Subjects: petrol prices
E&OE................................
JOURNALIST:
What comfort can you offer motorists and voters about the future of petrol prices?
PRIME MINISTER:
Well we can't control the world price, nor can we control the exchange rate movements. What I can say is that the world price more than anything else has driven what has happened. We do have the fourth cheapest petrol in the world. I'm unhappy that the price has gone up but it's gone up through factors over which I don't have any control. We could cut the excise and that would reduce the price of petrol, but you'd have to find the money from something else. We cannot run the surplus down at the present time because that would put upward pressure on interest rates and everybody knows now sensitive that is. So if you're going to cut the excise to get a cut in the price of petrol at the bowser you've got to take the money out of something else and I'm not going to take it out of roads or schools or hospitals or defence. I don't think that's sensible.
JOURNALIST:
Which is the bigger worry for you - the political damage or the damage to the surplus?
PRIME MINISTER:
Well the thing that I worry about most is the overall health of the Australian economy. That's more important to me than any other consideration and I don't want to see any upward pressure on interest rates and I don't want to cut spending on necessary government services. And all of those State premiers that are calling on the federal government to do something let them nominate the spending areas that they want us to pull money out of. Let Mr Bracks tell me whether he wants me to cut money going to schools in Victoria or roads or hospitals. I mean when you're the Premier, when you hold a high position you've got the responsibility of delivering the hard bits as well as the easy bits. The easy hit for a State premier now is to say Howard's got to fix it. The hard bit is to give me advice as to what spending areas they think I should hack into in order to cut the petrol excise and when they think about that they'll come to the same conclusion as I do.
JOURNALIST:
Mr Howard the RACV today said that the federal government is in denial about the role that it plays in terms of petrol prices. What's your response?
PRIME MINISTER:
Well I'm not in denial at all. I understand it. I mean the RACV has no responsibility for anything other than to sort of make easy calls on governments. I mean they are in the easy hit part of the game. They're like State premiers. But what I would say to the RACV is yes we can cut excise but if we cut excise we either run down the surplus or we reduce spending on roads and schools and hospitals and defence. Now they are the stark choices that I face. And I take the decision as Prime Minister, I accept responsibility for it, that it is more important at the moment to maintain spending in those areas and to keep the budget in healthy surplus than to cut petrol excise and I will be judged on that by the Australian public and I accept that judgement. But unlike the RACV and the State premiers I'm prepared to accept the responsibility of nominating the consequences of a cut in excise. That's the difference.
JOURNALIST:
Mr Howard, fuel plays an important role in firing inflation. How long can you let this go on before it becomes a [inaudible]?
PRIME MINISTER:
Well I can't control the world price. President Clinton can't control the world price. Maybe the RACV and the Victorian Premier can and if they've got the secret they might give it to us. But nobody can, no federal government or no Prime Minister can control the world price and I can't control the movements in the exchange rate of the Australian dollar against the United States dollar. It's a difficult situation but in the end I have to make a decision as to what is more important - maintaining the surplus, maintaining current levels of government spending in necessary welfare areas, or cutting the price of fuel by cutting the federal excise. Now at the moment I make the choice that it's more important to maintain the first two things. Now people will make up their own minds on that. I wish I could do all three but I can't and the difference between me and some of the others in this debate is that I'm prepared to face the reality, they just want to score political points.
JOURNALIST:
Is it a tough choice?
PRIME MINISTER:
All of these things are tough but I want to say to the people of Australia that at the moment it would be wrong and irresponsible and damaging to run down the budget surplus because that would exert upward pressure on interest rates. It would also be unfair on the needy in our community to cut spending on hospitals and roads and schools, and it would be reckless to cut spending on defence because when you're talking about the petrol excise you're talking about big dollars. You're not nipping at the margin. To make a difference you'd have to take five cents off. That's $1.7 billion and I only have to state that figure for people to understand the dimension of the difficulty. Now people who represent just one side of the argument can call on me to cut excise. I mean the motoring organisations do that every day but they don't then say well we think the $1.7 billion ought to come out of the surplus, we think it should come out of schools or hospitals or something. They're silent on that. They say that's my problem. Well I accept it's my problem and what I'm saying to them and I'm saying to the Australian public is that I have made the judgement at present that it is fairer and a better balanced response to keep the current levels of spending in those areas and to maintain the budget surplus. Now I will accept the political consequences of that as I do of all of my decisions. I'm elected to make that call and that's the call I make at the moment. I'm very sorry, I'm very sensitive to the price of petrol. I know the Aussie loves his motor car and likes to use it a lot. I understand that but I don't have the luxury of being able to call for somebody else to cut an excise. I've got the responsibility of deciding what the consequences of that are and I've tried to explain them. Thank you.
[Ends]