Subjects: Backpacker hostel fire in Queensland; GST; wages; wine industry; pensions; Millennium Summit; ABC; Cabinet reshuffle; cricket; Centenary of Federation Trip
E&OE...
FAINE:
John Howard joins me in the studio. Good morning to you Mr Howard.
PRIME MINISTER:
Good morning Jon, very nice to be back.
FAINE:
We've learned overnight of the tragic fire in Childers, north west of Maryborough in Queensland - eight people confirmed to have died. Raising questions immediately, as it has on previous occasions when there have been backpacker hostel tragedies about the facilities for some tourists around Australia.
PRIME MINISTER:
Yes, well it is an appalling tragedy and the details of it are still unfolding including of course the concern about the ultimate number of victims. I spoke to the Queensland Premier a few moments ago. Obviously investigations have to be carried out and it's not appropriate for me to start speculating about what may have been the particular cause of this terrible tragedy. I do however want to make the point that generally the tourist industry in this country is a very safe and reliable one and this tragedy is quite an appalling one but other facilities are generally quite good in this country.
But I think all of us, particularly having in mind how many Australians felt, as well as of course the families of those young Australians who died far away in Switzerland in that appalling accident last year, you feel for the families of these young people. Most of them I understand are from countries around the world, Korea and Japan and from Europe, some are I believe from Australia as well. Just a terrible tragedy and I extend on behalf of the Government my sympathy and concern to all of those affected.
FAINE:
Yes, I understand the updated figure now is fifteen dead so the extent of the tragedy is becoming more apparent.
PRIME MINISTER:
Well that was my worry when I spoke earlier to the Premier and also to the local federal member Paul Neville who's been in very regular touch with me about it. Just the concern was that it was going to end up being a much higher figure and sadly it looks as though that is the case.
FAINE:
Prime Minister to turn to the matters that are preoccupying you and your government at the moment and in particular one week out, the GST. This morning the petrol companies have all come out and said, look you may think that your changes to excise tax are going to reduce the price of petrol at the pump it will in fact though they say have the opposite impact and the price of petrol will go up at the pump.
PRIME MINISTER:
Well I can't understand the line the oil companies are taking. What we said was that as a result of reducing the excise when the GST came in the price of petrol need not rise. We didn't say we'd reduce it at the pump, we said that it need not rise. We've cut excise by 6.7 cents a litre. There are cost savings for the industry, and I'll come back to that in a moment, of about 1.4 cents a litre, so that makes 8.1. And that's all been calculated on what we call a strike price of 90 cents a litre and that 90 cents a litre is a slightly higher price than many people in Australia are paying at the present time. I would make the point that if the price of fuel were to come down in the future from its current level the excise reduction won't come down so therefore there will be, if there is a fall in the price of fuel, a greater benefit to the motorist.
FAINE:
But in fact we're being forewarned that the price of petrol might yet go up.
PRIME MINISTER:
Well it might, it might.
FAINE:
International [inaudible].
PRIME MINISTER:
But they do fluctuate. Now John I'm saying if. You know I don't want somebody in six month times to say, oh Howard promised on Faine's program that the price of petrol is going to come down. I'm not promising that. I'm simply making the point that we have taken a, I think a very fair, some might even say generous strike price of 90 cents a litre and I mean if we'd have taken say the six month average up to now it would have been a lower figure, it would have been 85 cents a litre so the reduction would have only been, would have been about 0.4 less than it's turned out to be.
FAINE:
The reality is we're going to have petrol at just about a $1.00 a litre.
PRIME MINISTER:
..but the..
FAINE:
.by a week and a half from now.
PRIME MINISTER:
Well, no, no, no. Well the reality is that if that is the case that will be due to the world price going up. I mean even the Government's fiercest critics on this issue, the Royal Automobile Club of Victoria have said that the price of petrol is dominated by world oil markets and I can't control that, no Australian Prime Minister can control that. But we have cut our excise by 6.7 cents a litre. There are cost savings of 1.4 cents a litre.
