Subjects: Petrol prices; prisoner exchange treaty; savings rebate; alternative energy
E&OE................................
MURRAY:
Good morning Prime Minister.
PRIME MINISTER:
How are you Paul?
MURRAY:
Very well.
PRIME MINISTER:
Good to be on your programme again.
MURRAY:
Very nice of you to give us your time this morning. Prime Minister, you are facing a revolt it appears through much of the nation about petrol prices today. A lot of this has centred on your GST changes and the recent automatic indexed increase in excise. Why won't you now peg petrol excise given that you get growth through the effect of the GST?
PRIME MINISTER:
Paul, I don't agree that we're facing a revolt. What I do agree is that people are very unhappy about the way petrol prices have gone up. The Government is very unhappy about that. And the main reason why petrol prices have gone up is that the world price of oil has gone up. Over the past few months, the world price of oil has risen quite dramatically. It's, it's gone up so dramatically, something in the order of $15 to over $30 a barrel. And there has been an enormous increase in the world price of oil, and there is nothing that we can do. There is nothing at all that we can do to control the world price of oil. And can I say that not even Mr Beazley believes that we can control the world price of oil. Yesterday during a press interview he was asked this question - but isn't the OPEC price out of our control, I mean it's now over $32 a barrel, what can you do about that? And Mr Beazley's reply was, oh well you can't do anything about OPEC prices, that's quite true. Now that statement by Mr Beazley is absolutely correct.
MURRAY:
But Prime Minister, the higher the international crude price goes nowadays, the more GST you reap, because . . .
PRIME MINISTER:
No, we don't get the GST revenue.
MURRAY:
Well, you . . .
PRIME MINISTER:
No, I am sorry . . .
MURRAY:
Give it to the states . . .
PRIME MINISTER:
Well, that's fairly important isn't it?
MURRAY:
You collect it and you give it to the states.
PRIME MINISTER:
But the states get all of it. Now if the states believe, if the states believe that the GST take from petrol is too great, they should be telling us what they would like us to cut in the other payments we make to the states, or what Federal Government programmes they would like us to cut in order to provide the money to reduce the GST take from petrol. You see everybody, it's easy for people to wring their hands and say isn't it terrible the price has gone up. I have the ultimate responsibility of listening to all of that and either do what I'm doing now and trying to explain the position calmly or alternatively deciding I am going to cut money somewhere else. Because if, if the states want us to reduce the GST revenue that's going to them out of petrol, let them nominate, let them nominate what other programmes have got to be cut. In the end you've got to go the step further, you can't just sort of stand on the wall and say isn't this terrible. In the end you've got the responsibility of going the next step and explaining to the Australian public how it is that, you know what changes have got to be made. And you know that's what I am saying in relation to this debate. It's easy, it's easy to criticise. It's easy to point to the fact that the world price of oil has gone up, it certainly has. It's gone up quite dramatically. I mean crude oil prices have risen from $US12 a barrel in February 1999 . . .
MURRAY:
Prime Minister . . .
PRIME MINISTER:
In the last six months to over $32 a barrel today, that's not six months, that's eighteen months.
MURRAY:
With respect sir, you've always doled out money to the states. You've now got two growth taxes going, you've got the GST which when the oil price . . .
PRIME MINISTER:
I am sorry Peter.
MURRAY:
No, no well let me finish my question.
PRIME MINISTER:
Yeah, well first get your facts right.
MURRAY:
No, well they are right.
PRIME MINISTER:
No, they're not. You can't, you can't say I've got a growth tax in the GST when all of it's going to the states.
MURRAY:
You've got . . . there is a . . .
PRIME MINISTER:
That is a contradictions in terms.
MURRAY:
You collect and you give it to the states as you've always given money to the states.
PRIME MINISTER:
No, I am sorry.
MURRAY:
You've also got an indexed, CPI indexed excise which has gone from 7 cents a litre in 1983 when Labor imposed it to 38 cents a litre now. That automatically has indexed twice a year and it must be seen to only build inflation into the economy.
