Subjects: Discussion on the GST, politician's pay rise, federation celebration in London, private health insurance and liberal party leadership.
E&OE.....................................
PRESENTER:
Good morning and welcome to Meet the Press. There are two certainties in life, so the saying goes, death and taxes - and perhaps from this weekend there's another. If it took one hundred years for the Australian Federation to get an all pervasive consumption tax, it'll be another hundred years at least before it's abolished. The papers this morning are reporting a slump in retail sales and commuter confusion over fares and tolls. The government says, not unreasonably, bedding in such a mammoth change will take four to six months. Today, the driving force behind the GST revolution, the Prime Minister, John Howard, meets the press.
Welcome back to the program, Prime Minister.
JOHN HOWARD - PRIME MINISTER OF AUSTRALIA:
Good to be back, Paul.
PRESENTER:
Well, the sky didn't fall in yesterday but .
HOWARD:
No. And the four horsemen of the apocalypse didn't arrive and I know Kim Beazley's very sad and disappointed.
PRESENTER:
Well, I'm glad you mentioned Kim Beazley because he says the worst is still to come.
HOWARD:
Yeah, but a few months ago he said today was going to be . yesterday was going to be a nightmare, a disaster. He flip flops. Now he's trying to reposition himself. He also said a few months ago that you could not possibly make this tax fairer but now he's promising a rollback to make it fairer. The reality is that he wanted yesterday to be a day of gloom of despondency and unhappiness and despair for the Australian community and it wasn't.
And the Australian community, by and large, took it in their stride, as I hoped they would. I found - and I was out and about talking to real people, not locked up in a Canberra press room like Mr Beazley - and those real people told me, yes, there was some adjusting, yes, there were some challenges, but, by and large, it was not what they'd been told, things didn't go up as much, not everything went up, some things went down, some things stayed the same, which is exactly what the government was predicting.
So, my take out yesterday was very positive, Paul, and I'm very pleased that the commonsense of the Australian people, so far, is coming through. Now, I don't want to claim instant success. That's foolish. It will still take quite some time but I do feel very positive and, of course, in the days ahead the good part is to come - the tax cuts.
PRESENTER:
Mm.
HOWARD:
I mean they're all coming over the next two weeks and they'll be bigger than a lot of people expect.
PRESENTER:
Well, this weekend there was also some good news for you and your federal colleagues in the parliament - Opposition and government - and some in state parliaments .
HOWARD:
Mm.
PRESENTER:
. with the second tranche of the fourteen per cent pay rise. Now Treasurer Costello has warned that there should not be a wages breakout because of the GST. It seems that politicians aren't setting a good example on that front.
HOWARD:
No. Well, that's not . with great respect, Paul, that is just not right. I mean, you know as well as I do that there was a freeze for close to three years - complete freeze. I mean, you mean to say that, at a hundred and eighty thousand dollars a year, the federal treasurer compared with the managing director of Westpac Bank, which would be paid about, you know, eight or ten times that . are you telling me he's overpaid?
PRESENTER:
No. But I'm telling you that with his pay rise and his tax cuts, he'll be in a much better position to deal with the GST than a lot of other Australians.
HOWARD:
Well, he'd be in . he'll be in a no different position, a no more privileged position than any other Australian who's on that level of income. I mean this idea that somebody with the sort of responsibilities that, say, a treasurer carries - and I'll leave other senior people in government aside - is overpaid, is a bit rich.
PRESENTER:
So, you're restating that there's absolutely no reason for people to claim higher wages because of the new tax system?
HOWARD:
Because the income tax cuts will more than compensate them for the price effects. That's the argument. That's the argument. I mean if we were increasing the overall tax take through slapping a GST on top of the existing tax structure and giving no income tax cuts . we're giving twelve billion dollars of income tax cuts and many Australian families listening to this program will find in the next couple of weeks that a combination of the tax cuts and the increased family benefits will leave them forty to fifty dollars ahead of where they are now. Now, that is a very big measure of compensation and that's why we argue there is no argument, there's no claim or basis, valid claim, for a wages breakout.
PRESENTER:
Prime Minister has there been some collateral political damage to yourself and the government over broken promises to introduce the tax, and I'm referring specifically to the petrol tax .