FAINE:
From the companies' point of view, they say they can't fund that.
PRIME MINISTER:
Well let me give you an example. What do they carry their fuel in to the bowsers? They carry them in tankers. The diesel that they use for those tankers will fall by 24 cents a litre from the 1st of July because of the cut in diesel excise. And what I'm saying is that that cost saving should be passed on. Now are they saying they're not going to do that?
FAINE:
The diesel that they use for their trucks is the same diesel everybody else use in their trucks. The price of diesel's not going to fall.
PRIME MINISTER:
No the price of diesel for heavy laden trucks is going to fall.
FAINE:
For huge, the big ones not for the sorts of diesel cars that ordinary people use?
PRIME MINISTER:
No I'm talking about the tankers. I'm talking about the tankers in which they carry their fuel. Now that is an example of where there is a cost saving from day one.
FAINE:
But does that translate to ?
PRIME MINISTER:
Well look there are other savings. The point I'm making is that there are cost savings available and everybody is being expected as part of this new system, everybody is being expected to pass on their cost savings as they are enjoyed. And in relation to the oil companies that cost saving will be enjoyed from day one.
FAINE:
Do you go so far then as to say that if the price of petrol doesn't come down that it's because the oil companies are profiteering?
PRIME MINISTER:
No what I say is that our commitment to the people at the election that the price of fuel need not rise, need not rise as a result of the GST has been honoured. And if it isn't then there ought to be pressure put on the oil companies to pass on their cost savings.
FAINE:
And the pressure should come from where?
PRIME MINISTER:
Well I think the pressure should come from everybody. The oil companies are no different from anybody else.
FAINE:
Shouldn't it come from you?
PRIME MINISTER:
Well I think I'm sort of saying a few things about it now, aren't I? And the ACCC will be as well. But look I don't want to get into an argument with the oil companies but when I hear representatives of the oil companies saying in black and white, there are no cost savings at all and I'd point out that there is in relation to the excise on diesel, of course I expect them to pass on those cost savings.
FAINE:
Every problem that comes up with the GST seems to be thrown over to Professor Fels and the ACCC to resolve.
PRIME MINISTER:
No I thought every problem that came up was thrown over to me.
FAINE:
Well you are the architect of it.
PRIME MINISTER:
Well of course I am. And I am the unashamed architect of it. And what we are going through at the moment which of course is the period of the Government's greatest vulnerability on the new system is entirely to be expected.
FAINE:
Is this starting to make impact on you? Is that starting to hurt that vulnerability?
PRIME MINISTER:
No, no I expected this. I knew that we would go through this difficult period. It's easy at the moment for our opponents and our critics to score points off us, to hit us all over the field to use a cricketing analogy. But eventually the tide will turn, it will come in. People will discover that the price of everything hasn't risen by? the price of many things won't have risen at all let alone everything rising by 10%. They will enjoy bigger tax cuts than they expect. The price of some items will fall. The price of many items will remain the same.
FAINE:
And if Governments get thrown out for introducing tax reform?
PRIME MINISTER:
Well that is the right of the people. I mean I didn't go into public life just for the purpose of staying in office forever. I actually went into public life and we were elected to do things that we think are good for Australia. And the reason we've brought in this tax change is that we think it will help Australia. We think it will give the states more revenue for schools and roads and hospitals and make us more competitive and give people lower personal income tax and cheaper fuel in rural Australia. Now these are all things that are good for Australia and what I'm saying is that it's easy at the moment to nit pick. It's easy to be destructive. It's easy like Mr Beazley to be a roadblock to progress but in the end the people will experience the new system and they'll make their own judgement and I'm very happy to be judged by whatever verdict the people like to bring down.
FAINE:
I've learned this morning that the Tax Office have issued a new guideline on the documentation required if you're to pass on through the GST system the inputs required in running a car. Now most businesses claim the cost, as one of their business expenses of running a car. Evidently the Tax Office have issued a guideline on the 9th of June that if you use the cents per kilometre method for claiming car expenses and 80% of people do then for the first time now you must keep every receipt, every piece of paper for petrol, for oil, for repairs and maintenance. Now for income tax deductions you don't need all of those documents but now for the GST you will need to.