PRIME MINISTER:
Well Paul, can I just go back to your question? You say I've got two growth taxes.
MURRAY:
Yes, you have.
PRIME MINISTER:
I am sorry, the states have got the GST. We have the, under the law, under the law that was passed by the Parliament, the GST goes to the states. We . . .
MURRAY:
Well you collect it and you give it to them as you always have done and that's . . .
PRIME MINISTER:
I am sorry Paul, we had legal authority to vary the flow of the money we gave the states each year under the old arrangement. Under the law underpinning the GST that money goes to the states. So it is different, it is not true, it is not correct of you to say as you've said three times already that the states, that we get the GST and then we give it to the states, under the law it is dedicated to the states. It is their revenue . . .
MURRAY:
You have always funded the states.
PRIME MINISTER:
It is . . .
MURRAY:
This is another way of doing that.
PRIME MINISTER:
No, no it's not. I am sorry Paul, I mean this is a very important thing. The states have, some of the states and to his credit the Western Australian Premier, disagreeing incidentally with his Deputy Premier, was saying that cutting the excise is not the answer. Look, the states have the GST and that goes up and down according to the price of petrol. The excise is the, is the petrol tax that we get and that is a fixed number of cents per litre. And if the price of petrol goes up the amount of excise doesn't go up automatically as it does with the GST. Now, none of us like the fact that the price is going up, but we're not going to get anywhere if we just sort of try and shift the blame to another level of government. I mean what I say to the Australian public is this, that I am very unhappy that the price of petrol has gone up, it's gone up because the world price has gone up. I don't control that. Mr Beazley now agrees with me that I can't control that. Now the only way that we can bring the price of petrol down, the Federal Government acting alone, acting alone, the only way we can bring the price down is to cut the excise because that's the tax we get. Now if you cut the excise, the money has got to come from somewhere. If you wanted to cut the price of petrol by 5 cents a litre and I would reckon every person listening to this interview now who's angry about the high price of petrol would think any reduction of less than about 5 cents a litre wouldn't even touch the sides, that would cost $1.7 billion a year.
MURRAY:
But you're getting an extra $1 billion a year out of the 1.5 cents you said the federal companies would save so . . .
PRIME MINISTER:
No, well I am sorry, I disagree. Let me, let me talk about the prices in Perth. Based on data from the Shell company, the price of Shell petrol in Perth has risen from 88.6 cents a litre on the 30th of June to 95 cents a litre yesterday. That's a rise of 6.4 cents a litre. Let me inform you that the refinery price of petrol, that's the wholesale price excluding tax, which incorporates the impact of external factors including world oil prices and the exchange rate, rose from an average of 36.8 cents a litre in June to an average of 43.4 cents a litre in August. And that is a rise of 6.6 cents per litre. So on those figures, the contribution to the rise in the price of petrol in Perth has come entirely from external factors. Even if you accept the argument that you just used, even if you accept that and I don't, and those figures disprove it, but even if you do, you're talking about a variation in the price of 1 to 1.5 cents a litre. What people are angry about is that the price of petrol has gone from 70 plus cents a litre to now in the middle or late 90 cents a litre. That's what they're cranky about.
MURRAY:
Prime Minister, could I put another argument to you? The Treasurer says the indexation of excise is the price we pay for indexed pensions, right? Now you could similarly argue that you could pay for the CPI indexing of your pensions out of bracket creep which has always been a bonanza for governments and it's as valid an argument to say you should pay for it out of bracket creep as indexed excise should pay for CPI index pensions.
PRIME MINISTER:
Well I don't..I mean I don't think that sort of alters the force of what the Treasurer said. The Treasurer's point was that if you're going to index outlays, in other words if the government is required as it should be to compensate people for the impact of inflation with the money it gives people then there is an argument that there should be a counter on the other side in relation to the revenue it collects. That's the point the Treasurer was making and I think it's a totally valid point. But look...
