MITCHELL:
Australia, you are in the blocks. Peter Costello has given you
the pre-race massage. The warm up has been completed and you are
waiting for the Prime Minister to fire the starter's pistol.
It has now been made obvious, if you run through to an election
in July or August and you elect John Howard's Government, there's
a pot of gold. On the line, the Prime Minister. Good morning Mr
Howard.
PRIME MINISTER:
Good morning Neil.
MITCHELL:
You disagree with that interpretation?
PRIME MINISTER:
Well I wouldn't describe it as a pot of gold but what I would
say is that we have given Australia the most secure economic foundation
for a quarter of a century. If we hadn't done what we've
done over the last two years with what has happened in Asia the
Australian economy would now be a lot weaker. And if there is a
change of Government the low interest rates, that are a product
of our hard work, will be put at risk. So that is how I would describe
it.
MITCHELL:
But isn't the pot of gold the tax cuts?
PRIME MINISTER:
We are going to cut income tax as part of our personal tax package
and that was always our intention. And we'll be introducing
taxation reform off the back of a very strong economy and off the,
I guess, the healthiest Budget outlook that this country has had
for more than 20 years. Because there is nothing phoney about the
economic forecast in the Budget. Nobody will be able to say that
we have exaggerated growth. In fact, some people think our growth
figure is very conservative indeed.
MITCHELL:
I'd like to get to those figures in a moment if I may but
have you told your party room that the election could be any time
after the end of June?
PRIME MINISTER:
Yes I have. Now that doesn't mean its going to be soon after
the 30th of June, that's the normal precautionary message that
a Prime Minister gives at the beginning of this sort of Parliamentary
session Neil.
MITCHELL:
Have you decided when.......
PRIME MINISTER:
No I haven't. I can honestly say to you that I haven't
decided when the election will be. I know it's your job to
keep asking me. I can't be any more helpful than to say that
I don't yet know when the election will be.
MITCHELL:
Obviously you'd have a few options in your mind wouldn't
you?
PRIME MINISTER:
Well there are a series of options. If there is to be a double
dissolution, then the Parliament has got to be dissolved by the
29th of October and the election held in practice four or five weeks
after that. If there is not a double dissolution then the Parliament
can run on until March or April of next year which would be the
third anniversary of the election of my Government.
MITCHELL:
Presumably a double dissolution is preferable though isn't
it?
PRIME MINISTER:
Well if you want to get the blocked legislation through at a joint
sitting, yes.
MITCHELL:
And you want to do that, therefore the most likely possibility
is an election this year.
PRIME MINISTER:
Well, that is one of the options Neil. I am not trying to be evasive.
I don't want to mislead anybody. I honestly have not decided.
MITCHELL:
What will influence you on when you call an election?
PRIME MINISTER:
Well, you always want to go at the right time.
MITCHELL:
You want to win.
PRIME MINISTER:
Well, of course I want to win. I mean I am not ashamed to say that.
The reason I want to win is that I think I can deliver better Government
than my opponent and I'm not shy about saying that and I don't
think anybody would believe me if I said otherwise and they'd
be entitled to disbelieve me if......
MITCHELL:
Fair enough, but do you reckon you'd win at the moment?
PRIME MINISTER:
Yes I do.
MITCHELL:
Do you think you'd win next year?
PRIME MINISTER:
Yes I do.
MITCHELL:
Do you think the Asian crisis, which is one of the issues raised
in the Budget, is going to affect the economy to the point that
it will make it more difficult to win next year.
PRIME MINISTER:
I don't think it does and saying that I think I would win,
I am not complacent. I think it'll be hard and the public is
entitled to run over what we've done and run over what the
alternative offering is an make a decision. But as far as Asia is
concerned, the message simply is, that if we hadn't of got
the Budget in order, we'd be in a real mess now.
MITCHELL:
Is it fair to say, that there's not [inaudible] the next election
will be a tax based election? It will be a fight about tax, tax
policy.
PRIME MINISTER:
That will be a big issue, yes. I think industrial relations reform
will also be part of it. I think people will make a judgement about
whether they want a reformed waterfront or whether they want the
rorts of the past but tax will be a very big issue. But also people
will ask themselves what's the reason for putting Labor back?
I mean they threw Labor out resoundingly less than three years ago.
Since then their interest rates have come down and the country is
back in the black. We've weathered the worst effects of the
Asian economic turmoil and on top of that, we've got the guts
to reform the Australian taxation system. They've got to ask
themselves what earthly incentive is there for putting Labor back
because you'd only get more of the same. And those interest
rates that have come down so much would go up again.
