Subjects: GST; Centenary of Federation trip; pharmaceutical benefits.
E&OE....
COX:
Mr Howard, good morning to you.
PRIME MINISTER:
Yes, I am in Canberra.
COX:
In Canberra, I beg your pardon, good morning to you.
PRIME MINISTER:
How are you?
COX:
Very well thank you, yourself?
PRIME MINISTER:
Very well indeed.
COX:
That's the way. Now we heard the Treasurer on AM this morning explaining some of the detail of how the GST will affect rents. Why did the Government sit on that report containing the details for four months?
PRIME MINISTER:
Well we haven't suppressed it. I understand from the Treasurer that from the time that Senator Newman told the Senate that the report had been sent to the Treasurer there was no request made by the Democrats to the Treasurer for access to the document. And that was on the 8th of March. So, look we're not trying to conceal anything and in any event, as the Treasurer pointed out this morning, when you take into account things that the private modeller didn't take into account, the difference over the long term between this private research and the Government's original prediction ? bear in mind here we're dealing with predictions and projections, nobody can state to the very last decimal point exactly what's going to happen and I would never pretend it otherwise. When you take it into account you are talking about 80 cents in a $200 a week rent, it's hardly a question of people being deceived.
The other point that's been lost sight of is in the negotiations with the Australian Democrats which led to the passage of the tax package, the rent allowance for low income people was increased from 4% to 7%. That seems to have completely lost sight of. When you are hearing figures thrown around of 3.5, 4.7, 5.5 and so forth, remember that the rent allowance, this is the supplement given to individuals who qualify in the income test to assist in paying their rent, that's been increased from 4%, we were going to make if 4%, and we agreed to increase it to 7%. So, I don't think anybody can seriously argue that people have been unfairly treated.
COX:
Well Prime Minister, you've mentioned the term, with numbers being flung about, is it possible perhaps that with the concern, scaremongering even, about this particular factor of the GST that the education campaign has not worked, has not been effective?
PRIME MINISTER:
Well it's very hard to counter deliberate distortions and we have had deliberate distortion by the Labor Party in relation to caravan parks. I mean they don't tell the caravan park residents that if you don't impose the half-GST their landlord's being input taxed will endeavour to recoup the tax paid on their expenses by lifting their rent. They never tell people that.
COX:
But the real rough on the caravan park issue has come from your Coalition partners, the Nationals.
PRIME MINISTER:
No, the Labor Party stirred it up in the first place, I mean hang on, Wayne Swan and Albanese and the boys and girls from the local branches, they were all there at there at the caravan parks. I mean you thumb though some of those photographs and you can find sort of an honour roll of Labor Party membership. So look, all of this in a sense is unavoidable, inevitable and the difficulty of a Government that's courageous enough to undertake a major reform for the benefit of the country. We have to go through it. But once it comes in on the first of July, the Australian public will make up its own mind according to its own experience. Now it is our belief, and it is my quite strong belief, that over time people will see this change as being hugely beneficial for Australia. It's going to make us more competitive, it's going to give the states access to money to help them provide more for schools and roads and police and health services. It's going to provide lower income tax. It's going to reduce business operating costs. It's going to cut the price of fuel from what it would otherwise have been. It's going to abolish provisional tax, halve capital gains tax. All of these benefits, it's very hard to get them through the clamour and the static and the clutter of claim and counter claim at the present time. And I knew this would happen. This is the moment, the hour of the Government's greatest difficulty in relation to the introduction of this new system because it's easy pickings for a destructive opposition. All you have to do is make an allegation, then that gets reported, we've got to reply to it, inevitably replies are complicated because it's a complicated issue. People thinks there's something up when there's not.
COX:
But you're not just getting a belting from the Opposition, you're getting from the Nationals over the caravan parks and from the Democrats over rent.
