CORDEAUX:
Prime Minister, good morning.
PRIME MINISTER:
Good morning, Jeremy.
CORDEAUX:
Thank you for joining us.
PRIME MINISTER:
It's a pleasure.
CORDEAUX:
First up, maybe you could give me an overview of your impression
of the economic scene at the moment. The Wall Street...the Dow
Jones has gone down another few
per cent, I guess it's about 10 per cent in all. They're
talking about a third-wave Asian crisis. We're looking at a
slump on our own stockmarket. The dollar is down. The Yen is down.
What do you feel?
PRIME MINISTER:
There's been some volatility on the financial markets for
some time now. I wouldn't be overly pessimistic about it. What's
happening in Asia is obviously of medium and long-term significance.
But thus far Australia has held up pretty well and we've been
able to protect ourselves largely because of the measures the Government
took when it came to office two years ago. And we have, in fact,
done even better in protecting ourselves than we thought because
we've got the budget back into surplus a year ahead of schedule
and that has resulted in lower interest rates and lower inflation
and a more positive view around the world about the Australian economy.
I never talk about the day-to-day level of the dollar. I haven't
in the past and I won't in the future. So far as the stockmarket
is concerned, it does bounce around. The underlying position of
stock exchanges around the world in recent years has been very strong
indeed. The American economy is still remarkably strong. It is historically
strong. It's got very low inflation. It's got virtually
full employment. It's got very strong growth. The budget has
come back pretty close to balance. So I'm pretty optimistic
about the American economy. More needs to be done in Japan. The
new Japanese government does need to tackle some of the more deep-seeded
structural problems of the Japanese economy, the sort of problems
that we have tackled and the Americans and others have tackled.
And Asian revival, to some extent, does depend on what the Japanese
do.
CORDEAUX:
Yeah, well, it doesn't look like they're getting the
thumbs-up in Japan. I guess it's only a situation that we can
watch. It's not a bad range of things that have come out this
week in advance of the tax package. That Productivity Commission
report, when it sort of looks at the amount that we sort of tie
business up with, I think it's about $23 billion worth of burden
through indirect taxes.
PRIME MINISTER:
What that report does is reveal, yet again, just how many hidden
taxes exist in the present tax system. The critics of a goods and
services tax say that we will be adding a tax by its introduction.
What they neglect to point out is that if you bring in a GST you
have a capacity to get rid of a whole lot of hidden, embedded taxes,
all of which add to the cost of manufacturing and exporting goods
out of this country, all of which make Australia a less competitive
country. And that Productivity Commission report has made the point,
yet again, that the present system is holding Australia back on
world markets. And that is one of the major reasons why we intend
to change the present system because it is retarding Australia's
economic growth, it is holding Australia back, it is denying Australia
export markets it would otherwise win.
CORDEAUX:
You're gearing up to sell this. It seems to me to be something
that everybody should buy. When you look at these figures that are
in front of me right now scrapping the wholesales sales tax
and cutting the fuel excise by four cents a litre would save manufacturing
$6 billion and the total economy $22 billion. Who's going to
argue against that?
PRIME MINISTER:
Jeremy, without going into specifics, there is no argument at all
that the plan I will unveil tomorrow will reduce business cost in
Australia. The plan to be unveiled tomorrow will create more jobs,
it will make our exports more competitive, it will give Australian
businesses a sharper, competitive edge.
CORDEAUX:
The budget surplus was a handy thing to have out at this time as
well. Although, I think this morning there are some people who believe
we should be slashing red ink around, not black ink.
PRIME MINISTER:
Well, Jeremy, the great virtue of being in balance is that you
are no longer paying dead money by way of interest on debt.
CORDEAUX:
Yes.
PRIME MINISTER:
And you know what you do with that money you'd otherwise pay
on debt. You use it to provide better services. I was able to make
some more money available to the States for the public hospital
system - $915 million over five years. Now, one of the reasons that
we were able to do that was that we were in a stronger financial
position. And this idea that somehow or other it's good to
be paying off debt, it's good to be spending your money on
servicing debt, is a very, very negative, backward-looking view.
I want to free this country of debt so that instead of spending
a whole lot of money on interest you can spend that money on lower
taxes or better services.
CORDEAUX:
Now, you no doubt this morning would have seen the report that
the Medicare levy is about to be axed. Will you comment on that?