MURRAY:
[inaudible] pay for it out of bracket creep.
PRIME MINISTER:
But look Paul the real issue here is if people want the price of petrol to be reduced by a cut in excise which is the only way the federal government can reduce it. Not even Kim Beazley who disagrees with me on just about everything suggests that I can do anything about the world price of petrol and he's absolutely right. So the only thing I can do as Prime Minister is cut federal excise. Now if we cut federal excise you've got to take the money from somewhere else. You've got to take the money out of the surplus, you've got to take the money away from other areas of government spending. It's no good people saying you know it's terrible, something ought to be done. Okay I agree it's very uncomfortable. And the only way I can influence it is to cut the price by cutting the excise.
MURRAY:
Okay just one last question on petrol and then we'll go to the listener's calls - do you now concede that the petrol companies cannot or will not make the 1.5 cent a litre saving that you demanded at the introduction of the..?
PRIME MINISTER:
Well I don't concede that and indeed the figures I quoted to you indicate that in Perth the increase was entirely due to external factors including world oil prices and the exchange rate. I mean I just quoted figures which show that the wholesale price rose by 6.6 [cents] and the retail price by 6.4 cents a litre.
MURRAY:
That's why I said cannot or will not because if they can't then it certainly appears they won't.
PRIME MINISTER:
But we're talking here about the impact on the consumer of what has happened. Those figures I just quoted demonstrate to you and ought to demonstrate to any reasonable person that the reason why petrol has gone up in the last six weeks is due to the fact that the exchange rate has had a negative impact, we can't control that, and that the world price has had an impact. But even if you accept the argument of our critics about the one to one and a half cents, that is relatively small compared with the huge increase that's flowed through from the increase in the world price. I mean people aren't just asking for a reduction of one cent a litre. People want it to come down by 10 or 15 cents a litre. Now the only way it can come down by 10 or 15 cents a litre is for the world price to fall. We can't afford I've got to say to cut the excise by 10 or 15 cents a litre. That would cost billions of dollars.
MURRAY:
So are your backbenchers who are calling for that excise cut are they wrong are they?
PRIME MINISTER:
Well a couple of them have asked for a freeze on the indexation factor. That would have an impact of 0.6 cents per litre. I think nothing will be achieved by that. I understand why people are unhappy and I understand that their constituents would be complaining about it. But in the end I've got to call it as it is not how I would like it to be. And I would like the world price to fall. If the world price fell dramatically over the next few months it would cease to be an issue but I don't control that and Mr Beazley agrees with me that I don't control it. I mean President Clinton doesn't even control that.
MURRAY:
Okay Prime Minister.
[Commercial Break]
MURRAY:
We've got Prime Minister John Howard on the line. You can talk to him on 9221 1233. Good morning Debbie.
CALLER:
Good morning Paul, how are you?
MURRAY:
Very well. The Prime Minister's listening.
CALLER:
Okay. Hi Mr Howard.
PRIME MINISTER:
Hello Debbie.
CALLER:
Hi. This is a total change of subject from the petrol. What it is, I'll just give you a quick run down on what I'm calling for. We returned last Friday from Bangkok where my brother is in prison. Yeah, he was sentenced to ten years for a $400 traveller's cheque fraud three years ago and he's actually been in just on three years now. And he's got TB and he's quite ill and he's very underweight. And we've been told that you know, one of the few ways of me to get him back to Australia is the prisoner exchange treaty which I know has been passed through the States and Territories and sort of the dotted line's there to be signed. So would you be able to enlighten me on, you know, is that the case?
PRIME MINISTER:
Well I understand that that is an arrangement that largely relates to people who are in gaol in the States and Territories. I can't tell you immediately. What I can promise to do if you provide the details, your address and name and telephone number to Paul, to his receptionist, I will have it investigated and I will get somebody from my office or my department...
CALLER:
I spoke last week to a man called Malcolm Bennett, in the Attorney General's office, and I rang him from Bangkok actually because I got word while I was over there that apparently..