PRIME MINISTER:
Well what you've got to understand in relation to the Democrats ? I mean, we dealt with the Democrats, and we continue to deal with them in good faith. And, but we don't control both Houses, so we had to negotiate with them in order to get our package through. But Tim, all of this was inevitable. The point I make is that when it comes in, people will make up their own minds according to what they actually experience. What we are debating at the moment are predictions by people about what will happen after the 1st of July. After the 1st of July, you won't be dealing in predictions, you will be dealing in reality. And the reality will be that people will find themselves better off. They'll find that not everything has gone up by 10% as they have been led to believe by the Labor Party in so many instances. They'll find that their taxes have been cut. They'll find that many items in the supermarkets are cheaper, some the same, some more expensive. They'll actually experience what it's about. And I am content as prime minister to be judged by the reaction of the Australian people to what happens, not to a whole plethora of claims and counter claims which we are getting at the present time.
COX:
Prime Minister, what if those increases though are greater than what your launch of the tax package said they would be? As with rents for example?
PRIME MINISTER:
Well, I'm going . . .
COX:
For clothes for example where they've not had to pay before?
PRIME MINISTER:
Well you make the point about rent, I mean if you listen to what the Treasurer said this morning, there is a very minor difference between what we said at the time of the launch of the tax package and what the Econtech model, the private modelling suggested, when you take into account the adjustments that were not allowed for in that private modelling and then you take into account the fact that when the changes were negotiated with the Democrats and food was taken out, there were consequences as, following from that. And when you take those things into account, the gap is what 80 cents in $200. So you're not talking about a huge difference in any event. But Tim we made good faith projections, according to Treasury advice at the time of the tax package. We had to produce hundreds of projections. They were done in good faith.
COX:
Prime Minister no-one denies that, but if people are . . .
PRIME MINISTER:
No, no I am sorry, I am sorry, people do deny that. People are running around saying that we have deceived the public.
COX:
But when your own . .
PRIME MINISTER:
No, I am sorry, I am sorry. I am glad you acknowledge that we acted in good faith, because we did and I think it is very important the public understand it. No Government in this country's history has attempted anything like this before. We laid it out, it all out in great detail and we have tried to deal in good faith with the public. I say again that it's coming in on next Saturday week, and in the weeks and months that follow, people will know whether we've dealt with them in good faith or not and I am content to accept their judgement because you'll be dealing there in reality, you won't be dealing there in supposition. That's what we're dealing with at the moment. People are making claims and counter claims and this is something completely new, it's different, it's going to help Australia and that's why we've done it. I know it's difficult and I know it's politically risky but what is the point of being in office unless you are prepared to take risks for the good of the country.
COX:
Prime Minister John Howard, he is our guest this morning on ABC Tasmania. . . . Let's go to Lance who's in West Hobart. Lance, good morning to you.
CALLER:
Good morning Tim Cox, good morning Prime Minister. Mr Prime Minister, this morning in the Mercury, there's quite a nasty political cartoon which we take for granted, but I'm going to cast your mind back a bit to 1975, no '76 actually the Hansard records that before the overseas excursions of Mr Whitlam and we are talking about 1976 money. I was wondering . . . in $522,000, it's quite a reasonable amount. My question Mr Prime Minister did any of the past prime ministers say to you, well I don't think I really should have this trip, I think I've had enough overseas expenses?
COX:
Alright.
PRIME MINISTER:
Well the answer to that question is that Mr Keating declined the invitation, I don't know that he ascribed the expense to the decline, he did decline the invitation. The others accepted the invitation. Can I make the point about this visit? It's not only important historically because we'll be celebrating one hundred years of the passage of the Australian constitution through the British Parliament and that is a very important historical event. But there is a whole week of events, a whole ?Australia Week' in London. Britain is the biggest destination for outward foreign investment from Australia. We as a nation invest more in Britain than any other country in the world and Britain is either the largest or the second largest foreign investor in Australia. We have a very important bi-lateral relationship with that country, forget for a moment the historical side of it, we have a very important bi-lateral relationship. And I've been prime minister for almost four-and-a-half years and during that time I've paid one bi-lateral visit to Britain, I've paid three to, I have visited Japan on three occasions, I have gone sixteen times to destinations in the Asia Pacific region and only three times to Europe. Now, people will criticise it because it is an easy sort of criticism to make but I think it is an important historical event and I also think the bi-lateral relationship between our two countries is very important and I am puzzled that some of the people who are criticising me, and this includes Mr Beazley, for going to London have criticised me for not going overseas enough. I think that's very odd.
