’t construe anything from that neutral disavowal either.
MITCHELL:
Nursing homes. Now, what is the line between listening to objection and looking weak?
PRIME MINISTER:
It is always hard. But the history of change in these sensitive social issues is that governments often take two steps forward or three steps forward and one step back. You will remember the debate on the assets test.
MITCHELL:
Very well.
PRIME MINISTER:
And you will remember that originally the family home was included in the assets test, remember?
MITCHELL:
Yes. Yes.
PRIME MINISTER:
Bob Hawke took it out after a lot of community opposition. He was acclaimed at the time as the saviour of the family home. Now what has happened with nursing homes is that we asserted a principle. And that principle was, that if you can afford to make a contribution then you should do so. We copied the Labor Party’s system for hostels, which they introduced with accommodation bonds in 1989, in which we in Opposition did not oppose. We have now scrapped the accommodation bonds but we are still having a $4,000 a year annual average fee and that, on our calculations, will deliver about the same amount of money as the accommodation bond would have delivered.
MITCHELL:
Well what will be the cap on that fee though?
PRIME MINISTER:
We are working that out at the present time, it will be a little higher than that and I hope that Warwick Smith will be able to say something... It is obviously well below $10,000, obviously it will be a little above $4,000 but the precise figure we will be in a position to announce very shortly. But the average will be about $4,000 and there will be a lot of annual fees, or at least a number that will be below $4,000. It will depend a bit on the area and the scale of the nursing home.
MITCHELL:
There is also the proposition to allow the rental of the family home to pay the bond, have you decided yet whether that will be taxed?
PRIME MINISTER:
Well it will be excluded from the income test and otherwise it will just be treated like any other income.
MITCHELL:
So it will be taxed?
PRIME MINISTER:
Well it depends on the level of the person’s income and what the other deductions are.
MITCHELL:
So they will be renting their house to get the money to pay the bond and the money on the rent is taxed?
PRIME MINISTER:
No, no, no. The bond is gone.
MITCHELL:
But to pay the fee, the $4,000 average?
PRIME MINISTER:
The fee is a capital item. But if they have any borrowings which are deductable well they will be deductable before any tax is payable.
MITCHELL:
I think part of the criticism has been, yes there is a change, there is a response, there is an admission of an error but the detail hasn’t been thought through and it is still not there, is it?
PRIME MINISTER:
Well, Neil, when we decided to change we had a choice, we could either wait until all of the detail was worked out and then announce that the accommodation bonds were being scrapped, or alternatively we could announce immediately that the accommodation bond system was going. If we had adopted the former course people would have continued to enter into accommodation bonds.
MITCHELL:
I will read this, 3,000 signed up....
PRIME MINISTER:
That is a ridiculous figure, absolutely ridiculous.
MITCHELL:
What would it be?
PRIME MINISTER:
Well the latest advice we have is fewer than 100.
MITCHELL:
And you have guaranteed they’ll get their money back?
PRIME MINISTER:
Absolutely. The only deduction that would be made from that money would be under the arrangement, the $4,000 that would be payable. At no stage, even under the accommodation bond system was it ever intended that people should not get all of their money back less the annual payments of $2,600. There was a lot of scare talk. It is very easy to scare old people, and, of course, the Labor Party played a hard political game on this.
MITCHELL:
You were sending letters to them asking if they had any cash or gold bullion under the bed.
PRIME MINISTER:
I’m sorry..
MITCHELL:
You were sending letters to them asking if they had any cash or gold bullion under the bed. It was pretty scary stuff?
PRIME MINISTER:
Yes, but with respect, any kind of means or income tested welfare arrangement involves asking people about their assets. Can I just make one other point to your listeners. Even after the $4,000 a year capital contribution the government, the general taxpayer will still be paying 70 per cent, I repeat 70 per cent of the cost of keeping somebody in a nursing home. And we are an aging population, we want to provide better facilities in nursing homes, we want to give people more comfort and more dignity in nursing homes. Now you have to get the money from somewhere, you either increase taxation or you say to people who can afford to do so, we would like you and your family to make a contribution. Now I don’t think that is unreasonable.
MITCHELL:
Mr Howard do you think your leadership style has changed in the time you have been Prime Minister?
PRIME MINISTER:
I guess it has. I haven’t really stopped to analyse how.
MITCHELL:
There has been no conscious attempt, perhaps in recent months to say: we will toughen up?
PRIME MINISTER:
No.
MITCHELL:
Have you been surprised by some of the criticism? Some of it comes from within your own party about a feeling the Government is wandering or you are not being firm enough?
PRIME MINISTER:
Modern politics is very volatile particularly when you don’t control both Houses of Parliament. People are less attached, less rusted on to political parties these days. There are a lot more people sloshing around in the middle and politics is a lot less tribal, a bit less ideological. And you have to expect criticism, you have to expect more peaks and troughs in modern politics than used to be the case.
MITCHELL:
But do you think you are tough, do you think you are decisive?
