E&OE...............................................
JOURNALIST:
Mr Howard, you got your surplus, but the dollar is still falling.
Is there no pleasing these financial markets?
PRIME MINISTER:
I think movements in the dollar are largely unrelated to that,
the immediate movements. I think long term though, financial markets
will give a huge tick to this Budget. I don't normally comment
on movements in the dollar and I certainly don't want to break
that rule on this occasion. In the long term though this is a really
classy Budget for the financial markets, because it is a genuine
surplus. The economic forecasts are full of integrity, there's
nothing overblown, they haven't been manipulated by the Prime
Minister's office the way in which in certain estimates, in
I think the One Nation statement of Mr Keating's were some
years ago. They are genuine Treasury estimates, very conservative,
and therefore they will give a lot of confidence to the financial
markets.
JOURNALIST:
But it's only actually going to last for a few weeks isn't
it? Because then you've got your tax package, Telstra social
bonus which will blow these figures away.
PRIME MINISTER:
Matt, the quality and the strength of this Budget will last for
years because what we have done is to achieve the most remarkable
and historic fiscal turnaround of any government since WWII. I mean,
to turn a deficit annually of $10.5 billion, into a surplus of $2.7
billion in two years is a phenomenal achievement and it will help
us lock in these low interest rates and low inflation rates. I mean
the lowest small business rates for 33 years, the lowest housing
rates for 30 years, 280 000 new jobs in two-and-quarter years. The
lowest inflation rate for 30 years, we can look the nations of the
Asia Pacific in the region and say we have got strong predictable
reliable growth. That is a tremendous economic report card.
JOURNALIST:
But we are still vulnerable to Asia though?
PRIME MINISTER:
Well just imagine where we would be if we had not done what we
have done over the last two years. Just imagine if we still had
Mr Beazley's black hole of $10.5 billion, if we'd taken
Labor's advice, and not cut the deficit. Just imagine where
Australia's economy would now be. We would be bobbing around
like a small cork on a very turbulent sea.
JOURNALIST:
What about the jobless figure, Mr Howard?
PRIME MINISTER:
They are better now than they have been for eight years.
JOURNALIST:
But are you happy with it, that's the question.
PRIME MINISTER:
Well look you can never be happy with a jobless figure while any
Australian who wants a job is out of work. I mean you never, you
should never rest on that, but we have created 280 000 new jobs
in just over two years. It is the lowest in eight years, I repeat,
the lowest in eight years. It reached 11.2% when Mr Beazley was
the Employment Minister, we now have it at 7.9%.
JOURNALIST:
Where it will stay?
PRIME MINISTER:
I beg your pardon?
JOURNALIST:
Where it is likely to stay?
PRIME MINISTER:
Well, I'm not as pessimistic as that. We've put a conservative
figure in, which says that you'll be down to about 7.75% by
the end of the coming financial year. We'd like to see it better.
I can guarantee that we'll follow the policies that will deliver
the best prospect of it getting better but it is better now than
what it was, measurably better than what it was when we came to
office.
JOURNALIST:
Mr Howard, let's take some calls. Well, Prime Minister, it
looks like we have a full board of calls. The first call goes to
Richard Coole from Condingup in Western Australia.
CALLER:
Good morning Prime Minister.
PRIME MINISTER:
Good morning Richard.
CALLER:
As a farmer, I would like to congratulate you on your surplus budget
but without trade surpluses as well, Budget surpluses in my opinion
result in an inward looking, contractionary type economy. Having
just returned from China, where there is a $46 billion textile industry,
and where our total wool exports are worth a mere $2.5 billion,
surely your Government can help us perhaps with some innovative
thinking, be a part of the Chinese action.
PRIME MINISTER:
Well, I think we've done a lot of that already. Our economic
relationship with China now is stronger than it has been for the
last three or four years. In fact, in the last two years, the improvement
in economic and political relations between Australia and China
has been one of the greater foreign policy successes of my Government
and the economic linkages between the two countries, the fact that
I understand China invests more in Australia than most other countries,
the fact that we have just seen one of our major life insurance
companies win a licence to do business in China and the fact that
when I was in Shanghai and Beijing last year, I had one of the largest
business delegations ever to visit that country and certainly the
largest ever to accompany an Australian Prime Minister. All of that
is evidence of the fact that our economic and business links with
China are growing very strongly. It's a market of $1.2 billion,
and we have followed a very pragmatic mix of economics and politics
in order to build the sort of relationship with China that I think
your question suggests.