PRIME MINISTER:
Well what did Malcolm tell you Debbie?
CALLER:
Well apparently, I spoke to Malcolm a few months ago and he's been very helpful and he said the Thais are meant to come here but in the last week or so they've now changed the tactics. Now they want the Australians to go there and he's sort of concerned about the [inaudible], but he said it's not up to him to say when he can go so that's what..
MURRAY:
Yeah Prime Minister, if Debbie hangs on the line we'll take her details.
PRIME MINISTER:
Yep and I will have that, I assure her I'll have that investigated and get somebody to be in touch with you.
CALLER:
[inaudible], I mean we know he's got to do some time when he gets back here but he wasn't a drug case, nothing to do with drugs and as I said he spent three years of his ten year sentence for $400. And his TB's quite bad and he's being treated at the moment for it but we feel like if he was back here being treated for it.
MURRAY:
Okay Debbie just hang on the line and we'll take your details and we'll get them over to the Prime Minister's office this afternoon. Good morning Robert.
CALLER:
Good morning. I'd like to ask the Prime Minister about the implications of our international debt which is running I think is now $350 billion. We haven't apparently had a current account surplus in our trade with the rest of the world since 1972. It seems to me obvious that we're not going to go into surplus and yet it also seems to me obvious that we've got to go into surplus in order to pay that debt back. I'd like to know what the long term consequences for our children are if we don't reverse this trading deficit.
PRIME MINISTER:
Well we do have a current account deficit. We have run one for a long time. It may be back in the early 1970s but you know what you say is broadly correct. What has changed dramatically are two things. Firstly that our capacity to service that debt has improved as a proportion of the wealth we generate each year. The level of our overseas debt has declined very sharply and is now within very manageable limits. Australia has often run a current account deficit and being a country that has to bring in a lot of foreign investment for development purposes that is not surprising. My answer to you is that the level of the debt, the size of the current account deficit is a lot more manageable now because the proportion that bears to our annual wealth generation is much lower than it used to be. And the other point I'd make is that the government debt which was in the order of $80 to $90 billion when we came into power that has been very sharply reduced. We've paid back about I think $50 billion of the $80 billion to $90 billion of government debt we inherited four-and-a-half years ago. And if we keep running budget surpluses we will have eliminated the government debt altogether. The government debt is separate from what you were talking about. What you were talking about was the combined indebtedness of governments, corporations and individuals to the rest of the world and that is now at a manageable level and the proportion that bears to our total wealth generation each year is much more manageable than used to be the case.
MURRAY:
Okay thanks for that call Robert. No doubt about it Prime Minister, a substantial achievement by your government, unrivalled since the war in this country.
PRIME MINISTER:
Yeah it's just extraordinary.
MURRAY:
Just on an associated matter the Australian dollar went down a cent overnight. Are you worried about big falls like that?
PRIME MINISTER:
Well I'm very careful in discussing movements in the value of the dollar Paul. I normally like to be as frank as possible with you but you'll understand I can't really talk about movements. People might infer things from that that would be wrong and that would cause difficulties.
MURRAY:
Okay thanks a lot Prime Minister. Okay good morning Neil.
CALLER:
Hello Paul, hello Prime Minister.
PRIME MINISTER:
Hello Neil.
CALLER:
First of all I'd like to point out that I'm a former president of a branch of the Liberal Party here in Perth so I'm on your side. I'm a senior citizen and I go to the local senior citizen's several times a week and the anger about your poor presentation of the $1000 savings bonus for pensioners as a result of the GST is in huge proportion. I can't read the information put out now because I'm a blind pensioner. But to generate $1000 a year in income a pensioner has to have in excess of $30,000 invested at the deeming rate. This is just not possible. People are very angry that they thought that all pensioners were going to get $1000 as a savings bonus as a result of the GST. I just felt that I had to point this out to you.