PRIME MINISTER:
No. I won't comment on any of it. I mean, I have enjoyed reading
the papers over the last week. I have enjoyed reading the papers
immensely. And the full measure of what we have in store will be
unveiled tomorrow. Let me say, I have enjoyed reading the papers.
CORDEAUX:
Good Newspoll, a bad Morgan Poll for the Government. I don't
know, I guess it depends on which poll you want to read.
PRIME MINISTER:
Well, polls are there all the time. We have a plan. The Australian
public will make a judgement on that plan when it's released.
They will see a comparison. We have a plan for the future. The Labor
Party says no to everything. One Nation says no to everything and
blames everybody for everything. So you do have a fairly sharp comparison
between a Coalition which has got a vision and a plan for the future
and a Labor Party and One Nation who simply say no or blame other
people.
CORDEAUX:
Prime Minister, it seems that the biggest problem, according to
this Morgan Poll which is out in the Bulletin today, some
85 per cent of voters are concerned that a GST will increase above
the anticipated 10 per cent. Now, you've said that you're
going to put a mechanism in place to prevent that. What sort of
mechanism could that be?
PRIME MINISTER:
Well, it will be a very effective mechanism. I can't announce
it this morning. It will be in the plan when it's unveiled
tomorrow. But it will be a very convincing mechanism.
CORDEAUX:
Would you agree that that really is the key?
PRIME MINISTER:
No, look, the key is whether Australians believe that the plan
will make Australia a better and a stronger country. It will and
if the Australian public believes that and they regard the plan
and the changes involving the plan as being fair, then I believe
they will support it because Australians are fair-minded, altruistic
people. They do care about the future of Australia. They do care
about the security of the world in which their children will grow
up. And if they believe the Government is going to produce a plan
that will strengthen Australia and they're satisfied it's
fair to them, they'll support it.
Now, the mechanism to embed, to entrench, to lock-in the rate to
be announced tomorrow will be a very persuasive and convincing mechanism.
I don't think there will be a more persuasive or convincing
mechanism imaginable.
CORDEAUX:
Now, I think you have said, or you have been reported to have said,
that there will be something in there for everybody, everybody is
going to be a winner.
PRIME MINISTER:
Well, tax cheats won't win but overall it will benefit the
entire community. There will be a collective benefit for the nation
because the changes we have in mind are so fundamental that they
will help the Australian economy grow at a faster rate. They will
make Australian exporters and producers more competitive. There
will be, as a result, more jobs generated and there will be protection
for low-income, vulnerable people and there will certainly be personal
tax cuts and we made that very plain. And on each of the five principles
that I outlined a year ago for taxation reform, we will be seen
to have very comprehensively delivered.
CORDEAUX:
What do you do, though, if you go to the election with this package
and you get returned and the Senate - and who knows what the Senate
is going to look like after the next election - and the Senate stymie
it? Don't they have to accept it as a mandate?
PRIME MINISTER:
Well, ultimately these are matters for the Australian public. I
will take one thing at a time. I am going to reveal the plan tomorrow.
Whenever the election is held we will seek a mandate to implement
not only our taxation reform plan but a number of other things.
And I would have thought that if the Australian public were to return
us at the next election then there would be a very strong, moral,
political obligation on those in the Senate to let measures that
we have plainly put in front of the Australian people through. And
I am optimistic enough to believe in the end that will occur.
CORDEAUX:
What are the other things you just mentioned?
PRIME MINISTER:
Oh well, we won't just be talking about taxation. We will
be reminding people that interest rates are at their lowest level
for 30 years. We will remind people that we converted Mr Beazley's
deficit of $10.5 billion into a surplus in only two years. We will
talk about the highest level of business investment on record. We
will remind people that Australia has the lowest inflation rate
in the western world. We will remind the Australian public we fixed
the native title mess; that I am the first Prime Minister to actually
deliver on commitments made almost since Federation to build the
Darwin-to-Alice Springs railway. And in the context of that we will
be introducing special legislation to secure the land corridor through
the Northern Territory for that railway and that was announced in
Darwin a few days ago. So we will have a lot of things to talk about.
We will also be talking about a new State for a new century - the
decision I announced yesterday that the Northern Territory will
join the Federation on the 1st of January in the year
2001, the Centenary of the Federation of the Australian States.
CORDEAUX:
How would you feel about the effects that that might have on the
make-up of the Senate?
PRIME MINISTER:
Well, we haven't decided yet. One proposal is that you could
increase the two Senators from the Territory to three and then have
an adjustment as the population grows. We are not wedded to that.