HOWARD:
Mm.
PRESENTER:
. I think it's been well documented, what was said at the time of the election. Are you ruling out now that the government will not drop the excise, that further one point five per cent, to make the excise equal to the GST in total.
HOWARD:
Well, if you did that, what you will be doing is in effect overcompensating for the GST because there are cost savings. I mean, even the oil companies admit there are cost savings. They are arguing about their capacity to pass them on now. That's the debate.
PRESENTER:
And the time scale, yes.
HOWARD:
That's their argument. I'm not accepting it but that is their argument and if you do that, well, you'd be overcompensating. I mean, I don't know, I mean you can't understand all of the complexities of the movement in petrol prices but the readout yesterday was that they actually fell compared with Friday.
PRESENTER:
But there is a formidable array, if you like, against the government here.
HOWARD:
Well, hang on a minute: nothing is as formidable as field evidence.
PRESENTER:
Mm.
HOWARD:
I mean, it beats everything, it's like a football match. The result always beats the prediction, doesn't it?
PRESENTER:
So, it sounds that you're fairly adamant about that.
HOWARD:
No, no, no. I'm just telling it as it is. It mean it might change, that it could be other reasons though for the price to move around. I'm just making the observation.
PRESENTER:
The price might change, but the excise won't. I mean, I guess that's the point.
HOWARD:
Well, but we've explained that.
PRESENTER:
Okay. Let's move on. You're going to London tomorrow.
HOWARD:
Mm.
PRESENTER:
I know the timing is none of your doing.
HOWARD:
Mm.
PRESENTER:
After all, there's the centenary -
HOWARD:
Well, I don't think a hundred years ago you could blame the founding fathers for not knowing I was going to bring a GST in this weekend.
PRESENTER:
I'll accept that, I'll accept that. But what about the symbolism of this? I mean, a hundred years ago the state premiers had to go cap in hand to Westminster to get the Federation bill, if you like, passed. Would it have not been better if London, if Westminster, came to Australia to celebrate what is an independent nation?
HOWARD:
Well, a lot of Westminster will come to Australia next year for the centenary of Federation, but when you . if you observe history you should observe it truthfully. And the Australian Constitution Act was passed by the then imperial parliament a hundred years ago sitting in London. Now that is the truth.
PRESENTER:
Yes.
HOWARD:
I mean, you don't celebrate other great historical events by re-enacting them in Australia, you actually try and observe them. If you have an observance of a great battle in which Australia was involved you don't simulate it in Australia, you actually go to where the battle occurred.
PRESENTER:
But is it asserting our independence in a symbolic way?
HOWARD:
Oh, Paul, really it's just observing an historical truth. And it's also honouring a very, and reinforcing a very important bilateral relationship. Australia invests more in Britain than it does in any other country. Britain is either the best or second-best foreign investor in Australia. We sell more wine to the United Kingdom than any country other than France, and there is no country with whom we have deeper cultural and historical and literary links. So, we owe our rule of law, our parliamentary system, our shared heritage of the English language and all the literature that envelopes it. I think in those circumstances to, sort of, almost fight against some kind of observance of that relationship at this time is strikes me as very odd and almost, sort of, you know, pedantic. It just seems very odd.
PRESENTER:
Okay, Prime Minister. Time to go. And time for a break.
When we return with the panel, will the income tax be enough to ease the cost of living burden?
[Commercial break]
PRESENTER:
You're on Meet The Press with the Prime Minister. And welcome to our panel, Michelle Grattan, The Sydney Morning Herald and Alan Wood, The Australian. It's only day two, but is the nation and the government in for a bout of reform fatigue? Alan Wood.
ALAN WOOD - THE AUSTRALIAN:
Prime Minister, I know your concern at the moment, of course, with bedding down the new tax system, but already people are looking beyond it. Campbell Anderson of the Business Council, for example, said in a speech last week that the GST is more complicated than he'd like, so he'd like something done about that.
That it hasn't really yet fixed up the problem of state indirect taxes and, perhaps most importantly, that personal income tax rates, particularly on people above . for people above sixty thousand, are still much too high. Can we expect another bout of income tax reform?
