Subjects: economy, ministry changes, current account deficit, trade
issues, lamb exports, manufacturing industry, foreign aid, industrial
relations reform, community violence, senate reform, business tax
reform, Collins Class submarines, republic referendum
E&OE................................................................................................
JONES:
Prime Minister good morning.
PRIME MINISTER:
Good morning Alan.
JONES:
Prime Minister, you said in Parliament last week that Australia has
an economic self respect, quote: that I do not think I have
experienced in the 25 years I've been in public life'. How
do you measure that?
PRIME MINISTER:
I measure it by the straight statistical achievement. I also measure
it by the greater respect and deference that is paid to Australia's
economic performance by other countries and other leaders. I measure
it by the fact that against all predictions we were not overwhelmed
by the Asian economic downturn because we put our house in order.
And I measure it by the fact that the prospects of this economy remain
very strong, and also by the fact that we've been able in the
last few weeks to put through the biggest shake up of our taxation
system at least since World War II. So when you can do those things
the rest of the world takes a bit more notice.
JONES:
Everyone likes to be recognised for their achievements. You've
never sought that sort of recognition but do you wonder whether people
fully understand the nature of the reform that's been undertaken
in the last few years? I mean gun laws, native title, and the battle
on the waterfront, trying to sell Telstra, the budget surplus, and
those sorts of things. Do you think that's fully understood by
the community?
PRIME MINISTER:
I don't think in those terms. I don't think people specifically
think gee it's a good thing that the budget's back in surplus.
But what they do think is a good thing is the fact that partly because
the budget is back in surplus they're paying $320 on average
less a month on their housing mortgage. The benefits of good policy
are understood and supported by the community when they are translated
into benefits for them. And the goal of the Government and the goal
of the Prime Minister is not to sort of list any personal achievements
but rather to deliver good outcomes for the Australian people and
the thing that pleases me most about our economic record is that we
have been able for most Australians to deliver good outcomes. Their
real wages are higher, their mortgage interest rates are lower, there
are 400,000 more jobs. All those things are tangible benefits. Now
there are some people who aren't getting that. I accept that.
And there are some sections of the community who are still suffering
and we have to work even harder to help them, and there still great
pockets of injustice and inequity in our society and no Prime Minister
even at a time when things are going strongly should ever lose sight
of that fact.
JONES:
You also said in the Parliament that tariff reform was one of the
five main areas of economic modernisation. You don't yet have
a minister for trade to replace Tim Fischer.
PRIME MINISTER:
I'll be announcing this morning at a press conference before
I go that Mark Vaile will become the minister for trade. The ministerial
arrangements will involve him going to the trade portfolio and he
will do a very good job, as did Tim Fischer. And I'll be making
Warren Truss not only a Cabinet minister but I'll be recommending
to the Governor General that he take over the agriculture, fisheries
and forestry portfolio. And the newcomer into the ministry will be
Larry Anthony. It will be a third generation Anthony in a ministry
and he'll become the minister for community services.
JONES:
Yeah, he's a first class young man Larry Anthony.
PRIME MINISTER:
He's a very impressive young man. I think they're good changes.
I will work well with both John Anderson and Mark Vaile. Mark will
do a very energetic job in the trade portfolio and Larry will bring
a great deal of commitment and enthusiasm to the community services
portfolio.
JONES:
Now on the question of trade though, does it worry you when you're
talking about modernisation that we are stuck with this $1.9 billion
trade deficit for April, marginally better for May, but the last 5
months have been absolutely horrendous? If we are constantly going
to live in deficit on trade, how do we pay for that deficit?
PRIME MINISTER:
Well we historically run a current account deficit. We have for most
of our existence because we're that kind of country. We need
to export to survive. It depends on how big it is. It's too big
but it's manageable, and it's manageable because we can
service the debt far more easily than we could 15 years ago and it's
also manageable because we have a budget surplus and we have low levels
of inflation and low levels of interest rate and we do not have to
close the economy down as happened in the 1980s in order to control
the size of that trade deficit.
JONES:
But you'll be talking to Prime Minister Obuchi and President
Bill Clinton. They don't have this view about level playing field
if it's likely to interfere with their own domestic position,
and the position you're talking to Clinton about, the lamb...
PRIME MINISTER:
We haven't got an answer on lamb and lamb is quite a watershed
as far as the Americans are concerned. They are telling the rest of
the world there should be more open trade but they are....
JONES:
Don't practice it.