MITCHELL:
Well if tax is the issue, and I agree with you it is likely to
be. The Treasurer last night was making the point the tax system
is awful, that's it's almost ripping people off. Do you
agree with that?
PRIME MINISTER:
It's very unfair. Well look at all those disparate sales taxes.
For example, and the high rates of marginal tax and one of the advantages
of tax reform is that you do have the opportunity to reduce some
of the cheating that occurs under the present system.
MITCHELL:
Well isn't it best to fix that as soon as possible?
PRIME MINISTER:
Yes.
MITCHELL:
And is your package ready?
PRIME MINISTER:
Well, we've done a lot of work on it. It's not ready
for release yet and there is still some more work to be done. And
now that the Budget is out of the way, we can turn our attention,
with even greater intensity, to the preparation of the package.
But Neil, it's well advanced. We've got a very good idea
of the broad architecture, if I can borrow that overworked expression
in economic matters, but we've still got some work to do.
MITCHELL:
I guess that's part of the point I'm making, is it needs
to be done quickly. Isn't it best to get an election, get it
over and done with and get on with things?
PRIME MINISTER:
It is, but you've got to get it right. And it's a very
big change. This will be the biggest change to the Australian taxation
system in 80 years. So we better be certain that we've got
it right. Other people have tried this reform in the past and not
been successful. We don't intend to repeat that failure because
we think the Australian economy desperately needs a new taxation
system. And the fact that we've been able to get the country
back in the black and we've been able to turn around a $10.5
billion deficit into a $2.7 billion surplus will give the Australian
people a lot of confidence that we have a competent Government in
charge of the economy.
MITCHELL:
If you go to an election in the next year obviously, and you are
re-elected, how quickly can tax reform be implemented? If your package
is accepted by the people when do they actually see the benefits
in the tax they are paying?
PRIME MINISTER:
Well all I can say in answer to that at the moment Neil is that
it will be implemented as soon as feasible. I can't say any
more than that. As soon as humanly possible. But these things do
take a lot of preparation and they do involve a lot of change but
I would not see any sense at all in delaying it a month longer than
was absolutely essential.
MITCHELL:
There is going to be a few problems in the months ahead when we
talk about Asia, we talk about unemployment.....
PRIME MINISTER:
Well unemployment, of course, is better now than it's been
for eight years.
MITCHELL:
It's not good enough is it?
PRIME MINISTER:
No, it's not good enough and you never rest. I mean when people
say to me, are you satisfied with the unemployment rate. The answer
is always no, but I can say that we've created 280,000 new
jobs in just over two years. We do have the lowest rate for eight
years and we've created more full-time jobs in the last two
years than the former Government did, in the last eight months rather,
than the former Government did in its last six years in office.
So we are not doing, comparatively speaking, we are not doing badly
on that front, but there is still a long, long way to go. And don't
think for a moment that I regard that as anything other than still
a first class challenge, it is.
MITCHELL:
Okay, well the Budget predictions are around eight per cent unemployment
aren't they?
PRIME MINISTER:
Well edging down to seven and three quarters.
MITCHELL:
Yeah okay. But are we getting to the stage where we have to accept
full employment at around seven-and-a-half per cent.
PRIME MINISTER:
No I don't believe that. I think that you have to realise
that it's very hard to get it below a certain level. But I
think that certain level is lower than seven and a half per cent.
MITCHELL:
What is it?
PRIME MINISTER:
I can't say that with any precision but it is noticeably lower
than seven and a half per cent.
MITCHELL:
But you must have a figure in mind?
PRIME MINISTER:
No, I don't have a particular figure in mind. I just have
a sense that, given the structure of the Labor market, given the
change that's occurring in the composition of the workforce,
that the lower you get the harder it gets to make further gains.
But you've got to look at countries like the United States,
for example, the United States now that has an unemployment rate
of less than five per cent. Now the United States does not have
as kind a welfare system as Australia has and there are many features
of the American welfare system that I would not want to emulate.
I think you've got to have a balance between making sure that
people have an incentive to be in a job but also recognising that
in a compassionate society you need a decent safety net. And that's
the basis of our mutual obligation principle and our work for the
dole policy. What we are saying to people is that we'll support
you if you can't get a job but we want you to do something
in return. The Americans are harder than that and I don't want
to go that far. I think the Australian way is different and better.