PRIME MINISTER:
Well I haven't seen that ruling. I don't see every single ruling.
FAINE:
Well this is supposed to be a simple system.
PRIME MINISTER:
Well it is a simpler system than the present one.
FAINE:
Every piece of accounting?
PRIME MINISTER:
Well you are reading out to me a ruling I haven't seen. I'm not saying you're wrongly reading it but Jon I can't without seeing the context of that and looking at the ruling I can't give you any more detailed answer on that. I mean look you can do that a hundred times to me if you like and that's fair enough but I mean it's not a particularly productive way of trying to examine the benefits as well as the detriments and I don't believe there are many detriments of taxation reform.
FAINE:
Are you worried about a wages break out? The manufacturing unions are negotiating with the Australian industry group for a 5.5% per year for three years settlements of wage claims. The tram workers are negotiating for a 5% for three years wages deal. Even the Tax Office is negotiating with its own 18,000 staff for a two year deal, 5% and 5%.
PRIME MINISTER:
No I'm not worried about a wages break out because the tax cuts more than compensate people for the one off price increases. There ought not to be a wages break out. There is no case for a wages break out because people are more than compensated. People are going to be better off. I mean let's put aside you know all the nitpicking and the minutiae and the point scoring and the narky negativism that has been a feature of this debate now for months and look at the broader horizon. I mean what we're doing is we're cutting income tax by $12 billion. 80% of Australian tax payers will be on a top marginal rate of no more than $0.30 in the dollar. Family benefits are going up. Pensions are going up. Provisional tax is being abolished. Capital gains tax is being halved. Company tax is being cut from 36, to 34 and then to 30 cents in the dollar. These are generational, dramatic, historic reforms. My argument is that when it all comes in the benefits of this will wash over the nitpicking over this or that element of the taxation package. Easy to run it now, I mean people will be running it for the next week and I'll be doing interviews like this all over the country for the next week, I except that. But Jon in the end this will be good for the country, that's why we've done it.
FAINE:
And we have to keep that in mind. The black market, much speculation. You are saying that the black market will be reduced, the size of the cash economy will be reduced. But in other countries it was only reduced very much in the short term. In Canada, New Zealand and Europe it seems to have blossomed in the long run under a GST or value added tax.
PRIME MINISTER:
Well we are careful what we say about the black economy. We think there will be some dividends. Our figuring has been pretty conservative on that subject. We believe there will be some dividends through the black economy and one of the advantages of tax reform is that more people will be caught. The Australian Business Number will bring some people within the income tax and company tax net who are not previously there and that is a good thing. It means that the honest tax payers like you and I who have our tax taken out every week will be joined by some people who haven't.
FAINE:
And huge number of people taking out ABNs, in fact more than were ever expected?
PRIME MINISTER:
Now that is some indication that we'll be making inroads into the black economy but I'm quite careful about that. We haven't made any exaggerated claims in our figures so if it collects more than we expect then that's a plus but I don't want to get too carried away with it. I think it will help though.
FAINE:
If you can pop the headphones on Prime Minister, there's a number of people with specific issues that they want to pursue and I've got some non-GST questions I want to ask you before we wind up as well. Tim from Yark is on the line, good morning to you Tim.
CALLER:
Yes good morning Jon. I'm a small businessman growing grapes and making fine red wine. I presently claim the small business exemption, in eight days I'll have imposed on me a 10% GST on wine I retail and a 41% tax on wine I wholesale. I would like the Prime Minister to tell me how I can compete or even survive with such massive impositions.
PRIME MINISTER:
Well, you are operating in one of the most successful export industries that this country has ever seen. All of the people in your industry to whom I speak talk optimistically and with hope. And the price impact on the consumer of the new tax system, which ultimately is the driver of the profitability of your industry is nothing like of course the figures you've quoted. Nothing like that at all.