PRIME MINISTER:
Well that's what I said to president Clinton. I had a conversation
with him three weeks ago and I put that very proposition to him. I
said President, if you close down our lamb exports to the United States
you will send a terrible signal to the rest of the world. You'll
be saying that we talk one thing we do another. Now he's very
conscious of that. I'm still not overly optimistic about what
the Americans are going to do but we are still in there punching and
we haven't heard yet, and I'm hopeful the Americans will
at the last moment see the wisdom of not interfering with a market
that we have worked very hard to win. I mean the reason why I argue
for more open markets Alan is that this is a lamb market we didn't
have a few years ago and as an exporting nation we have to win market
share overseas if we are to expand. And if we get markets overseas
than obviously people have got to have some capacity to trade into
this country. Now there is no such thing as a level playing field
as Tim Fischer was fond of saying, and you have to constantly make
pragmatic judgements in the best interests of Australia and that's
what we try to do on each issue.
JONES:
Billy Wentworth, whom you know well, wrote the biography of Jack McEwen,
and he wrote: for 2 years McEwen was in the sweat box of international
negotiation. He saw Australia's trade competitors at work, he
heard them say one thing and watched them do another. He moved from
a stance of real hope for a world in which big and small nations would
transact business on a basis of fairness and equity, to one of skepticism
that the big would ever give an inch to the small. And he was utterly
convinced, not from theory but from practice, that the much vaunted
level playing field in world commerce was a myth'.
PRIME MINISTER:
Well I don't know that I disagree with that conclusion. I would
make the point though that our economic performance now is just as
strong if not stronger than it was at the time of McEwen. I mean we
have an economy now whose fundamentals are stronger than they've
been since the late 1960s.
JONES:
But this is a big issue because.....
PRIME MINISTER:
[inaudible] ......McEwen's contribution to this country,
but let's keep it in perspective.
JONES:
Yeah but the Manufacturing Workers' Union are saying today that
manufacturing is at its worst post war level since the recessions
of the 70s, 80s and early 90s. It says manufacturing exports to Asia
have been cut by 40% but imports continue to rise. And they talked
about a Comalco aluminum plant in Queensland getting $100 million
in Commonwealth assistance but Australian firms excluded from the
deal. Now while ever we continue to support international companies
and leave Australians high and dry how can we sponsor a manufacturing
industry, or growth in manufacturing employment.
PRIME MINISTER:
Well, I'll say a couple of things about that. First is that any
loss of manufacturing exports to Asia is not due to tariffs, it's
due to the Asian economic collapse. And you can't blame tariff
changes for that. As far as that Comalco project in Queensland is
concerned, well, that hasn't come to fruition yet and the question
of whether or not there will be foreign firms or Australian firms,
therefore, can't be resolved.
JONES:
But we are giving assistance to foreign firms, why don't we do
that for Australian firms?
PRIME MINISTER:
Alan, hang on, hang on. We give assistance, Alan, to Australian-based
projects. And when you help an Australian project you help jobs. I
mean, one of the...
JONES:
Foreign jobs.
PRIME MINISTER:
Well, no, no, I mean...
JONES:
The profits are repatriated overseas.
PRIME MINISTER:
Well they do employ Australians and they pay Australian tax and the
company pays Australian tax. And we've just decided to give some
assistance to the establishment of a pulp mill by the Pratt organisation
in Tumut and that is going to generate hundreds of local jobs. I mean,
you have to remember that when you assist a project, even though there
may be some foreign investment in it, that it does generate jobs here
in Australia. And all of those things that you've mentioned would
generate Australian jobs and those Australians will pay tax and the
company will pay tax.
JONES:
Well, one of the pluses you mentioned earlier on about achievement
and we talked about the waterfront reform and there's a second
slice of industrial relations reform, if you're introducing it
where do workers of Oakdale colliery and others fit in? There's
talk today that at least 3,000 employees of dozens of companies have
lost an estimated $30 million in entitlements in the past few years.
PRIME MINISTER:
Well, that is a result of some companies going bankrupt and their
money not being available to meet redundancy and leave entitlements.
And this is a problem. Two of my Ministers, Peter Reith and Nick Minchin,
who met industry people and union people a couple of weeks ago are
coming back to Cabinet with proposals to make changes in this area.
I think we do need changes.
JONES:
Is it urgent?
PRIME MINISTER:
It is quite urgent, yes, but it's got to be handled carefully
because there are implications. If you go too far in one direction
there are implications for the ability of people to generate enough
cashflow to run small businesses.
JONES:
But should liquidators and secured creditors get their money ahead
of workers?
PRIME MINISTER:
Well, that is the issue that's got to be resolved. If they don't
then to the extent that that has some impact on the amount of credit
that is available for small business, that could in turn have some
impact on the capacity of those businesses to employ people. This
is an issue that in addressing this I think quite serious matter,
this is an issue that has to be resolved. I should say in relation
to Oakdale that as I've foreshadowed, I think when I last spoke
to you about this, that we have been in touch with the Australian
Securities Commission and the Australian Securities Commission is
investigating the circumstances of what's happened. Now, I'm
not raising any expectations in relation to that but you will remember...
