Subjects: Ryan by-election; Newspoll; previous by-elections; Aussie dollar; strength of the economy; tax reform; Labor's record; budget speculation.
E&OE................................
CLARK:
Too much can be made of one poll result I suppose, but the newspoll at the weekend would suggest that things are looking a bit shaky in Ryan. It can't have pleased too much.
PRIME MINISTER:
Well it is a very tough by-election for us. There are Liberals in Ryan who are probably saying well I'll give Howard a kick to make him listen. I'd say to that that we already have listened on a number of things. We listened in relation to the business activity statement. We listened and acted immediately in relation to the slump in the housing industry identified by the economic figures last Wednesday. So we are listening to those concerns but if the Liberal protest vote were to deliver Ryan to the Labor Party then that would just be a signal to Kim Beazley that he can cruise into office, so he would think, without saying what he stands for. So, it is not just a simple question of saying, well I'll give them a flick this time and come back to them in the general election. The outcome of by-elections can have an impact on the way both political parties behave.
CLARK:
Hindsight is a wonderful thing both in human affairs and I'm sure in politics as well, but in hindsight do you regret not asking Mr Moore to stay on?
PRIME MINISTER:
Well, the reshuffle was good for the government and I'm still working very hard and I don't give up. I'm recognising that Ryan is tough for us, but I'm not conceding for a moment that it's impossible. We've got a very good candidate and his local identification with the area, Bob Tucker's local identification with the area is really resonating, and we are getting that message very strongly. And there is an air of complacency and taking it for granted and the Labor candidate is talking about the thrill of that plane ride to Canberra. Well it's a bit premature to start assuming that you are going to win just because you've had a few opinion polls pointing in that direction.
CLARK:
But you would have been around politics a long time. You've read a lot of polls, you know the signs and you can sniff the wind, probably better than most.
PRIME MINISTER:
It is a very tough call but it is not over until the votes have been counted and I would counsel, not only Liberal Party supporters but others, not to assume that the polls are right.
CLARK:
This isn't good news though is it? It's one of the safest seats in the country and for you to be saying to me this morning that look, there's a chance that we will lose this - one of the safest seats in the country.
PRIME MINISTER:
Well I have said that from the beginning. It is traditionally a safe seat but by-elections can go in all sorts of directions. We recorded very big swings in our favour in opposition against the Hawke government in 1988. I mean, we won the Adelaide by-election with an 8.5% swing there, and an even bigger swing in Port Adelaide, and we got an even bigger swing than that in Oxley yet Hawke won in 1990 and Keating in 1993. It took another eight years to get rid of them. So look, we are going through a tough period politically. I know that. But there'll be a number of months to go by before the election and in the end people have got to make a choice. They've got to decide whether they stick with us; you can either have a Coalition Government, a Liberal government led by me or a Labor government led by Kim Beazley. They are the only alternatives. And as we get closer to the election people will be reminded that when Mr Beazley was last in government he left us with a government debt of $85 billion. He presided over interest rates of 17% and unemployment of 11.2%. Now, despite the setback of last week's national accounts figures, the Australian economy is unbelievably stronger than what it was when we came into office in March of 1996. We've got the budget in balance, we've got interest rates down. We have the lowest government debt to GDP ratio than just about any country in the world.
CLARK:
Okay here's another figure. I looked this morning at when you came to office in March 1996, and the Aussie dollar was trading at that stage at 76.8 against the US dollar. This morning I looked again, it's 50.93. So from 76.8 in March 1996 to now this morning it's 50.93, and of course if you go to the United States and you want to exchange US dollars you'll get less than 50 cents for it. I mean, that's not much of an improvement.
PRIME MINISTER:
Yes, but that is not just a measure or a judgement if you like on the Australian economy. It is also a reflection of the overwhelming strength of the American dollar and the American dollar has strengthened against all currencies, and don't assume that a flexible exchange rate is a bad thing. It was the capacity of our exchange rate to adjust downwards during 1997 and 1998 that saved the country from the Asian economic collapse overwhelmingly. If we hadn't have had a flexible exchange rate then, we would have been overwhelmed by the Asian economic downturn.
CLARK:
Although some might sit and look and I know many people do, sit and think well look it is just one long slow inevitable slide, and you've really participated in it.