HOWARD:
Well, I should introduce Campbell to the Senate. (laughs) And then that might provide an answer to his Jindalee question. Now, I think everyone knows that we would have liked a bit more flexibility in income tax than we were able to have, but we got about eighty-five per cent of what we wanted and we've got to be realistic.
We fought an election on a particular program and there's about ten to fifteen per cent chopped off that by Labor Party sabotage and Democrat amendment, so we've got to deal with that reality but, to the general question of reform, I don't think you can stand still in this era. You either keep going forward with genuine changes or you go backwards.
And that was the philosophy I brought to tax reform and it'll be the philosophy I'll continue to bring. Now is not the time - we're still focused on tax - to talk about other areas, but nobody should think that I'm going to take the view that, now that we've got tax reform, that's it. That would be the wrong thing for the country and it would be properly disappointing for those people who want to see further reform.
WOOD:
Well, one of your five principles of tax reform .
HOWARD:
Mm.
WOOD:
. was no increase in the overall tax burden.
HOWARD:
Mm.
WOOD:
If the GST actually yields a lot more revenue than you've allowed for, as Peter Reith, for one, suggests it will, wouldn't you be breaking that pledge if you don't deliver .
HOWARD:
Well, that is .
WOOD:
. further tax cuts?
HOWARD:
. that is a sort of a hypothesis, based on a supposition. Let's deal with that situation as it comes. There's no evidence to me yet that we're going to collect more evidence. People have intuitions and hunches but, Alan, if that were right, I'd be very happy to take a question from you on what we're going to do with it. (Laughs)
MICHELLE GRATTAN - THE SYDNEY MORNING HERALD.
But even so, Mr Howard, is it possible or probable that people could look forward to another round of income tax cuts in your next term, if you're re-elected?
HOWARD:
Michelle, I think for me to be talking about what might happen if, in eighteen months' time, when we're still bedding down the biggest economic reform this country's seen, is a bit silly.
GRATTAN:
But we're only talking about quantity here, not .
HOWARD:
No, no, we're talking about a hypothesis, where we don't know, on the best evidence available to me, we're going to collect what we've said we're going to collect. Now, until I get evidence to the contrary, I'm not going to answer that question.
GRATTAN:
But we do know that we are heading towards quite big surpluses, don't we, in the next three years?
HOWARD:
Mm. Well .
GRATTAN:
So, you're going to give that .
HOWARD:
. you know, I think you ought to go .
GRATTAN:
. give them back?
HOWARD:
. I think you ought to go and ask the other bloke, that's Mr Beazley .
GRATTAN:
We'll ask him too, but .
HOWARD:
Yes .
GRATTAN:
. what about you?
HOWARD:
. yes, but what he's going to do, you know, in relation to the present situation, not to a situation that might transpire, I'm not going to speculate about what might happen. Let's focus on, but I'm . on the GST, but I'm fascinated, here you are asking me about things beyond the GST the day after it's come in - very interesting, Michelle. (Laughs)
WOOD:
But, let's accept your own revenue forecast, not hypothetical ones, yours.
HOWARD:
Mm.
WOOD:
Are you going to leave a big surplus there for Kim Beazley to spend? Surely Jeff Kennett .
HOWARD:
Well, that makes the assumption that he wins the election.
WOOD:
Well .
HOWARD:
I mean, that's possible and I'm not complacent. I think it's going to be very tough but, Alan, fair go, we've just brought in the biggest tax reform ever, it's the day after it and you want me to tell you now, today, what I'm going to do in relation to a surplus, the financial year after the one that started yesterday. I think I'm entitled to say, give me a few days before I do that.
GRATTAN:
Business was very strongly .
HOWARD:
Mm.
GRATTAN:
. behind getting .
HOWARD:
Yes.
GRATTAN:
. this tax system changed.
HOWARD:
Mm.
GRATTAN:
And now they're full of criticisms all over the place, that it's too complicated, they're not getting enough of this or that. Are you disappointed that business, when it's come to the point, hasn't been more supportive?