JOURNALIST:
Okay Prime Minister can we move onto Darwin now. We have Mick on
the line.
CALLER::
Good morning Mr Howard. I have a question which was mentioned last
night by Mr Costello in his speech, reference the commitment that
the Australian soldiers had made to the country and now it was about
time that the Australian country repaid it to the servicemen in
issuing the Gold Card. Why does this not include Vietnam Veterans?
PRIME MINISTER:
Well, what we've done is in relation to WWII veterans is we've
applied the same approach that we applied in relation to WWI veterans,
that is about 55 years after the end of the hostilities. Obviously
I can say right now that Korean and Vietnam veterans will be treated
at least as generously as WWI and WWII veterans. It may turn out
in the fullness of time to be even more than that, but I'm
not promising that. I would remind you of course that any veteran
from Korea or Vietnam who has any war related disability is already
getting the benefit of the Gold Card. I mean, this extension that
was announced last night was for about 50 000 veterans of WWII who
are not now enjoying the benefits of the Gold Card, in other words,
are not now judged to have a war related disability but who saw
active service in hostile circumstances overseas in WWII. So, I
think there are already 180 000 or perhaps 170 000 WWII veterans
who have the Gold Card because of a War related disability. We are
including it now for another 50 000 who don't have any war
related disability but nonetheless saw active service abroad and
I can assure you that Vietnam and Korean Veterans will be treated
at least as generously as we treated WWI and WWII Veterans.
JOURNALIST:
A call from Queensland now. Mr N Williams, from Tewantin.
CALLER:
Mr Howard, good morning, and thanks for the chance to speak to
you. First, congratulations on the surplus, it is wonderful. I hate
paying rent and I hate us paying interest. But the question I had
was, I agree with your fact that the tax system is presently not
fair, your comment I know. Please could your staff look at a debits
tax, which really does seem to be fair right across the board?
PRIME MINISTER:
Well, there was a brief examination of that by a former Coalition
Government. Can I say it won't work. If it did work it would
have been introduced in many other countries. It will distort the
whole financial system, it will impose unreasonable burdens on some
sections of the community and no burdens on others. It does not
properly measure economic activity so that you can have a fair tax
base. It is my understanding that it was briefly tried in one country
about 30 years ago, namely Sri Lanka and then abandoned. So, it
has been looked at in the past and I'm sorry Mr Williams, it
doesn't work.
JOURNALIST:
Prime Minister our next caller is from NSW. His name is Matt. He
says he is the President of the NSW Young ALP.
CALLER:
Good morning Prime Minister.
PRIME MINISTER:
Good morning Matt. Two Matts in a morning.
CALLER:
As a young Australian in constant contact with a lot of youth organisations
and student groups, I must say that for young Australians I think
last night's federal budget was a major disappointment, and
my question to you is why has your Government failed to throw a
life line to young Australians, and ease their suffering after two
years of successive cuts to services and programmes when you ...(inaudible)...
with a $2.7 billion surplus?
PRIME MINISTER:
Well, I don't accept that, and I appreciate the fact that
you are honest enough to disclose your political affiliation. But,
can I just say something about the surplus. Surpluses don't
just sit there. Surpluses when built up, are used to repay previously
accumulated debt and what we are doing this year is that we are
going to collect a $2.7 billion more than we spend, but that's
not going to go mouldy in the Treasurer's bank. What it's
going to do is be used to repay the $95 billion of deficits that
the previous Labor Government ran up in the early years of the nineties.
And every time you pay a dollar off the country's debt, you
further entrench low inflation and low interest rates. And you talk
about young people. Young people want jobs, in time they may want
to buy homes and have families, and if you provide better business
conditions and if you have low inflation and low interest rates,
small business will do more and employ more people. And also if
you have low interest rates, you will make it easier for young people
to buy homes. We have made changes to the education system. I think
the changes we've made at a tertiary level have made the system
fairer. I might also point out that in the changes that we've
made to Commonwealth spending, we deliberately quarantine from any
spending cuts at all, the support the Federal Government gives to
schools in Australia. I remember when we had our discussion on education
right at the beginning of the ERC proceedings two years ago, and
I said from the very start, I'm not going to have any reductions
in the basic recurrent funding that we give to schools, both the
Government schools and also what I might call the more modest independent
schools particularly in the, but not only in the Catholic sector.