COX:
Prime Minister [inaudible] criticism though and I think you would be aware is the timing of, I know you will be here for the weekend the GST is introduced and when retail picks up on the Monday and it's obviously going to be an interesting situation to say the least, you won't be here and I think people are very critical about it.
PRIME MINISTER:
When you say I won't be here when retail picks up on the Monday. I mean the die is cast now as far as the introduction of the tax system is concerned. And the Treasurer who is going to an OECD meeting tomorrow, he'll be back and it was just one of those pieces of timing where a judgement had to be made as to whether we completely ignored this very important historical observance or undertook it. And bearing in mind the time involved in the visit is, in London only four or five days and then two days in India. And I've been constantly urged to pay a visit to India. No Prime Minister's been there since 1989 and it obviously is more economical to go to India on the way back than to undertake a separate bilateral visit in a few months time.
COX:
Why though is there the need? the cost of the federation, or century of federation trip seems to be spiralling. One hundred and fifty-five members of the Federation Guard- why is that necessary?
PRIME MINISTER:
Well we do have Federation Guard and in 1988 for the Bicentenery Mr Beazley sent an equivalent size guard when he was Defence Minister and he was very proud of it and he thought it was very important to mark that historical occasion. Look you could decide of course never to observe any aspect of Australia's history. I mean we could completely scrap the observance of the Century of Federation.
COX:
I don't think anyone?
PRIME MINISTER:
And you'd probably save seventy five, one hundred million dollars. So I suppose it really is a question of whether you think those things are important. We made a judgement that it was and I know it's been criticised but I can only honestly tell you why we've made that judgement.
COX:
All right Prime Minister we'll move on. It's twenty eight minutes to ten and you're listening to ABC Tasmania. We'll get news headlines in just a moment but first of all we got to Susie who's in Cygnet. Good morning Susie.
CALLER:
Good morning Tim. Good morning Prime Minister.
COX:
Hello.
CALLER:
I wanted to ask the Prime Minister- he's probably aware that globalisation hasn't really served Tasmania at all and I'm just wondering why the Prime Minister and the federal Government is insisting on the introduction of genetically modified organisms and pushing to have a national introduction of these things and not allow in Tasmania to maintain the GM free status.
PRIME MINISTER:
Well we are a nation and we're not a collection of states and you have to have a national point of view. And Tasmania gets a lot of benefits out of being part of the federation and we can't have a system where every individual state just goes in its own direction because that would end up disadvantaging Tasmania a lot more than the other states because Tasmania depends for other parts of the country on assistance and I'm very happy to support that. And for example out of the Natural Heritage Trust Tasmania did better than any state by far, everyone knows that.
CALLER:
But Prime Minister are you saying that because Australia gets benefits from being in the federation of Australia that we have to accept?
PRIME MINISTER:
No, no I didn't say?
CALLER:
? [inaudible] effect on our economy and we were [inaudible] a benefit for their states in the future.
PRIME MINISTER:
I'm sorry I didn't hear you, you were talking over me.
CALLER:
No you were talking over me Prime Minister.
COX:
Just reiterate what you were saying Susie.
PRIME MINISTER:
I'm sorry I didn't hear it.
CALLER:
Because Tasmania accepts some benefits from being in the federation then is what you're saying is that because we accept those benefits we have to also undertake something that for no benefit to the federation of Australia but for possible huge detriment to Tasmania we have to accept that. Is that what you're saying?
PRIME MINISTER:
No I'm not saying that. What I'm saying is that in a federation there's give and take and Tasmania gets great benefits out of the federation. As far as trade issues are concerned, if we stop things coming into Australia then other countries will stop Australian produce, including produce from Tasmania going into their countries and we have to balance these things off one against the other- that's what I'm saying.
COX:
All right Susie, thanks indeed for your call. And we'll return with the Prime Minister in just a moment.
[news headlines]
COX:
The Prime Minister is in our Canberra studios. Prime Minister we'll continue with a few more calls while we have you. And we have Roger who's in Burnie. Good morning John. Good morning Prime Minister.
PRIME MINISTER:
Good morning.