CALLER:
For me . . .
PRIME MINISTER:
No, you asked, you made a statement, I don't know it was a question, you made a statement. And on top of that of course exports are completely GST free and the wine exports now to Britain for example are the best export that we send to that country and our exports of wine for the first time this year have gone over $1 billion.
CALLER:
Yes, I know all that, but I don't think . . .
PRIME MINISTER:
Well I think it's relevant.
CALLER:
Of course it is.
PRIME MINISTER:
And I think it drives what's going to happen to your industry.
FAINE:
Briefly Tim.
CALLER:
To the industry as a whole that's fine, but to me I get a 41% tax that I didn't have to pay before.
PRIME MINISTER:
You are deliberately using that figure in order to . . . .
CALLER:
It's a tax.
PRIME MINISTER:
?with respect to disguise the fact Tim that your industry, that the impact at the bottle shop, the impact to the consumer is quite reasonable and affordable and all of the people in the industry with whom I've spoken accept that.
FAINE:
Just finally a quick question, do you think you can put up the price of your product and survive?
CALLER:
Not, I can't put it up 46%.
PRIME MINISTER:
No, but you don't have to and you know that.
FAINE:
We'll have to move on Tim, we'll have to leave the disagreement as a disagreement, rather than being able to resolve it and thanks for calling. Val in Avondale Heights, morning Val.
CALLER:
Morning Jon, good morning Mr Howard. You keep saying that everyone will benefit from income tax cuts.
PRIME MINISTER:
Those who pay tax.
CALLER:
Those who pay tax, but what about all those who are below the income tax threshold? They will now be taxed at the same rate as Kerry Packer. And I happen to be totally disabled, I have to employ a gardener, I have to employ someone to do my windows, I have to employ tradesmen because I can no longer do odd jobs myself. I'll be paying 10% on their services.
PRIME MINISTER:
Well Val, you of course presumably get a benefit, you get a pension and perhaps some additional benefit, I don't know. I mean I don't know your circumstances.
CALLER:
No, the people like myself do not get any additional benefits.
PRIME MINISTER:
Well no, can I just, well you do you get a 4% increase.
CALLER:
But that will in no way compensate for the sort of things that have to be paid.
PRIME MINISTER:
Everything will not go up by 10%. I mean one of the great myths, one of the great misunderstandings I suppose, largely because of the fear campaign about this new system is that everything rises by 10%, it doesn't.
CALLER:
And so [inaudible] by our own research. All the things we have to buy.
FAINE:
Well Val.
PRIME MINISTER:
Well, I mean I did listen courteously to you and I am just trying to answer your question, it is a fair question. Many of the people who do things for you will enjoy cost savings, as a result of the abolition of other taxes. If anybody uses a vehicle in their business, they will be able to claim . . .
FAINE:
Hang on Val.
PRIME MINISTER:
?refund on the tax on the fuel they use in that vehicle ? that's something you can't do now. The point I make is and I don't think you'll really believe me until after the 1st of July and you find out that it's not as bad as you've been told, that not everything will rise by 10% and we believe that the immediate increase in the pension, the increases in the level of rent assistance, and other changes are going to more than cover the increases in the costs that you refer to.
CALLER:
Do you know that my electricity bill for this quarter, which is usually about $600 is going to have 10% on top of that.
PRIME MINISTER:
I didn't hear the first bit.
FAINE:
Val. To do with electricity prices. But Val you say you're not yet convinced, the Prime Minister says wait and see and I don't know that we can take it much further than that and thank you for calling. Ken in Gippsland, good morning.
CALLER:
Thank you, good morning. Observation, Mr Howard. I understand since the 70's I think we've had world parity pricing for oil.
PRIME MINISTER:
The late 70's, yes.
CALLER:
Australia has [inaudible] and it's petrol is supplied by its own oil from our own shores.
PRIME MINISTER:
That's true.