HOWARD:
Oh no, I don't think it's fair to categorise business reaction as being critical all over the place. They are critical of some things, but overall, business is still very supportive and I want to pay tribute to people like John Ralph, in particular. And others and I, you know, the ACCI, Mark Paterson and the Business Council and others, who really went out and championed the cause of tax reform. Overall, I still get a very positive reaction from business. They're cranky about a few things but that's human nature.
GRATTAN:
A week ago the BCA was slapping you round the head over petrol.
HOWARD:
Well, that's an exaggeration. It's a colourful way of describing their debating point.
(Laughter)
WOOD:
Well, if we come back to the bedding down of the tax system .
HOWARD:
Mm.
WOOD:
. I noticed [coughs] pardon me . you said on Friday that it's your head that's on the block.
HOWARD:
Mm. Well, it's always the prime minister's head on the block.
WOOD:
If it turns out that it isn't it a very good .
HOWARD:
Mm.
WOOD:
. it is bad news politically for the government, are you prepared to step down?
HOWARD:
Well, Alan, I don't think it will be.
WOOD:
If it were?
HOWARD:
I feel very . I feel quite positive. I think what happened yesterday and what is happening and I think it could go up and down a bit. But, I mean, we were told by Mr Beazley the world was coming to an end, darkness and pestilence would descend upon the land and there'd be a deluge and all of those things. But it never happened. And now he's saying, oh, it's a slow burner. Well, I mean, that's a bloke who's flip-flopping.
WOOD:
Well you, yourself, have said though it could take six months.
HOWARD:
Yes. And . but I've been consistent. I've not made extravagant claims. I haven't said you'd have instantaneous success. What I've said is that it's a necessary reform - it would have teething troubles - but in the end people would see the benefits outweighing the teething troubles, and I believe that that will happen.
PRESENTER:
But there is tremendous nervousness, is there not, within the coalition parties. I mean Bob Katter may be outspoken but he does, if . going on the National Party federal conference the other week - seemed to express a view held by others that the GST will be as popular as a black snake in your sleeping bag.
HOWARD:
Well, he's colourful. I don't know that he's representative. We'll see.
PRESENTER:
Time for another break. Coming up, how healthy is the health system?
[Commercial break]
PRESENTER:
Welcome back. Yesterday marked the beginning of lifetime cover for private health insurance. Will the carrot and stick work? Michelle Grattan.
GRATTAN:
Mr Howard, You are forcing a lot of people into private health insurance who, it seems, don't want to be there. Is this a case of giving tax cuts on the one hand, and taking back money or taking money, as it were, on the other, not for the government but from the person's point of view.
HOWARD:
No, it's not. We're not forcing people, we're providing them with a very attractive incentive. And the incentive is a combination of, effectively, a tax deduction for the full value of the premium for eighty per cent as from yesterday of the population, and also a rearrangement of premium charges so that you have an incentive to join when you are young and healthy. And I think we all understand that to have a private health insurance system, to make it work you've got to balance the older people who need to draw on the funds more frequently with the young and the healthy making a contribution who don't, and that's been the imbalance. And I'm delighted at what's happened. I mean, we are seeing a renaissance of private health insurance in this country, and that will be a great help to the public system because it will take the load off it.
GRATTAN:
But, anecdotally, one hears quite a few complaints about this. Do you think there'll be a backlash?
HOWARD?
Yes, but - no, I don't think there will be a backlash at all. I think it's an absurd proposition. People don't have to join, they can still use . they can still choose to use the public system if they want to. I mean, nobody's being forced to join, we're just making it more attractive for the young and the healthy to join now, and isn't that a good thing?
GRATTAN:
Well, I think that we'll find that Labor is going to emphasise very strongly the public health system and public hospitals .
HOWARD:
Well .
GRATTAN:
. in its pitch over the next few months. Do you plan to look at that area, or are you going to stand on what you've done so far and say, well, that's the state's responsibility?
HOWARD:
Well, it is the state's responsibility. And we are increasing their money by five per cent, by about fifteen, eighteen per cent over a five year period. And, of course, as the GST revenues build, the states get that money and they'll have more to spend on public hospitals.
GRATTAN:
And should?
HOWARD:
Yes, they should. I mean, I want the states to use the growing GST revenues to enhance public services, yes.
GRATTAN:
Especially public hospital?