CALLER:
I just wanted to check the pensioner compensation arrangements. Apparently on July the 1st if you're 55 you're entitled to a $3,000 compensation payment with regard to the GST business. Unfortunately some people prior to 55 are pensioners and I just wondered if you could comment on what arrangements have been made for those?
PRIME MINISTER:
Well people who are in receipt of a whole raft of pension or other payments irrespective of their age, if you're getting the payment that goes up by the four percent on the 1st of July. But the savings bonus which I think you're referring to, that is only available in relation to people within a certain age bracket.
CALLER:
Oh I see. And can you give me a reason as to why that is the case?
PRIME MINISTER:
Well I guess it was put on the posited on the basis that it's available for people who are self-funded retirees or are generally retired or pensioners. And we took 55 as being a reasonable cut off point bearing in mind that you've got to have a cut off point at some stage and we thought 55 was pretty reasonable.
COX:
Roger thank you for that. Let's go to Tea Tree. Kristine good morning. Are you there Kristine? Colleen is in Hobart. Good morning Colleen.
CALLER:
Oh good morning. Good morning Mr Howard.
PRIME MINISTER:
Good morning.
CALLER:
I am a slightly, a more than slightly cynical constituent. I am very dubious about what benefits I'll get out of the GST. As a sole earner in our household, my husband won't get any benefits because he doesn't get provision down here, $68 a fortnight disability pension, so he won't get any benefits back. I'm just concerned why the pharmaceutical benefits have not been raised in well months, years. The benefit there is only $2.70 a fortnight and there is not a single script that you can get anywhere that is under $3.30 and then you have to be careful that you ask for the generic name or you will pay up to a dollar to two dollars more. Why hasn't this been raised in respect of the cost of living index, cost of scripts etc because mostly people that are on disability pensions and old age need scripts more than they need anything else. And my second question and then I'll stop and listen was why isn't it going to be mandatory to show the VAT on all receipts as it's shown in England so that you know clearly what percentage of that price you are paying for an article. Thank you.
PRIME MINISTER:
I'm not sure, despite what I said earlier I'm not so a frequent to England that I'm completely conversant with their VAT system. But I thought that when you got a bill in England it had including VAT, that's my understanding so I don't think that claim is correct. But look the broader thing- I'd honestly have to go back and check the budget papers in relation to the last increase in pharmaceutical benefits. I don't think it's quite right to say it's years since that has occurred but I honestly? I don't have the papers with me. I would have to check that because I don't want to mislead you.
In relation to people on pensions generally, and I don't pretend to understand all of your circumstances and I'm not asking for them but we are increasing all pensions and benefits on the 1st of July by 4%. We're having additionally an increase in the rent allowance at 7%. I don't know whether you pay rent or not. There are also liberalisations concerning earnings that people have outside their pension. There are if you've got savings and you're over a certain age and you're on the pension or a self-funded retiree you get benefits in relation to those savings. I don't know whether you pay any tax, I'm not sure. If you do then you get the benefit of the tax cuts. If you don't then you don't get those benefits.
I guess I have to go back to what I said earlier and that is that there have been so many claims flying around over the last year and it's been so much in the interests of our opponents to create as much fear as possible. But people won't really know for sure until this system operates. And what I ask you to do is give it a fair go, experience it. And if people have legitimate concerns when they actually know what is happening that we naturally want to hear them. But I'm very confident that it will be a fair system. It's a very big change and we understand that people are apprehensive and we want to help them and we want to make information available. But in the end you really have to experience it to know exactly how it works.
COX:
All right Prime Minister next time we talk we'll know whether the introduction of the GST has been a smooth [inaudible] or not.
PRIME MINISTER:
Mmm, we certainly will. Well I think that's right and I think that is how increasingly people are going to approach it. I mean we think it's good for Australia and we think it's fair. And if it can pass those two tests then I believe the public will support it.
COX:
And if that they'll certainly let you know.
PRIME MINISTER:
Well of course they will and they have every right to and we will deserve the consequences of it.
COX:
All right Prime Minister I know you have another appointment to get to. Thanks for your time this morning. I hope we talk again soon.
PRIME MINISTER:
Ok. Bye, bye.
[ends]