You obviously can't have 12.
CORDEAUX:
No, but you know that the profile of the Aboriginals and Territorian
is pretty similar to the Queenslander and you know what that could
mean in terms of political consequences?
PRIME MINISTER:
They are all Australians, Jeremy.
CORDEAUX:
Yes, I know but some are more conservative than others.
PRIME MINISTER:
Well, they are all Australians. And the Northern Territory has
returned federal Labor members in the House of Representatives.
And in a time that I have been in Federal Parliament, which is 24
years, I think, on a rough count, you have had an equal number of
representatives from both sides. I can remember Sam Calder representing
it for the Country Party and then you had somebody called Reeves
for the Labor Party and you had a Snowdon for the Labor Party. You
have now got Nick Dondas for the CLP and prior to that you had Paul
Everingham. So it has gone back and forth.
CORDEAUX:
Yes. They are arguing about the flag, what do you think should
be done there, and extra point?
PRIME MINISTER:
Well, I am not fussed about that. I don't think Shane Stone
is either and that is something that we'll just give consideration
to as time goes by.
CORDEAUX:
Well, what does it matter? Would it worry you personally if the
Euthanasia bill automatically, as I assume it would upon the Northern
Territory gaining Statehood, the Euthanasia bill being taken up
as law?
PRIME MINISTER:
Well, that's not a Government issue. That was a free vote
of the Federal Parliament. I personally am against euthanasia and
I voted in favour of the bill that went through Federal Parliament.
So that is my personal point of view as John Howard, private member.
As Prime Minister, I won't be pushing any particular point
of view on behalf of the Government in relation to that. And whether
or not the Northern Territory will have full authority in that area
is something that would be discussed as part of the negotiations
on the Constitution. I would expect that the Northern Territory
would, that if it is going to be a State then the criminal law of
the new State of the Northern Territory ought to be as amble as
the criminal law of the State of South Australia or Western Australia
or New South Wales. The other point you have got to bear in mind
about something like euthanasia is that the attitude of the Northern
Territory Parliament itself may have changed. And that you couldn't
assume that a measure of the type that was passed through the Northern
Territory Parliament several years ago will automatically get passed
through a Parliament of the State of the Northern Territory. But
I accept the possibility that in a constitution of the State of
the Northern Territory it would have power, without concern that
it would be overturned by Canberra, to pass a law of that kind,
just as the South Australian Parliament has got the power to do
that at the present time because it would be a State just like South
Australia. And you can't, on the one hand, say you believe
in Statehood but say, hang on, we are going to reserve this and
this and this and this because that's only truncated Statehood.
You are either for or against Statehood. I am personally against
euthanasia. I know that is not a view that the majority of the Australian
people hold but it is my personal view and there is no point in
beating about the bush on something like that where you have a personal
view.
CORDEAUX:
I have heard it said by more than one person and in more than one
place that after the election it might be necessary for the Liberals
to enter a coalition with the Nationals, obviously, if you want
to govern. Would you comment on, number one, whether or not you
might go into Coalition with One Nation or, as I have heard suggested,
with the Labor Party?
PRIME MINISTER:
Well, there is no way that I would contemplate a coalition with
either. We will go into coalition with the National Party. We will
not go into coalition with One Nation and we will not go into coalition
with the Labor Party.
CORDEAUX:
But even if One Nation is stronger and more popular than the National
Party whose views are clearly similar...
PRIME MINISTER:
We would still not go into coalition with them, I want to make
that very plain. And the Australian public and conservative voting
Australians should understand that the only party that the Liberal
Party will go into coalition with after the next election is the
National Party. I do not expect that the One Nation Party will hold
the balance of power in the House of Representatives. I think that
is an entirely hypothetical and unlikely proposition. But you asked
me the question, I give you the answer - the Liberal Party will
go into coalition with no party other than the National Party of
Australia.
CORDEAUX:
And those people who are absolutely hell-bent on destroying or
crushing One Nation suggest that if they are a strength after the
next election that it might be necessary for you to consider going
into a coalition with the Labor Party.
PRIME MINISTER:
Well, I don't, for a moment, contemplate doing that. I mean,
that is ridiculous.
CORDEAUX:
Well, I would have thought so.
