Subjects: GST and tax reform; ABC; childcare; pensions
E&OE..................................
CORDEAUX:
And it is with a great deal of pleasure that I welcome the Prime Minister of Australia, John Howard. Sir, good morning once again.
PRIME MINISTER:
Very good to be with you. And first of all congratulations to you and Caroline on the birth of Christopher.
CORDEAUX:
Thank you very much for that.
PRIME MINISTER:
I know what it means to both of you and what it means to new parents and I know that you've named your child after you late brother. That gives it a special additional family significance.
CORDEAUX:
It's a wonderful moment seeing new life again.
PRIME MINISTER:
It is. I've had the experience on three occasions and it's great.
CORDEAUX:
Sir, now it's almost there.
PRIME MINISTER:
It is.
CORDEAUX:
This moment.
PRIME MINISTER:
The GST. This political baby we're talking about.
CORDEAUX:
This GST baby. Has there been, maybe, I don't know, in the still of the night, I don't know whether prime ministers sort of wake up at three o'clock in the morning and worry about things. Has it occurred to you ever that you know, have you had really severe, strong doubts about it?
PRIME MINISTER:
I've never had any doubt that it was the right thing to do. I know that we've had a lot of stormy weather and I know that particularly over the last few weeks it's been very easy for those against us to run scare stories and to unnerve people. And it doesn't surprise me that we're being hit every day because at the moment we're in a period of unrestrained negativity but that is about to change because at the weekend people will begin to experience the new system. They will begin to find, as I think the publicans of Adelaide indicated yesterday that some of the price increases are not as great as the public was led to believe. And people will start to experience their tax cuts. I went to inspect a liquor place in Canberra this morning and I found talking to the proprietor that the difference between the pre and post GST prices were absolutely minuscule and he indicated to me he's just going to hold his existing prices and see what happens. Now I think you're going to find quite a lot of that and I think people are going to be pleasantly surprised that things haven't gone up.
CORDEAUX:
Well if people do that and people do the right thing and try to ease the thing forward I think that would be wonderful. But do you blame the media to any extent that they have really been pushing the negative side? I mean I don't know that I've ever sat down and read a story about the big picture, about the international competitiveness, that kind of thing.
PRIME MINISTER:
No, no, no. Well, I mean sections of the media have sort of just played to the headline of the day. Now whenever you say that to a journalist they say, well that's our job to sort of put the heat on you fellas. Now that's true and I can't complain about it. We live in a democracy, the media's part of the system but there does come a point where you've got to try and look at the longer term national interest.
And there is a longer term interest in this. This country has needed tax reform for a quarter of a century and what I ask is that it be given a fair go. I ask people to give it a few weeks, a few months, then make their final judgements and if they don't like it, they think it's unfair well they will react accordingly at the next election and I will accept that. But I think if they do give it a fair go and after a few weeks and months people will say okay, some things have gone up in price, some have gone down but I've got a decent tax cut and I'm better off and I'll go with it and I recognise it's good for the country.
CORDEAUX:
As you sniff the political wind? What sort of negativity would you regard as being acceptable? What have you prepared for?
PRIME MINISTER:
Well, I prepared for a lot of scare stories. I knew that for example you'd have a scare story on petrol.
CORDEAUX:
But once it comes in? Once it comes in, what then? What are you expecting then?
PRIME MINISTER:
Oh, well I think what some people will do in the media is they'll hunt around for the one disgruntled small business operator amongst the twenty who've absorbed the new system quite easily. I'm quite sure that will happen. I'm quite sure you'll find people being interviewed saying, oh I didn't think it would go up by this much. But then you may not have people being interviewed saying, golly my supermarket trolley is cheaper than expected.
But the good thing about it coming in Jeremy is that people will actually experience it. All people are experiencing at the moment are the scare stories because you don't have any real life experience to set off against it, you just have the scare story. You hear something on the radio, or see it on television, or read it in the papers, everything up 10% sort of thing and you say, oh it's terrible. But when you actually go into the supermarket and you'll find that some things have fallen in price because there's no wholesale sales tax. Some things are completely free of GST like basic foods and other things have gone up by a much lower figure than 10%. You get a better picture as I did this morning in this liquor store when you actually compare the two. The difference it pretty limited and you think gee that is good in anybody's language.
CORDEAUX:
And one would have more money in his pocket in any case.
PRIME MINISTER:
Well that's the point. Nobody really is convinced of that until they actually experience it because the last time a government in this country, it was the Keating Government, they promised a personal tax cut they snaffled it after they got re-elected.
CORDEAUX:
But politically Prime Minister, even though you can say and prove and demonstrate that something is good, people don't like change do they? It's difficult for a politician to stand up and be, well statesman-like enough to say, this is the way forward, follow me.
PRIME MINISTER:
If people don't like change while it's happening and while they're contemplating it once it's there and they get the benefits they're inclined to say, well that was a good idea, I'm glad the Government did it. And we haven't reached that stage yet. We're going through this very difficult stage where it's easy for people to score points off us and there are always going to be glitches. I mean we've got a glitch with the child care benefit payments. I mean there is a glitch. But it will be fixed. It's being fixed now and nobody will be denied their increased benefit. There may be a delay of a few days but nobody will be denied their benefits.