Now, I think given all the constraints that we faced as a Government,
we have been very fair and very reasonable in the changes we've
made and the beauty of being back in the black is that there are
limitless possibilities opened up for the future. When you've
paid off the mortgage you can turn your horizons to something else,
something more creative, something more innovative, something more
for the future, both in terms of a reformed taxation system and
also other creative areas of social spending.
JOURNALIST:
Prime Minister we could move I think now to South Australia. We
have Dean Dowling from Glenelg East on the line.
CALLER:
Right, okay, look when we had 35+ years of Federal Budget deficits
since the war, to whom does the - two questions I've got -
to whom does the Government owe the apparent debts and when must
the apparent debts be repaid? The second question is, now you've
got a budget surplus, in which bank are you going to put the surplus
and at what rate of interest? Is the answer to the first question,
no money was ever paid to anyone, they were just left as figures
in the budget papers. Nothing was borrowed.
PRIME MINISTER:
Okay, are you finished?
CALLER:
Yes.
PRIME MINISTER:
Well, what happens when you accumulate, accrue a surplus is that
the Commonwealth Government borrows the money, it borrows the money
from individuals, it borrows the money sometimes domestically, sometimes
overseas to make up the shortfall, and when it borrows the money
it issues bonds and those bonds carry an interest rate and you've
got to pay interest on the borrowing and eventually when the bonds
fall due you've got to redeem the loan from the individual,
and so when we get a surplus, we use that to repay previously incurred
debt, and the beauty of what has happened over the last two years
is that in 1995 about 20% of our GDP, our debt to GDP ratio is about
20%. By the turn of the century it will be down to 10% and if we
go ahead with, which we intend to, the sale of the remaining part
of Telstra it could be down to 1.5%. Now that will lift an enormous
load off the shoulders, off the back, and off the worrying minds
of all Australians because we'll be able to breathe easily
in the next millennium, because we'll enter it essentially
debt free.
JOURNALIST:
Prime Minister, a call now from Patrick Morrisey of Federal in
NSW.
CALLER:
Good morning Mr Howard. I'd like to ask how can the Government
ensure the tax rebates given to farmers for soil conservation actually
facilitate more sustainable land use rather than propping up unsustainable
enterprises?
PRIME MINISTER:
Well, I believe in the main, the rebate will be used in that way.
It will be subject to appropriate criteria when the legislation
is drawn up. Whenever you give a tax rebate, people say, well how
can you be certain that it is used in the right way, but my experience
in relation to those sorts of rebates in the past is that they are
used effectively and certainly there's a very strong grass
roots support for landcare in the Australian community. I went to
the annual landcare awards ceremony in Canberra a few weeks ago
and I was tremendously impressed about the community based character
of the movement and it's one of those things that's brought
together farmers, conservationists, community leaders, people right
across the political and social spectrum because they all have a
vested future interest in restoration of the quality of our land.
JOURNALIST:
A call from Sydney now. Bill of Kensington.
CALLER:
Good morning Mr Howard. Hello?
PRIME MINISTER:
Good morning Bill.
CALLER:
Good morning. Thank you very much for putting us in the black again.
It's been a long time coming, and thank you for that. I just
want to ask you quite a simple question. Why can't we make
contributions to health funds tax deductible like they were in the
70s, again ensure against a gap, which Bob Hawke took off, and then,
if this is attractive to people, and I'm sure a lot more people
would be attracted to the funds.
PRIME MINISTER:
Well, you can. It's a question of whether the resources needed
to do it are available. We already of course do have a tax break.
If you are earning under about $70 000 a year and you've got
a family, you get $450 a year off your health insurance. For a couple
it's $250 a year, and that normally, but not only, is taken
as a tax break. What you are recommending is that we go further,
and that we really increase the generosity of that tax deduction.