PRIME MINISTER:
Well, I think the whole idea of a coalition between the Liberal
Party and the Labor Party - and bear in mind that on economic issues
the Labor Party and One Nation are virtually the same. They are
virtually the same. Both of them are against taxation reform. Both
of them want to back to the policies that would penalise Australian
exporters by encouraging retaliatory trade action by other countries.
They really have very similar economic policies.
But let's take a reality check on all of this. The idea that
the Labor Party and the Liberal Party would be in coalition because
of a bit of support for One Nation within the community, and I don't
know how strong that will be by the time of the election, is fanciful.
And, after all, there wasn't even a national government in
this country during World War II, although the then coalition parties,
conservative parties of the time, the Liberal Party of the UAP,
as it then was, and the Country Party wanted one, the Labor Party
was against it. So if the Labor Party was against a unified national
government during World War II, I find it rather fanciful that the
idea should be getting around from anybody that the two parties
would get together. Now, I think that is a gross overreaction to
what has occurred and I certainly don't see it happening.
CORDEAUX:
Prime Minister, can you justify completely, to yourself and to
everybody else, the spending $10 million of taxpayers money on promoting
the GST package?
PRIME MINISTER:
Yes, I can, on two grounds. Firstly, that we do have an obligation,
given the size of the change, to explain it. It is, taxation is,
no matter how simple you try and make it, it is inherently a bit
complicated. You do need to explain it. People are entitled to know
the changes as they affect them and some of the changes do require
some detailed explanation. And there are ample precedents in the
past for governments of both persuasions using public money to explain
changes.
Now, people are making assumptions that, you know, this is part
of some kind of continuum into an election campaign. I have not
decided when the election will be and anybody who thinks that there's
automatically going to be an election at a particular time following
a particular series of events are jumping to conclusions. The Labor
Party in five years spent $315 million - $315 million promoting
government campaigns. I can remember advertisements about Working
Nation' run by the actor, Bill Hunter.
CORDEAUX:
Yes, 300,000 they paid him for that.
PRIME MINISTER:
Enormous amount. Now, they were going on and all he was basically
saying was that One Nation was terrific. They weren't really
providing any information. Those ads weren't saying: this is
the benefit you will get, this is how it will affect you. But the
advertisements that we will be running will be providing factual
material. They will not be saying the Liberal Party is terrific
and the Labor Party is terrible. What they will be saying is that
this is how the plan affects you, this is the consequence of it,
this is how this particular section of the community or this particular
person is affected or influenced by the taxation plan. I justify
it absolutely.
CORDEAUX:
We've only got a couple of minutes before the news. But looking
at that surplus, that coming into surplus, what, 12 months earlier
and a tad over a billion dollars. Is it possible that you cut too
deep into those things that you wish to make savings on?
PRIME MINISTER:
No, it isn't. You've got to remember that the Federal
Government's looking at revenue of in the order of, what, 130/40/50
billion dollars and you can obviously have, because of an unexpected
surge of revenue or a bit of an under-spend here and there, you
can obviously end with a result which is about a billion dollars
different from the projection you made 12 months earlier. There's
nothing remarkable about that. If it had come in at $10 billion
then your question would have been valid, but it didn't. And
bear in mind that because of our slightly better position, it has
already been possible to do one or two things. But we're not
going to go on a spending spree. You could very easily next year
have a slight reverse of the situation. You could project a surplus
of x' and, through no miscalculation or bad management,
it could just come in a little under it. So whilst it is a very
pleasing result, it's an enormous tribute to the Government's
economic management. It doesn't mean that we have cut too hard.
CORDEAUX:
Well, with what is going on in the world around us I think it's
a wonderful thing.
PRIME MINISTER:
It's given Australia enormous protection against that Asian
storm.
CORDEAUX:
Just quickly, I see that Premier Kennett has said, in The
Age this morning, that he's urging voters not to punish
the Federal Government and to give you a fair go. Is that a bit
of a worry?
PRIME MINISTER:
Jeff's a very strong supporter of our reform programme and
I have no doubt that he will very strongly support the tax reform
plan....
CORDEAUX:
Well, he said that, he said that.
PRIME MINISTER:
Yes, and he's a great believer in tax reform and I've
briefed John Olsen about the details of the Commonwealth/State arrangements
and I have no doubt that the South Australian Government will support
the plan very strongly. In fact, the overall plan will be particularly
beneficial, for reasons you'll understand tomorrow, for South
Australia and South Australians.
CORDEAUX:
We've got to go. Thank you so much for your time.
PRIME MINISTER:
Pleasure.
[Ends]