CORDEAUX:
I remember I spoke to Neil McMaster who's the BP Manager of Public Affairs and I put it to him that your modelling had demonstrated to your satisfaction anyway that there was 1.4, 1.5 cents in it. And he said, look we would like to sit down with the Government and look at that modelling because we can't find that saving to pass on, it's just not there. And I said, well you both can't be right. Why don't you try to figure out where the mistake is in all of this is and try and solve it?
PRIME MINISTER:
Well his people and John Fahey apparently had a meeting yesterday and I don't think we're much closer together and we'll see what happens at the bowser. We're talking here of course, even if you accept that everything the oil companies have said and that is you have virtually no cost savings to pass on, and we don't accept that, and even if you did when you take other things into account you're sort of arguing over a cent a litre, that's what you're arguing over. I mean that's the difference. That really is, in effect the difference because the GST. I mean assuming you've got a price of somewhere in the order of 85 and you take off the 6.7% straight reduction, the GST is then added on. I mean you are not talking here about a 10% increase in the price of petrol, you're talking, even if they were, and I don't except they are. I mean you've got to keep a sense of proportion about this.
CORDEAUX:
Well when OPEC met recently they were saying that, the subject of petrol prices world wide came up and they made the point that world wide, various governments tax petrol at somewhere between 50 and 70%. You do have the opportunity if it becomes a problem, you do have the opportunity to cut the excise to make it, well more attractive don't you?
PRIME MINISTER:
Well Jeremy there is a heavy excise on petrol, I don't deny that, but I also should point out that Australia has the third cheapest petrol in the world.
CORDEAUX:
But half of what we pay at the bowser goes to government in one way or another.
PRIME MINISTER:
Yes it does and that comes back in schools and roads and police services and health services and so forth. I mean it doesn't go into my pocket or Peter Costello's pocket, I don't get it. It goes to pay.
CORDEAUX:
We just lost the line I think. I think we'll take a break and see what's happened to that line to Canberra where we're talking with the Prime Minister.
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CORDEAUX:
The Prime Minister's my special guest. I think we've got you back Sir?
PRIME MINISTER:
Yes, I'm back again.
CORDEAUX:
Every time we try to talk to you we end up with some sort of technical glitch.
PRIME MINISTER:
Not the GST.
CORDEAUX:
No it's not the GST.
CORDEAUX:
How big, I was going to say Prime Minister, how big do you think the black economy is?
PRIME MINISTER:
Oh, big but probably not as big some but bigger than you and I might think. And the GST will reduce it, it won't totally eliminate it but it will reduce it. The Australian business number will bring into the income tax and company tax net some people who've been outside it and that's good because you and I and your listeners who've been paying their taxes every year without fail get a little bit irritated if people who don't pay any tax continue to enjoy that privilege. Now we're not sort of trying to clobber people. We just want them to join the system and contribute their fair share.
CORDEAUX:
If let's say, it's more than Treasury think, and I think they put $3 billion on it?
PRIME MINISTER:
Well they've been very careful about this. We don't want anybody to allege that we've inflated our revenue figures by phoney claims about the black economy. They've been very conservative.
CORDEAUX:
Now what happens if indeed it turns out to be more like the $7 billion that Peter Reith mentioned, which you have rejected?
PRIME MINISTER:
What I've said is that there's no evidence of that, and we haven't had any official revision. That was just a figure that was based on Peter's own personal views but it has no official status. What happens if it turns out to be more revenue - well we will use that wisely, we will probably reduce our debt at a faster rate, we might also use the money for sensible Government decisions, either on the tax or expenditure side. But I don't think we should start counting those chickens before they're hatched - they may never be hatched, and I think it's unwise to start talking about revenue we haven't got and revenue we haven't been told we're likely to get. We are in a strong budget position, we're providing the biggest tax cuts in Australia's history - $12 billion worth, and we're introducing a brand new tax system. Now that is a big meal in anybody's language, and one of the great benefits of this new system is that all the revenue from the GST is going to go to the States, and it means that over time each of them will have more money to spend on roads and public hospitals and government schools and police - those services which, in our day-to-day lives we take for granted as being necessary elements of a just and stable society. That's a very important element of this new proposal. It's not the most glamorous part of it, but it's certainly in a long-run sense, one of the more important parts because many of those of our day-to-day public services are provided by the States, and they've constantly complained as you know that they don't have a guaranteed source of revenue. After a transitional period - it will vary from State to State - it's quicker in some cases than others, they will have a growing source of revenue to fund their ongoing activities.
CORDEAUX:
I don't know if you've seen this, Wayne Swan put it out this morning - the Howard Government will renege on a promise to pay 4% up-front increases in the pension, with most pensioners being short changed by almost $10 from the first fortnightly pension payment after the start of the GST.
PRIME MINISTER:
I just don't know how that man can say that. What is happening is that the first pension pay day will occur a few days after the 1st of July, because that's the set pension pay day. When it happens, the amount of the pension will be back-dated to include the increase from the 1st of July. How in the face of that, can that many make that claim?