PRIME MINISTER:
Well Neil I accept what you say. I've had a mixture of reactions on this. I've checked very regularly with my own electorate office and I have a high proportion of people in my electorate who are retired and some people have expressed that concern to my electorate staff although the number of complaints is not as great as I would have anticipated given the publicity it's being given in the media. There was no intention on my part to deceive anybody. In the course of an election campaign you make a passing reference to something and along with a whole lot of other things I think I may in fact have been on 6PR when I was asked a question about this and I listed a whole lot...
MURRAY:
'98, you certainly were. In 1998.
PRIME MINISTER:
Yeah and there were a whole lot of things I listed that would benefit retired people and the information that was sent to people's homes made it clear that there was a certain amount to which people were entitled to up to an amount of $1000 depending on the level of their savings. Now I regret the fact that this has occurred. I mean just on this very subject I was in a hotel in Adelaide last Friday and I met two gentlemen there both retired. One of them had not received anything and the other one had received the full $1000 because his level of investments had been higher. Now naturally I regret any misunderstanding that's occurred. I can say to you Neil that there was no intention on my part to deceive people. I think some people may have had the expectation that you refer to. I think other people may have heard reference to $1000 and assumed it was available to people irrespective of the level of their savings. But..
CALLER:
But are you prepared to do anything to address this?
PRIME MINISTER:
Well we're not in a position to make it available to everybody because that was never the commitment. That doesn't mean to say that there isn't scope in another context according to circumstances to have other initiatives for retired people. But it was never the intention and it was never the representation that it be available to everybody and in those circumstances I can't give an on the run commitment that we can do that.
MURRAY:
Okay thanks very much Neil. Prime Minister I know you've got to go. We've got one last caller on board, can you take it?
PRIME MINISTER:
Yeah sure.
MURRAY:
Okay righto. Good morning Pat.
CALLER:
Good morning Paul, good morning Prime Minister.
PRIME MINISTER:
Good morning Pat.
CALLER:
I want to return to almost the subject you started on which relates to world petrol prices. All the authorities concerned with world oil resources say that these are approaching maximum known limits and that the world supply is going to shorten therefore prices will continue to rise. Australia has a very energy dependent economy with mining, tourism and agriculture. I wanted to ask why you're government was not putting more effort into alternative energy technologies?
PRIME MINISTER:
Well we are putting quite a bit. We've put aside quite a large amount of money out of the GST.
MURRAY:
You'd certainly like to get up a tidal power [inaudible].
PRIME MINISTER:
Well certainly, Derby tidal power which has received an enormous amount of publicity in Western Australia which we are alone at this stage pursuing.
CALLER:
But Prime Minister compared with Germany with its 80,000 [inaudible] policies, and you know countries which for instance have much less sunlight than we have. We really aren't putting great effort or great investment into solar energy.
PRIME MINISTER:
Well I'm not sure that this comparison with Germany is particularly helpful to your argument because the price of fuel in Germany is much higher than it is in Australia. Much higher. Australia has the fourth cheapest petrol in the world after the United States, Canada, and New Zealand. Petrol in Europe is significantly higher.
CALLER:
I'm not really relating it to the price of petrol.
PRIME MINISTER:
Well it is relevant because you were talking about our energy dependence and I think it is relevant.
CALLER:
[inaudible] we have no national policy on development of our natural gas resources where as I believe New Zealand does.
PRIME MINISTER:
No I don't agree with that. We do have a national policy.
CALLER:
Well do we?
PRIME MINISTER:
Yes we do, very much so.
MURRAY:
I think we could...
PRIME MINISTER:
And the last State in which you can say we don't have a national approach is in Western Australia. I mean we work very closely with the Western Australian government. We are constantly working closely with State governments in relation to our LNG potential and all of those things are relevant to the very questions you've raised.
MURRAY:
Okay Prime Minister I appreciate your time today. I'm sorry about that Pat but I know the Prime Minister has to go. He's got other obligations. Thanks very much Prime Minister good to talk to you again.
PRIME MINISTER:
Thank you Paul.
[Ends]