CALLER:
Understanding we've got a World Trade Organisation pressing for level playing fields and I think your government supports that. Well if China was allowed to take advantage of cheap labour to import goods here and Taiwan likewise, why don't we take advantage of our local oil and sell it to ourselves at cheaper prices and take advantage of that?
PRIME MINISTER:
Fair enough, I will tell you why. One of the reasons we are largely self-sufficient is that we have provided people with the incentive to explore for and exploit our oil reserves. And that incentive has been the benefit of world parity pricing.
CALLER:
And boy it's good at the moment for them, isn't it? And aren't we paying?
PRIME MINISTER:
Well, yes. It's also good for Australia because if we had not adopted world parity pricing in the 70's, I believe we would now have been less self-sufficient if I can put it that way.
CALLER:
And I am paying for it.
PRIME MINISTER:
Well, no well can I tell you that our actually, well although none of us like the fact that the world price of oil has gone up, petrol at the bowser in Australia is the second cheapest in the world. I mean you go to Europe or Japan . . .
FAINE:
It's a lot more, but Tim's saying we could do something useful.
PRIME MINISTER:
Well no, I don't believe we could, I don't agree with that. Because if twentyy-five years ago, or twenty-three years ago we had said no we'll not price it at the world level, there wouldn't have been the same incentive for companies to develop our capacity.
CALLER:
And you wouldn't get as much in excise and taxes out of it either.
FAINE:
But that's returned to the government.
PRIME MINISTER:
When you say we ? we don't, I don't keep it. It's returned to the people. We use it to spend on the army, we use it to spend on social security, we use it to spend on health and all the things that people want.
FAINE:
Prime Minister, you are described in some of today's newspapers as snubbing the United Nations by refusing to attend, or saying you're not available to attend a Millennium Summit that Kofi Annan's invited you and every other national leader to. Only a few countries are not sending their national leader and it's the week before the Olympics start. You say you won't go?
PRIME MINISTER:
Well, I can't because of the Olympics. And I did discuss this with the Secretary General, he understood. I discussed it with him when he came to Australia a few months ago. This is not sort of a new development. And the suggestion that I'm snubbing the United Nations is the fantasy of the headline writer.
FAINE:
But if it's far enough away from the Olympics it's a week ahead.
PRIME MINISTER:
There are a very large number of events in the lead-up to the Olympics. There are a lot of people coming to this country and they will expect some contact with, and discussion with, and hospitality from the prime minister of this country and I think the Australian people will expect me to provide that.
FAINE:
Another one of the headlines today is speculation that the ABC's Managing Director Jonathon Shier later today will make announcements which could include the 7.30 Report losing its separate identity as a national 7.30 Report.
PRIME MINISTER:
Well I don't know.
FAINE:
Do you want to comment though on whether you think it's a good idea to . . .
PRIME MINISTER:
Well I think . . .
FAINE:
To change the arrangements?
PRIME MINISTER:
Well I think it would be a good idea if I sort of knew what he had in mind before I commented. I think the ABC provides a very good current affairs service. Whether in the view of the new managing director and those who advise him it can be made better, is really a matter for them to resolve and if they have propositions they want to put to the public, then they'll do so. And if you then want to ask me what I think, I'll try and give you an answer. But I don't really want to respond to some speculation in the Australian newspaper. I mean it is a matter for the ABC, the Government doesn't run the ABC I can assure you of that.
FAINE:We are well aware of that.
PRIME MINISTER:
Well there you are.
FAINE:
I have read two or three articles, including one by Laurie Oakes in the Bulletin speculating about the prospect of you having a minor Cabinet reshuffle, Jocelyn Newman and John Herron both expected to retire, John Herron Aboriginal Affairs. And Brendan Nelson, the speculation is that he will be invited to take up the position of Aboriginal Affairs Minister. Any truth to those rumours?
PRIME MINISTER:
Oh Jon, I don't respond to those rumours full stop.
FAINE:
None at all?
PRIME MINISTER:
No.