CORDEAUX:
He's accusing you of sneaky accounting.
PRIME MINISTER:
How is it sneaky? We're back-dating it.
CORDEAUX:
He says sneaky accounting by the Government will see just four days of the first fortnightly payment after July 1st included in the 4% increase.
PRIME MINISTER:
But look, the thing only starts on the 1st of July. We're not paying the increase for a period before the 1st of July, we're paying it for every day after the 1st of July.
CORDEAUX:
But some people might say that doesn't apply to things like lay-by's.
PRIME MINISTER:
There's no unfair but the thing applies, the tax applies from the 1 July. If there's been some kind of obligation before the 1st of July, it is only in relation to the period of the obligation or the contract that accrues after the 1st of July. I mean, is Mr Swann saying we should have started increasing the pension from the 1st of June, I think from the 1st May - of course you can say it. When you're in Opposition, you can say anything you like I suppose because you don't have to do anything except talk. But when you're in Government you do have to exercise some responsibility. I'm prepared to cop legitimate criticism, I'm prepared to listen to the Labor Party saying - well look, we think it's a bad decision to have an indirect tax, and let them argue that intellectually, but don't run around telling whoppers and suggest that pensioners are being ripped off - that is terrible.
CORDEAUX:
Prime Minister, would you take a call?
PRIME MINISTER:
Yes.
CORDEAUX:
Hannah. Are you there Hannah? Speak to me Hannah.
CALLER:
Good morning Jeremy.
CORDEAUX:
Here's the Prime Minister.
CALLER:
Thank you. Good morning Prime Minister. Prime Minister, my question is there's going to be a one-off self-funded retiree's supplementary bonus of up to $2000 for self-funded retirees aged 55 or over. Now I am on a self-funded disability pension and I am under 55, and I've been told therefore that does not apply to me. And I would like to know why people like myself, who are under 55 and self-funded retirees are being discriminated against?
PRIME MINISTER:
You are right in saying it doesn't apply to people under 55, and I can't give you any better explanation then to say that with all of these things, there has to be a start. If you bring it down to below 55, say to 50 - there'll be somebody at 49 and then perhaps somebody further down and it'll go right down. We took the view that initially that this was something that was designed to cover people who are self-funded retirees and we originally were going to have it at 60, and we then decided to bring it down to 55 because there are a lot of people retiring at 55 and we thought that was an appropriate starting point. Now I'm sorry it's not going lower than that, I don't expect you to like that and you clearly don't. I understand that, but I just ask you to bear in mind that there's always an argument for pushing it lower and lower or in some cases, higher and higher and we just thought that 55 was, taking everything into account, was a fair and reasonable cut-off point.
CORDEAUX:
Prime Minister, tonight you address the nation. Can you give me some idea what you might be saying?
PRIME MINISTER:
Well a lot of the things that I've tried to say in this and many other interviews, I'm asking people to focus on the long-term benefits for the country. I'm explaining why I believe it will benefit Australia, I'm asking that the system be given a fair go. I acknowledge that there are transitional challenges, particularly for small business, and I assure them that Government and the Tax Office are not in the business of pouncing on them. I just think that we do want the new system complied with but we're not going to punish innocent mistakes, and nor should the Government.
CORDEAUX:
All right Prime Minister, with a lot of those mandarins at the ABC losing their heads, are you looking forward to a better shake from the national broadcaster?
PRIME MINISTER:
I don't have a comment to make on individual decisions and they're being taken by the new Managing Director and I don't have any role in them at all, nor does anybody in the Government. But all I've ever wanted of the ABC is balance.
CORDEAUX:
Yes.
PRIME MINISTER:
I don't expect any special favours from the ABC, I don't expect any special favours from anybody in the media - I just want 50%. If I can't win with 50% fair coverage, then I don't deserve to win.
CORDEAUX:
A national broadcast, I would have thought would have a very real obligation to be fair and even-handed?
PRIME MINISTER:
That is all one should ever ask of the media - 50%. If you get that, you're being treated well and if you can't win with that, you don't deserve to.
CORDEAUX:
Just quickly, it looks like lifetime health cover is going to be extended, maybe through to July 15. Is that on Prime Minister?
PRIME MINISTER:
I think it's a fair tip, it has been hugely successful. It's the possibility that people getting in on the existing basis - and that is you can join at any age and get the benefit of the current premium, but after that it will start to rise if you join after a certain age. This has been hugely successful and we are seeing a veritable renaissance of private health insurance in Australia, and the long-term benefit of that in the health system is tremendous, because not only does it give people cover but it will increasingly take load off the public system. We've actually got a very good health system in this country. It gets knocked every day by politicians on both sides of politics at a State level in particular, that they're wrong to keep knocking it and it's a much better system. If you're going to get sick, better to get sick in Australian, as a battler than in New York or London or Paris. You get far better treatment and it's not as expensive.
CORDEAUX:
Prime Minister thank you very much for your time.
PRIME MINISTER:
Okay.
CORDEAUX:
And all the best to you sir.
PRIME MINISTER:
Thank you.
[ends]