Now, that is something that has to be set off against other calls
that might be made on the resources that would be involved in that
extension, and whether the use of those resources in some other
way to support private health insurance, or support the health system
would be more desirable. The gap is something that is under fairly
constant debate. I understand the argument and I do know that it
is an irritant to people who have private health insurance that
they can't insure against the gap. I also know that it is an
irritant that they, if somebody goes into hospital they not only
have their private health insurance cover but they also then get
some bills on top of that, and they think in a sense that they've
paid three times. They've paid the Medicare levy, they've
paid their private health contribution, and then they've got
to pay some bills. Now, moves are already under way to try and eliminate
that irritant of getting bills on top of, or getting a series of
bills. I think it is fair of me to say to you Bill, that improving
the health system and improving the attractiveness of the health
system is something that is always on the Government's action
agenda. You never close the book on health policy. I've not
known a Government in Australia in the last 25 years, that's
sort of closed the book on health policy and said well, no further
changes are needed. It's a very important, very sensitive area
of Government policy. With all its faults, the Australian health
system is more economical and of a higher quality than any in the
Western world, and conversations with Canadians and people from
Britain and people from the United States will remind you of that.
I had a conversation with such a group only a few days ago on the
subject of health systems and with all the criticism that is made
of ours, we have an infinitely better and more economically run
system and a higher quality of health care delivery than most countries
in the world.
JOURNALIST:
But Prime Minister, Matt Peacock here, if I could just add to that,
isn't the private health insurance scheme still running down.
I mean the trend is still there.
PRIME MINISTER:
It is lower than we would like. It would have been much worse if
we had not provided the tax rebates that we have provided. The haemorrhaging
has been certainly slowed down, we would want to see the impact
of the high income tax surcharge. I think there are a lot of people
in the, for couples over $100 000 a year bracket still don't
realise that if you don't have private health insurance, then
you pay another one percent on the Medicare levy and when that really
bites in, and I don't think that will be until people start
filling in their tax returns after the 30th June this year, there
will be I am sure a new influx of people into private health insurance.
Matt, it is not satisfactory. It is better than it would have been
if we hadn't have acted. It should have been fixed six or eight
years ago when Graham Richardson as Labor's Health Minister
said, once you get below about 40% you start to have a problem.
And he wanted something like we did, done then, and the Labor Government
refused to do it. Matt, it is something that remains under constant
review.
JOURNALIST:
Prime Minister, we have a few more listeners in. We have Rachel
from Yallunda in South Australia on the line.
CALLER:
Good morning Mr Prime Minister.
PRIME MINISTER:
Good morning Rachel.
CALLER:
Good morning. Regarding the Gold Cards for WWII veterans. Is this
only for men and women returned from active service?
PRIME MINISTER:
At this stage...I'm sorry, at this stage yes it is. It's
people who were, who faced the description is - hostilities on active
service.
CALLER:
Another call from South Australia, Prime Minister. Andrew, from
Adelaide.
CALLER:
Hello Mr Howard. I was just wondering why, with all the reductions
in the Federal Public Service, why there hasn't been the same
reductions to the number of politicians because they wouldn't
have the workload that they once had, because of the reduction in
the amount of people they are supervising?
PRIME MINISTER:
Well, you don't measure the responsibilities of Government
according to the number of people on the Government pay roll. You
measure the responsibilities of Government according to a whole
range of things. But don't blame me, I voted against an increase
in the size of the Federal Parliament back in 1983. The Liberal
Party voted against the increase from 124 House of Representatives
members to 148, and we also voted against increasing the size of
the Senate from 64 or 62 as it then was, to 76 and can you say,
I think it was a great shame and I say this with some feeling given
the voting system in the Senate, I think it was an enormous shame
that the size of the Parliament was increased back in 1983 and that
was done by the Hawke Labor Government just after it was elected
without having told the Australian public that it was going to do
it and I'm very proud to say that as Deputy Leader of the Liberal
Party at that stage, Andrew Peacock was Leader, we fought against
that increase and we voted against it. So don't blame me, I
voted for a smaller number of politicians.
JOURNALIST:
Prime Minister, we won't blame you. We are out of time, thank
you very much for coming in this morning.
PRIME MINISTER:
Okay. Thanks.