MITCHELL:
Just finally on the election. I know that there are some reports
that there's a debate going on already about whether Kerry
O'Brien will host a debate between Kim Beazley and John Howard.
I think radio is the place to do it.
PRIME MINISTER:
Neil, I'll leave that to the Federal Director of my party.
MITCHELL:
Have you got any problems with Kerry O'Brien?
PRIME MINISTER:
Well, look I'm not going to get into personalities on your
programme or, indeed, on any other programme. Arrangements on my
behalf for the debate will be handled by the Federal Director of
the Liberal Party, Lynton Crosby, and I'll leave all the discussions
and negotiations to him. He does it very well. Andrew Robb did it
very well before him on my behalf last time and I'll be very
happy to leave it to him.
MITCHELL:
Okay. Final point on the election. There is a possibility when there
is election talk around, there's that sort of mood at the moment
but it can be a distraction. Does that concern you and is that an
influencing factor, that we've got all these issues coming,
so let's get an election out of the way and face them.
PRIME MINISTER:
I'd rather we didn't have it but it seems to be unavoidable
and we started getting election talk when we faced this problem
about getting the Native Title Bill through the Parliament. If the
Senate had passed the Native Title Bill I don't think an early
election would be something that people were talking about a lot
but because they didn't and the prospect of a double dissolution
was there and the fact that we came back at the beginning of the
Parliament this year and put the Bill up again and it was rejected
again by the Senate, it turned up the heat on that whole issue.
I don't think it's helpful but there's really nothing
I can do about it. It's not of my generation. I'd be delighted
not to have to answer any questions on the election until I give
advice to the Governor-General to hold it.
MITCHELL:
But your Budget is very much preparing for an election, isn't
it?
PRIME MINISTER:
Some people have said it's unlike a pre-election budget. Many
people have said it's quite restrained in the spending initiatives.
I think it strikes the right balance. It's got the country
back in the black. It's attended to a few areas that needed
attending to and it's given people a great ring of confidence,
particularly in relation to low inflation and low interest rates.
MITCHELL:
Ring of confidence? That sounds like a toothpaste.
PRIME MINISTER:
Well, it's true. I apologise if anybody is accusing me of plagiarism
but it is absolutely true. I mean, people must now feel that the
show is being run by a group of men and women who know what they
are doing.
MITCHELL:
Can I ask you about some specifics in the budget. The self-funded
retirees getting a health card, now $67,000 is what they can earn
as a couple...
PRIME MINISTER:
As a couple, yes.
MITCHELL:
And get their health card. That's an enormous amount of money.
Now, that really looks to me as if it's a cynical attempt to
get back that vote, to get the grey vote. Why do you give...
PRIME MINISTER:
I suppose where you draw these lines is always difficult and whenever
you draw a line, whenever you have an income test, those who just
miss out are cranky no matter what their income is and those who
just get it of course are very grateful and the previous limits
were significantly lower than that and we took the view that people
who have been thrifty enough to make provisions for their own retirement
felt that on occasions their thrift was not recognised. The other
thing you've got to say is that that particular group of people
have not got as much out of falling interest rates as homebuyers
because many of those people have investments. They have lent money
and when interest rates go down, it's great if you are borrowing
money but it's not so good if you are lending money.
MITCHELL:
Yes but on one hand we seem to have a philosophy where you will
be tough on welfare payments, and so you've got to really deserve
this. You are not getting money for nothing but on the other hand,
here's somebody, here's a couple who could be earning
$67000 and we're going to give them a hand out.
PRIME MINISTER:
No, you're only talking here about a discounted rate for pharmaceuticals.
You're not talking about giving them a pension.
MITCHELL:
Yes but it's a fair old hit, isn't it?
PRIME MINISTER:
$190 million over four years and that's about, just under $50
million a year and it will benefit about a quarter of a million
people. So it's not as if you are handing them a fortune but
what you are doing through that is you are recognising the contribution
that a very thrifty section of the Australian community has made
to relieving the taxpayer of the obligation of looking after them.
I mean, these people don't get the pension. These people are
not a burden on the taxpayer. I am not criticising people who get
the pension, by the way, I am just making the comment that people
who save and have been thrifty and careful, many of them, they are
not living in luxury. They have just been very careful and very
provident and they appreciate the fact that the Government recognises
the contribution they have made and the way in which they have relieved
the taxpayer of an obligation.