FAINE:
Brendan Nelson just accompanied you on a visit, a reconciliation visit to the aboriginal community in Moree last week, it was regarded as a sign that . . .
PRIME MINISTER:
Jon, I am not. Jon I don't comment on those sorts of rumours.
FAINE:
Alright, well moving onto other things. Cricket, the world of cricket on which you are passionate and you keep a close watch. Shane Warne, it's reported today is unlikely to remain as the vice-captain of the Australian Cricket team after his latest encounter.
PRIME MINISTER:
Well that is a matter for the selectors and the Australian Cricket Board. I love cricket and everybody knows that. But I don't think it's right for the prime minister to give a running commentary. I think you should allow the administration of sport to remain in the hands of the administrators of individual sport. I mean from time to time if one makes a comment, but I think it's a bad habit, particularly for a cricket-loving prime minister to sort of be giving public advice, expressing public views. And I will leave those . . .
FAINE:
You don't want to throw him a lifeline?
PRIME MINISTER:
I know, I will leave, they are matters for the cricket authorities, not for me.
FAINE:
And Hanse Cronje of course . . .
PRIME MINISTER:
I am very sad about what has happened. I've met Hanse Cronje on many occasions, on a number of occasions. I am disappointed like other people are. I want the cricket authorities of the world to get to the bottom of it. I don't think they should be in any way be laid back or indifferent to the need to get to the bottom of it and to root out any examples of bribery and put the people responsible out of the game. I think that's what the cricket public wants overwhelmingly whether they're in Australia or South Africa or the West Indies or England. I think people want the game that they love so much free of this kind of behaviour. There's no evidence to date that any Australians have been involved in this kind of behaviour and I hope that remains the case.
FAINE:
And on Monday week, you're off overseas. The GST obviously is going to go through more turbulence as you've just said over the weeks to come. Any thought of rescheduling your travel?
PRIME MINISTER:
Well I am only going to be away . . .
FAINE:
Or delaying your departure?
PRIME MINISTER:
No, I mean I will be here when the GST comes in . . .
FAINE:
On the weekend?
PRIME MINISTER:
Well I'll be here when it comes in. And I mean the die is cast - it's coming in on the 1st of July and I'll be away for a bare eight days. And it is an important historical observance. It is a hundred years since Australia's constitution was passed. I think you should observe those things. But quite apart from that, we have a very important bi-lateral relationship with Britain, that country invests more in Australia than the United States on most occasions.
FAINE:
Do you need to take a couple of hundred soldiers along with you for company?
PRIME MINISTER:
Well there is nothing wrong with that, Mr Beazley did that in 1988.
FAINE:
Does that make it alright for you too?
PRIME MINISTER:
Well we didn't criticise it then and I think the idea that you have an Australian military presence for something like that?.I mean you can take the view of course that you never observe anything.
FAINE:
I don't take that tack.
PRIME MINISTER:
Well it sounds, many people do. No, many people do. I mean you can always score a cheap point as Mr Beazley is doing at the moment on these sorts of issues. But I didn't notice that when Labor was in office that they argued or behaved that you should never observe these things. They were very happy for important trips to be undertaken. Prime Ministers and Treasurers, I mean you asked me a question a moment ago that was based on the proposition that I should be going to New York at the end of August to attend a meeting. I mean that was, the thrust of that article in The Age was that I should be going overseas more, and now as the interview comes to an end you are in effect saying I should be going overseas less. I can't win can I.
FAINE:
No, not that you shouldn't go overseas less, in fact I think you should be going to England for the Celebration of the Centenary of Federation, but I do wonder why we need a couple of hundred soldiers to go with you?
PRIME MINISTER:
Well I think if you have a Federation Guard, why should their, the involvement in something like that just be as it were at the elite level, for the Prime Ministers and the Premiers. Why shouldn't people who are serving their country in uniform be part of the ceremony? I think the men and women of that Federation Guard deserve and for the first time we'll actually have women part of the Guard.
FAINE:
The Prime Minister, thank you very much for joining us today.
[ends]