HOWARD:
Well, there are a range of public services. But one of the great benefits of the GST is that all the revenue goes to the states and they have public hospitals, government schools, roads and police, four basic public services, and if ever there's an opportunity to see them enhanced if there is going to be, as some argue, even more revenue than we've predicted, then that's more available for those very important public services.
WOOD:
Prime Minister, talking of health, if God forbid you should fall under the proverbial London bus -
HOWARD:
Yes (laughs), I'm very careful about London, all buses, particularly those red London ones.
(Laughter)
HOWARD:
I've actually travelled on them years ago and very aware of them.
WOOD:
But should this terrible thing happen, would Peter Costello make a good prime minister?
HOWARD:
Oh, I think Peter Costello would make a very good prime minister. I do, but, I mean, these are matters for the party. Other people could make good prime ministers as well. But if you're asking me what do I think of Peter's ability, I have a very high regard for it. And without in any way short of going through this ritual short of - you know, invoking this ritual of people examining every single thing I say about the succession, I mean, there will come a time when I go and the party will make a choice. There could be others. I mean, others have made a great contribution, Peter Reith's made a great contribution, Alexander Downer's made a great contribution, who knows who will be making contributions when the time comes for me to leave the scene. But I wouldn't want anybody to be in doubt that I think Costello has done a very good job.
GRATTAN:
Would you clarify your plans during the election campaign?
HOWARD:
My plans?
GRATTAN:
Plans for the future, plans for when you do intend to go.
HOWARD:
Well, I've no doubt I'll be asked about that in the next election .
GRATTAN:
And will you answer?
HOWARD:
. campaign, and I'll save the answer for them.
WOOD:
Well, to turn something we asked you a minute ago on its head, let's say the GST goes as well as you think it will.
HOWARD:
Mm.
WOOD:
It's bedded down, it's no longer a major issue. Is there some risk that people will say well, this has been a big agenda of yours, for most of your political life. You've done it and the sort of Kennett factor comes into play, he's done what we elected him to do, it's time he moved on?
HOWARD:
Oh, I think some people have been saying that already. That's to be expected. Alan, I'm an open book on the future. I have always said that if the Liberal Party wants me to lead it to the next election then I'm very happy to do so. I owe the Liberal Party a great deal.
The Liberal party's been very good to me and my future is in their hands and, of course, through them the Australian people are ult. my ultimate masters. I don't intend to eye gouge and carry on about an extra few days or weeks in my present position, but nobody should think that I'm not enjoying it and that I don't look forward to doing quite a number of other things before I depart the political scene.
PRESENTER:
Prime Minister, talking of parting the political scene, Senator Jocelyn Newman, one of your senior ministers, has already flagged that she's thinking of retiring, it's speculated around the corridors of parliament that John Herron, too, is thinking of retiring. That would set you up for a reshuffle, in a month or so's time, would it not?
HOWARD:
I don't speculate about reshuffles.
PRESENTER:
But it would be a terrific opportunity to freshen up the face of your government?
HOWARD:
I don't speculate about reshuffles.
PRESENTER:
There's one other speculative piece - it's been speculated that the Olympics would be a terrific circuit breaker and some people are predicting - but at outside odds perhaps - that it may be a good chance to go to an election?
HOWARD:
Paul, I have always thought it a huge political error to believe that great public festivals like that have any political impact at all. Barrie Unsworth thought that might have saved him, the bicentenary celebrations in 1988.
You had blanket Unsworth and Hawke through New South Wales for about two weeks, it didn't make the slightest bit of difference, once it was over, people's minds went back. I don't get fooled by that. I won't be doing that, I assure you.
GRATTAN:
Mr Howard, you've made your reputation as a politician on economic reform, industrial relations, tax, do you have another big round of economic reform in you?
HOWARD:
Well, I've got other reform ideas, yes. Yes. In a number of areas and of course I don't accept that I'm just an economic reform man. I mean, two of the three great things I believe I've done in my prime ministership are non-economic. That's gun control and the defence of the people of East Timor.
PRESENTER:
Prime Minister, we're right out of time. We'd like to pursue this further and perhaps on another time. Thank you very much for joining us today and thanks to our panel.
Ends