PRIME MINISTER:
Well, I don't accept that when you take into account the strength of the American dollar and the advantage of the flexible exchange rate and you look at the other economic strengths. I mean, a country that has repaid $50 billion out of an $85 billion government debt has to be a country that's stronger. A country that's got lower inflation, lower interest rates and a government that has had the courage to embrace major reforms. Reform is not easy but everyone knows we needed tax reform in this country.
CLARK:
On tax reform, do you feel let down by the bureaucrats? I know Mr Abbott has pointed the finger at some bureaucrats for saying look, he thinks they let the Government down on the business activity statement, the BAS. Do you feel let down by the bureaucratic advisers.?
PRIME MINISTER:
There's no point at this stage sort of going over that. Can I just say in relation to the business activity statement, people keep writing it was a backflip. I said before Christmas, that if there was a problem with the paperwork of the business activity statement it would get changed. And I regarded the changes we made as a natural response to the concerns that people had expressed. But Phillip, tax reform has been needed in this country for a generation, and the Labor Party took the easy way out. They opposed it every inch of the way to the great detriment of the national interest. Now, they are getting some political dividend out of that at the moment because when you embrace a big change there are some implementation challenges but in the long run, political parties get judged on how they treat the national interest. Back in the 1980s when the Labor Party decided to float the dollar and deregulate the financial system, we supported them. Now, if we'd have taken an opportunistic approach back then, we could have made life very difficult. I could have run a fantastic scare campaign against the Labor Party saying we're handing the economy over to the foreign money merchants and the foreign banks. I could have run an emotional populist campaign but I didn't because I knew in the long run it was good for Australia that we freed our financial system. Now, they have done the complete reverse on this occasion. They know in their hearts we needed tax reform. Beazley supported tax reform when it was launched by Keating.
CLARK:
As you know on record there is no pledge to abolish.
PRIME MINISTER:
Well, no I mean they hate it so much they are going to keep it. But all of these things they attack. these points are worth making.
CLARK:
If you lose the by-election in Ryan would you resign, would you consider resigning?
PRIME MINISTER:
Well, look I'm not resigning. I've never felt more determined to win an election in my life than I am to win the next federal election and I'm not going to start hypothesising about what happens given particular outcomes in Ryan except to say I'm here for a long haul.
CLARK:
But if you lose Ryan it would be a disaster.
PRIME MINISTER:
Well Phillip, we are fighting hard to win Ryan and I'm not going to get into some kind of hypothetical discussion if we lose Ryan. Let me simply say, in relation to my own position I am determined to win the next federal election. I am very committed. I know it's tough at the moment, very tough, but that always happens to political leaders. We've had the guts to implement some reform, the Labor Party has opportunistically run sabotage with the great detriment of the national interest. They will have their day in the dock of public opinion on that at some stage.
CLARK:
You're standing for the, you say you'll lead for the next election and you'll go to the Australian people as leader at the next election. Will you stay the entire next term?
PRIME MINISTER:
Well you asked me that question before on another programme. I gave an answer then and the answer is the same.
CLARK:
Just remind me of the answer again.
PRIME MINISTER:
It will be misunderstood. Let us simply say that I come clean with the Australian people I will lead them, the Liberal Party to the next election and I will be laying out a programme and I'll certainly be seeing that that programme is implemented.
CLARK:
In your view, is Mr Costello the alternative leader? I mean I don't mean in the sense that he is challenging you, but at some point you'll lay down your baton. Is he the alternative leader?
PRIME MINISTER:
Well that is a matter for the Liberal Party. I never presume or Hawke/Keating-like to hand the leadership of my party around as though it was some kind of birthday gift. The party room decides who the leader is. Let me simply say Peter is a very capable politician. He's been a very good Treasurer and we work together very closely and clearly he would have the ability to lead the party but that is a matter in the end for the party room to decide. It is not for me to put my hand on somebody's shoulder and I can assure the Australian public I haven't made a secret deal with anybody at Kirribilli, The Lodge or indeed anywhere else.
CLARK:
Can we look at the petrol decision on excise for just a second. You must have felt in the horns of the age old dilemma, damned if you do and damned if you don't on this one, because there was a lot of widespread disquiet about the petrol issue. You knew very well what would happen if you rolled over the excise that it wouldn't necessarily show up at the pump for long or, after a while, even be remembered. Still worth doing?
PRIME MINISTER:
Well yes it is, because that was a clear signal to the Australian public that we understood their hurt and anger about the price and whatever the price of petrol is now or in the future, it will always be one and a half cents less than it would have been if we hadn't have taken that percent and importantly we've got rid of the automatic tax rises every six months and over time that will make all Governments more accountable and I think that's a very good change.