JONES:
So how do they pay their mortgages, Prime Minister?
PRIME MINISTER:
I beg your pardon?
JONES:
How do they pay their mortgages?
PRIME MINISTER:
I am acutely aware of that but I'm also acutely aware of the
fact that the capacity of small businesses to finance their operation
would be reduced if they are forced to put aside money that they might
otherwise invest in the operation of those businesses.
JONES:
But if they're using employee entitlements as part of their cashflow
they've got to be pretty crook to start with.
PRIME MINISTER:
Well, many small businesses do that, Alan, that is the...
JONES:
We went through this before. It's not their money to use.
PRIME MINISTER:
Well, all I'm saying, I mean, I agree with you that it is a very
difficult situation and these men have a lot of justice on their side.
I'm simply making the point to you, though, that if you make
a permanent change to the rule for the future and you prevent many
small businesses from using money that they habitually use now in
the cashflow daily operations of their business, that is going to
have an impact on them. Now, whether that is regarded as wise practise
or not, it is the reality, and you and I often talk about the need
to deal with reality rather than theory. Now, the reality of many
small business operations is that they do use money that is theoretically
entitled. It theoretically is meant to be earmarked for a future liability,
they use it in the daily operations of their business, otherwise they
would have to borrow more from the bank and many of them would, therefore,
go out of business.
JONES:
One of the phrases being used beneficially in the last couple of days
by your Employment Minister, Tony Abbott, is about moving away from
the culture of welfare. I think there is widespread understanding
of exactly what he's saying on that. What about the culture of
violence, how damaging is that and what prime ministerial initiatives
do you take to try and turn that around?
PRIME MINISTER:
Well, I think it's one of the most serious things in our community.
The greatest thing we did in relation to that, of course, were the
gun control laws. And whilst I don't want to claim too many benefits
from that I do want to make the point that we've already seen
a drop in the number of deaths, homicides related to the use of guns.
I think you need, constantly as a community, to be encouraging the
habits of civility and courtesy. I think we do as a society have too
much violence through video games, too much violence on television
screens, in the end, the best regulators of this appearance. I think
we teach our children to acquire the habits of violence too early
and too often. And as a society we are not quick enough to condemn
violence when it occurs.
JONES:
You've been talking about further reform. You say the job's
not done, no Prime Minister ever gets to the top of the mountain,
there's always another hill to climb. Given that the Senate already
has challenged you on the tax reform, will challenge you on new industrial
reform, has challenged you about youth wages, has been intransigent
over the full sale of Telstra, doesn't seem committed to a 30
per cent corporate tax rate, how much is reform of the Senate part
of reform which remains to be done?
PRIME MINISTER:
Well, I think that's something that will attract a lot of debate
in the months ahead. Once again, I've got to deal with the here
and now. Reform of the Senate inevitably conjures up the notion of
constitutional change and you know how difficult that is in this country
and you know how a country can get diverted from the day-to-day needs
of things with a debate about constitutional change. I think what
you have to do with these things, Alan, is you have to achieve what
you can with the existing mechanisms but recognise that they're
not perfect. And if the opportunity for change, beneficial change
which is fair to all parties, presents itself in the future you try
and bring it about.
JONES:
So if the Labor Party are prepared to support a capital gains tax
change, would you introduce that into the Senate quite separately
from corporate tax change?
PRIME MINISTER:
Well, I think it's too early for me to speculate how I will handle
the tax.
JONES:
But we do need a change to capital gains tax, don't we?
PRIME MINISTER:
Well, we certainly need to remove some of the disincentive in the
capital gains tax and I can assure you that whatever is needed to
get that through we will undertake.
JONES:
I mean, our marginal rate, capital gains tax, as you now, is about
49 per cent. In America it's less than 20 per cent.
PRIME MINISTER:
That's right.
JONES:
And it is a disincentive, isn't it?
PRIME MINISTER:
In a global economy if it's more attractive to invest in the
United States than it is here, well, the investment will go to the
United States. That's one of the realities of life.
JONES:
Just two quick ones before you go. The navy apparently is going to
submerge you on a Collins Class submarine to prove they work, are
you aware of that?
PRIME MINISTER:
Well, I've read that and I'll give some consideration to...
JONES:
Will it be one of those that needs $600 million to fix it?
PRIME MINISTER:
Well, that is a disappointing project. I think the concept way back
may have been a good one but I'm glad that John Moore had the
foresight to get a couple of outside experts to have a look and really
reveal the extent of the problem. We are optimistic that when we get
the new weapons system and that when the defects are fixed that it
will be a first class piece of equipment. But I can't disguise
the disappointment I feel about the way in which the project has been
handled.
JONES:
And finally, Australia becoming a republic, is that part of your urgent
programme for change?