PRIME MINISTER:
I just try to do the right thing by the Australian people. I think if you spend your time worrying about style as distinct from worrying about the quality of decisions and what is good for the future of Australia, then you make bad decisions. What should drive your decision is the answer to the question: what is best for the Australian people? I mean that is my responsibility above everything else, is to try and deliver good outcomes. We have taken some decisions that are on individual analysis, unpopular but we have delivered strong foundations for the Australian economy. And we have been able to weather this international financial storm far, far better than most other countries, that is because we have got strong economic foundations.
MITCHELL:
But is there a perception that Australia is perhaps not being led in a strong fashion?
PRIME MINISTER:
All of these things Neil, different people have different views on and they will decide at the next election. I am not going to spend my time between now and the next election fretting about views about style, I am going to spend my time worrying about the future of Australia, strengthening those already very strong economic foundations. We were able to help countries in our region recently, and we were able to do that because we are strong.
MITCHELL:
So you continue to listen to the criticism, you continue to listen when people shout, as with nursing homes, and will you continue to change if necessary?
PRIME MINISTER:
My guiding principle will always be what I think is best for the Australian public and occasionally you will have to adjust policy. This idea that it is strong and tough and robust and virile never, ever, ever to change your mind is ridiculous. I think I may have said to an interviewer a few days ago that: what is more important: taking the right decision or being able to say to your biographer I never changed my mind? That is a sign of weakness and stubbornness never to change your mind.
MITCHELL:
But isn’t there a feeling from people, and we have seen it specifically here in Victoria, quite a change. Isn’t there a feeling people want to be led?
PRIME MINISTER:
I think people want their leaders to be open, forthright, conscientious and to do the right things, to always state their mind, but always be indicating where a debate ought to go. I mean the republican issue is a good example. I am not frightened to tell the Australian people, even though the majority in polls show that people want Australia to become a republic although they haven’t decided what form, I don’t mind telling people what my own view is. But equally my responsibility is to guide and facilitate that debate so that we get a rational outcome.
MITCHELL:
Jeff Kennett has been very supportive of you publicly lately. Would you like him in Canberra?
PRIME MINISTER:
Well if he wanted to come, yes. But he has indicated that he doesn’t want to. And I think he is doing and extraordinarily good job here. Very, very good.
MITCHELL:
One of the things he has been talking about lately is the health crisis. Is there a chance of more federal money going into health, because we have got a lot of problems there?
PRIME MINISTER:
We are considering that at the moment. I have got to say in defence of the Federal Government that if you look at the funding patterns of the States collectively and the Federal Government, our contributions have gone up and in a number of areas the State contributions have gone down. So this idea that every time there is a health problem in a State it is the fault of the Federal Government is not true based on the facts. If you look at the funding patterns of the last few years, you see the Federal one going up and the average State one going down.
MITCHELL:
What has gone wrong? I get people calling me all the time with problems?
PRIME MINISTER:
We have a divided responsibility. We have thousands of people leaving private health insurance which is putting an added strain on the public system. And it is a great pity that the former Labor Government didn’t take Graham Richardson’s advice when he said in 1990 that if the number of people in private health insurance falls below 40 per cent you lose the critical mass. Our tax incentives have helped but it would have been a good idea if they had been introduced years ago when Labor was in power.
MITCHELL:
The cricketers are meeting the ACB today, you wouldn’t get involved in that to avoid a strike, would you?
PRIME MINISTER:
I would hate to see a cricket strike. I hope the whole thing is rationally worked out under our new industrial relations system. Everyone knows my passion for cricket, I hope that any thought of a strike is put far from peoples’ minds, particularly after a very good first Test.
MITCHELL:
You might be available to mediate if necessary?
PRIME MINISTER:
I have to say that the philosophy of the Industrial Relations Act is for the parties to sort things out, but maybe cricket is a special case.
MITCHELL:
Mr Howard, how long would you like to be Prime Minister?
PRIME MINISTER:
As long as the Australian people want me.
MITCHELL:
But what about you personally?
PRIME MINISTER:
I haven’t had any thoughts about retirement. I am 58, I am in very good health, I have only been Prime Minister since March of last year. I certainly look forward to a number of years ahead, just exactly when I don’t know. It is obviously a bit of a buzz to think you might be around at the time of the Centenary of Federation. But the important thing is to do the job well not the length of time you are there. I know people who have been in office for a long time who have done nothing.
MITCHELL:
Are you going to win the next election?
PRIME MINISTER:
Yes.
MITCHELL:
And the one after?
PRIME MINISTER:
That is a bit further ahead, but ultimately the public will judge that.
MITCHELL:
Is it going to be a bigger fight than you expected, this next one though?
PRIME MINISTER:
No. I always thought it would be. The first party meeting I had after I was elected I told my very large, new backbench that they should never take the public for granted, that it was volatile and they shouldn’t assume that the big swing we got couldn’t go in the other direction. Because we are living in a very volatile time. And I do know this, that in order to get re-elected you can’t just re-run what you ran in 1996.
MITCHELL:
And that backbench still supports you?
PRIME MINISTER:
Yes.
MITCHELL:
Overwhelmingly?
PRIME MINISTER:
I don’t know, I haven’t done a poll.
MITCHELL:
Don’t need to?
PRIME MINISTER:
No.
MITCHELL:
Thank you very much for your time.
[Ends]