MITCHELL:
I understand that but at the same time where you tightening up on
say childcare but loosening up with people on $67,000 a year.
PRIME MINISTER:
You say we are tightening up on childcare. I mean, we have actually
increased the amount of money that we are contributing to childcare
in the two budgets that we have brought down. We are providing an
additional 83000 places over the next four years. I don't think
you could say we are tightening up on childcare.
MITCHELL:
The health area still Mr Howard, case mix severely criticised here
in official reports on the way the hospital system is working is
really a damning report. Health Ministers today have already issued
a statement saying, well, the Budget doesn't help health. It
doesn't do anything for the hospitals. Now do you accept that,
because people are going to continue to suffer in hospitals?
PRIME MINISTER:
I don't accept that. I don't want to get into a running
commentary on the Victorian health system. That is something that
I will leave to the Victorian Government to deal with but I can
only repeat that our Medicare agreement offer for the next five
years involves an increase of 3 per cent a year, that's 15
per cent over the period of the agreement and that's at a time
of zero inflation. On top of that, we gave the States an extra amount
of money when we brought in the Gold Card for those additionial
50 000 World War Two veterans because paying for them is already
in the base that we've given to the States and by rights, we
should have taken that out of the base when we brought in the Gold
Card but we are leaving it in there, so that's just a free
gift of additionial money for the States. Queensland has signed
up because it thinks the arrangements are fair. We will honour the
offer we made from the first of July and there were some other benefits
in the health area that were announced last night.
MITCHELL:
But isn't the bottom line here that people... whether it's
just Victoria or right around the country, the hospitals aren't
working properly because of this dispute.
PRIME MINISTER:
No that's not right. I mean, the dispute itself has not affected
the operation of the hospitals. The dispute at the moment is manifested
in a debate between those States that haven't signed up and
the Commonwealth Government and that's not affecting the quality
of care.
MITCHELL:
It's affected public confidence in the system, I think.
PRIME MINISTER:
Neil, the States ultimately are responsible for their hospitals
and the stark facts are that under the health care agreement they
are getting the increase that I just described. The general tax
payments that are going from the Commonwealth to the States are
going to go up by almost 5 per cent next year and that's in
a time of zero inflation and we argue with those figures that the
States have received fair provision from us and it's up to
them, with their own resources, to provide the services that are
needed within their own States. You can't have it both ways.
You can't assert the right to run a State fully without Commonwealth
interference in the areas of your responsibility and then, whenever
there is a shortfall, simply turn around and say, if the Commonwealth
Government would give us more money there would be no problem. We
have to put a measure of reasonableness over any claim made by the
States and we have done that and we think on any measure, what we
are offering in a time of zero inflation is very fair.
MITCHELL:
I wonder, could I just ask you about the social bonus that was to
come out of Telstra. Now I didn't see any specific reference
to that ....
PRIME MINISTER:
No because there was no announcement made about it. We are yet to
make a decision on that.
MITCHELL:
But still, the social bonus will still be there?
PRIME MINISTER:
Oh yes, very definitely. I made that very clear. The size of it
and where it is going to go we haven't decided but we will
be taking out of the proceeds of selling the remaining two thirds
of Telstra to the Australian people, we will be taking a social
bonus out of that. That certainly has not changed and the announcement
I made on that remains but that's something that we will make
statements on further down the track.
MITCHELL:
Just on the economy finally, Mr Howard, if I might, this doesn't
look all that bright for the year ahead. Asia, the prediction is,
Asia is going to hit quickly and heavily. The dollar has gone down
further today. Inflation, it is forecast inflation to be up. Unemployment
stable but as we discussed, not great. Current account deficit bad.
Why is this a good economy?
PRIME MINISTER:
Because it's still growing very strongly. It's still growing
at at least 3 percent a year by the end of the coming financial
year.
MITCHELL:
But even that's not a great...
PRIME MINISTER:
Compared to the rest of the world it's a terrific figure and
the other reason it's a great economy is that we, despite the
very, very modest hiccup that you mentioned in inflation, we've
now got the lowest rate for 30 years. We've got the lowest
interest rates for more than 30 years and we've got a very
high level of business investment and we are no longer living beyond
our means and by the turn of the century with the sale of the rest
of Telstra, we will have our debt level down to an unbelievably
low proportion of GDP, the sort of freedom from debt that this country
has not experienced in the lifetime of anybody listening to this
programme.
MITCHELL:
Thank you very much for your time.
PRIME MINISTER:
Thank you.
ends