JOURNALIST:
Joining us today to discuss the state and future of his nation's economy
is Australia's Prime Minister, John Howard. Prime Minister Howard,
good to see you, thank you very much for joining us today.
PRIME MINISTER:
Hello. Nice to be with you.
JOURNALIST:
How have you done it, coming back from the troubles that beset all
these countries in Asia over the last couple of years?
PRIME MINISTER:
Well, I think what's happened is that we have been able to avoid the
downturn in Asia because of basically two things. We made a lot of
changes to our economy which strengthened it. We got our budget into
surplus, we have reformed our labour market. A few years ago we reformed
our financial system and cut our tariffs and the other thing is that
we have managed our exchange rate policy very well and as a combination
those things have enabled us to shift a lot of our markets away from
Asia. For example, in 1998 our export growth to the United States
grew by 34 per cent and we have also been able to build our exports
to Europe as well. So it's been a combination of those things. But
the most important thing has been the fact that we did get our domestic
economic house in order and with very low inflation and a strong fiscal
position and a freer labour market we've been able to boost our productivity.
JOURNALIST:
Now, by the same token though people who are still worried about the
dependence that you have on commodity exports and the like, that your
resource rich country but during times of commodity deflation as we've
seen in the last two years there's great vulnerability both in your
currency and in certain sectors of the economy. How do you combat
that?
PRIME MINISTER:
Well, I would have thought the fact that we've been so strong and
successful over the last couple of years demonstrates that that is
not the constraint that people argue. If it had have been then we
wouldn't have done nearly as well over the last couple of years. Sure,
we'd like stronger commodity prices. We do rely a lot on our exports
of minerals and of farm produce but we rely on other things as well.
And the fact that we've been able to weather the Asian storm really
stare it down quite effectively despite low commodity prices indicates
that it's not really the constraint and the negative that some people
imagine.
JOURNALIST:
Now, some foreign investors, some foreign companies have steered clear
of Australia particularly in financial services because of some punitive
tax rates, corporate tax rates up around 36 per cent, the capital
gains tax, I guess, at the high end is 47 per cent or above. You are
making some moves to lower those tax rates. How likely is it that
you'll be successful in that effort?
PRIME MINISTER:
Well, we've just completed the transformation of our indirect tax
system and delivered big personal tax cuts in a huge revamp of our
tax system and that went through Parliament a couple of weeks ago.
We are now turning our attention to business taxation and the very
things that you have mentioned, namely the corporate tax rate, the
capital gains tax regime, they are going to be right at the core of
that examination and we'll be taking decisions on those issues very
soon. And I am aware that some of the existing taxation arrangements
do act as a disincentive particularly in the capital gains tax area
and we are obviously serious about trying to remove impediments as
much as they can be achieved.
JOURNALIST:
Is Parliament friendly at this time?
PRIME MINISTER:
Well, we don't control the Upper House, our Senate. But I would hope
that the Opposition parties in the Upper House would see that it's
in Australia's interests to make this country, our country, as attractive
as possible for overseas investors. And I am optimistic but we'll
be able to put forward some sensible reforms in the corporate and
capital gains tax area and win the support of the Opposition parties.
JOURNALIST:
Let me ask you a little bit about gold because there was an announcement
from your country some months back about disgorging its holdings of
gold from the central bank that helped to precipitate an even further
decline in the price of gold. Do you have any more gold to sell or
is Australia out of that business at the moment?
PRIME MINISTER:
Well, I am not going to predict whether we are in or out of it. That's
a matter ultimately for the Reserve Bank which is the holder of our
gold reserves. But the decision that was taken to which you refer
was obviously in our interests because it protected the value of our
reserve holdings and what the Reserve Bank of Australia did was essentially
no different from the activities of central banks in other parts of
the world.
JOURNALIST:
But do you need to hold onto any gold that you have or are you among
others who believe that it's really not an asset to be owned at this
point?
PRIME MINISTER:
Well, I am not going to respond to that question beyond what I have
just said.
JOURNALIST:
All right. Prime Minister Howard, good to see you. Thank you very
much for spending time with us today.
PRIME MINISTER:
Thank you.
[ends]