CLARK:
Max Walsh made a point in The Bulletin this week that I think has been made about almost every government that your's will be, by the end of the year, probably the highest taxing government in Australian history.
PRIME MINISTER:
Yes I saw that article. Its based on some figures produced by the Business Council.
CLARK:
You don't agree with it?
PRIME MINISTER:
No I don't because the classifications used in the figuring, it's really all a matter of classification. For example, in the comparison that is made and referred to in that article the private health insurance tax rebate is treated as expenditure. The diesel fuel rebate scheme is an outlay and not a tax deduction because when the Democrats forced us to take it away from people in the city, constitutionally we had to pay it as an outlay and not through the tax system. When you adjust for things like that.
CLARK:
I don't want to run through all the accounting now but you.
PRIME MINISTER:
It's an accounting thing. I'm not bagging the Business Council because they've used some government figures but when you adjust for the things like that the argument falls to the ground.
CLARK:
All right, tax cuts, they're on the way for middle income earners .
PRIME MINISTER:
Well I saw an article in the paper this morning. That is just speculation.
CLARK:
But it suggests quite strongly that you're planning tax cuts for $30,000 to $50,000 income earners, middle income earners. Do you think they deserve tax relief?
PRIME MINISTER:
We always like to give tax relief when we can. We are a low tax party. The Labor Party is a big spend, big tax party and ..
CLARK:
Have you got some plans for it?
PRIME MINISTER:
Well what you read in the paper this morning is pure speculation.
CLARK:
Inspired by the Government no doubt.
PRIME MINISTER:
No not inspired by the Government. We are not going to add to speculation. There is always speculation before a budget but let me make it very clear that our preference is always to have lower levels of taxation. The Labor Party's preference is always to have higher levels of Government spending.
CLARK:
You've spent a swag of money on petrol, you've spent last week another swag of money on increasing, doubling in fact the home owners, first home buyers' scheme which was no doubt of great benefit to people trying to get into a house...
PRIME MINISTER:
And will be of great benefit for employment in the housing industry.
CLARK:
No doubt.
PRIME MINISTER:
That's $60 million this year and $90 million next year.
CLARK:
There are reports you are spending money on tax cuts this year when the Treasurer, Mr Costello says I need some fiscal discipline.
PRIME MINISTER:
Well we have delivered fiscal discipline. We have reduced government debt by $50 billion over a period of five years and we've got the budget back in the black and we will retain a budget surplus. That's our position. We have a very low government debt level at the present time and the fact that we have been able to spend these sums that you talked to an in fact addressed, the petrol excise incidentally is a tax cut. It's not an addition to outlays. We have actually reduced tax on petrol. Those things are affordable because of the prudence of earlier years.
CLARK:
Mr Howard can we talk about the New South Wales Division of the Liberal Party, Mrs Kerry Chikarovski and her leadership, has she got your full support in this election year? You're going to need a lot of help here.
PRIME MINISTER:
Yes she does have my full support.
CLARK:
Should she stay as leader?
PRIME MINISTER:
Yes.
CLARK:
Have you told her that recently?
PRIME MINISTER:
I don't feel any need to. I mean in the end that is ultimately a matter for her and her parliamentary party but she is.
CLARK:
She is the best possible alternative is she?
PRIME MINISTER:
Yes.
CLARK:
All right. It was reported once that Prime Minister Menzies, I think in a very crucial by-election in Queensland, once when referring to Mr Killen, sent him a telegram after he just crossed the line saying "Killen you're magnificent". Are you preparing a similar telegram for your candidate in Ryan?
PRIME MINISTER:
I've got a number of messages. I am more interested in the messages to the voters of Ryan at the present time. I don't, it's silly to sort of speculate about what you might say after the result. I am more interested in talking to the people of Ryan and just reminding them that protest votes have implications and if you deliver seats to the opposition it only encourages them to think that they can cruise to victory without saying what they believe in.
CLARK:
Every political leaders' time is up at some point. How will you know when your's is up?
PRIME MINISTER:
Well I know that it's not now.
CLARK:
It's Monday morning! Mr Howard, good to talk with you as always.
PRIME MINISTER:
Thank you
CLARK:
Thanks for joining us here in the studio at 2GB.
(ends)