Subjects: Budget; petrol; John Moore; Ryan by-election; aged care; Tough on Drugs; Bob Tucker
E&OE................................
CARROLL:
Good morning, Prime Minister.
PRIME MINISTER:
Good morning, Andrew, good to be with you and your listeners.
CARROLL:
You must be wishing now that John Moore had stayed on.
PRIME MINISTER:
Well, that's academic, he didn't. I've got a by-election.
CARROLL:
Okay. Well, I refer you to what Peter Costello, your Treasurer, said on AM this morning where he seemed to indicate that we are spending too much and that we need to pull our head in. Is that the case?
PRIME MINISTER:
I didn't hear him because I was in the air. But we've been very successful in getting rid of the very big budget deficit we inherited from Mr Beazley. And, as a country, we have one of the lowest, if not the lowest, government debt to gross domestic product ratios of any nation on earth. It's about 6.4% compared with an OECD average of 45%. In other words, we have got government debt in this country well and truly under control because since we've been in office we've repaid $50 billion of Federal Government debt of the $80 billion we inherited from Mr Beazley. So our fiscal position is very stable. That is why it has been possible to do a number of things that have needed to be done - extra spending on defence, extra spending on roads, extra spending on science and innovation. All of those things are the dividends of very good fiscal management in the early years that my Government has been in office and it's now been in office five years, in fact.
CARROLL:
Well, congratulations on that, by the way.
PRIME MINISTER:
.But in the first three or four years we did have to tighten the belt and there were.
CARROLL:
Are you able to release it a bit now?
PRIME MINISTER:
Well, what we've been able to do is we've been able to get debt down and have a strongly growing economy and, off the back of that, responsibly to do a number of things. Now, yesterday you know I made an announcement about fuel tax.
CARROLL:
Couldn't have missed it.
PRIME MINISTER:
No. Well, that will be of benefit to motorists but the biggest benefit to motorists will be when the world price of crude oil comes down because that will make the big difference.
CARROLL:
All right, given what your Treasurer said on AM this morning, did he support you on this?
PRIME MINISTER:
Absolutely.
CARROLL:
Absolutely.
PRIME MINISTER:
Oh yes.
CARROLL:
And the quantum.
PRIME MINISTER:
Look, it's a Government decision. He supports all Government decisions, as I do, as every other Minister does. That's the way our system works.
CARROLL:
I guess the real question that would be in a lot of minds today is, what was fiscally reckless last week or last month is now politically expedient this week, how do you explain that?
PRIME MINISTER:
Well, Andrew, what.I know the question, let me explain it as best I can. The arguments we used previously I acknowledge. We did use those arguments. But I equally acknowledge that the strength of public feeling on this issue is such that we had to find a way of responding to public concerns. But what it means is that there are some things that we would otherwise have done in the budget this year that we now won't be able to do.
CARROLL:
And those sorts of things.
PRIME MINISTER:
Well, there's no point in going into them because, I mean, they're not going to happen. So the point is that the decision we took yesterday to cut tax - yesterday's decision was not a spending decision, it was a decision to cut tax because excise is a tax. It's a tax on a necessity of life, petrol, and we took a decision to cut it. And it's that decision, which will reduce taxation over a period of time - about $550 million next year and that will grow in subsequent years - that means that in the coming budget there will be less room for other things. But they're the choices you make in Government. And we came to the conclusion that the public wanted us to give a much greater priority to that than to other things we might have in mind.
CARROLL:
It's been very rare for you to backdown in this way and to say sorry to the Australian public in this way. It's very rare for you to do that.
PRIME MINISTER:
No, I think it is necessary on occasions when you.
CARROLL:
But is it responsible? Don't say it's necessary politically, but is it responsible from - I mean, you're the manager of this country.
PRIME MINISTER:
Do you mean to say - could I just answer that. I understand the question you're putting. I mean, I don't think you should assert ever that a Prime Minister is always right in everything he does. I try to be right most of the time but I'm a human being like everybody else and from time to time I get it wrong and I got it wrong on this and I said so yesterday.
CARROLL:
Why did it take you so long to realise, so long to realise that you got it wrong?
PRIME MINISTER:
I believed very strongly for a period of time in the position that I'm asserting, believed it very strongly, but in the end it became very clear to me that the public wanted us to give greater priority to this. And the mistake I made was not understanding that earlier. Now, I acknowledge that. I don't think it's a weakness to recognise that you may have got something wrong. And I'm not a person who mistakes strength for stubbornness. I think people want a strong Prime Minister but they don't want a stubborn Prime Minister and there's a very significant difference.
CARROLL:
Well, then how would you then expect Australians this morning to react to what you decided yesterday?
PRIME MINISTER:
Well, ultimately that is something that they will work out for themselves because in a democracy I respect their right to do that. I think they will see me in various lights. People who are never going to be supporters of mine will be highly critical of it and the rest, there will be a mixture of reaction. I mean, you have to recognise in the market place of politics that there are some people that will never agree with anything you do and I understand that. That is the nature of politics. I just ask people to accept that what we have done is to significantly reduce the tax on petrol over years into the future. The abolition of half-yearly indexation which was introduced by the Hawke Labor Government in 1983 puts a much greater discipline on governments in the future. A lot of people said to me look we understand that the price of petrol is going up and that has an impact on inflation and we think this half-yearly indexation is very unfair because you seen to be clobbering us with extra tax when the price is going up and they don't like that. And that's one of the reasons that having decided to do something about petrol I thought it necessary not only to cut the excise rate but also to have a long term structural change and that's what we've done.
CARROLL:
Now just for those people, certainly in Queensland and it's obviously a crucial issue for your Government at the present time in terms of your relationships with your Coalition partners and what have you, how are you actually going to ensure that what you've decided, that this 1.5 cents-a-litre cut and the dropping of indexation, is going to be passed on to country motorists? I mean even at the moment.
PRIME MINISTER:
Well you say the indexation, how's that going to passed on? You asked me both. I mean the indexation, I mean we're abolishing it. So it means that the rate of excise will not go up in August as it would otherwise have done. So there's no way that's not going to be passed on.
CARROLL:
But the background to that is?
PRIME MINISTER:
And the 1.5 you asked me about, the 1.5, we are giving additional powers to the ACCC to make sure that the benefit of that is passed on and not pocketed by the oil companies. This is for motorists, not oil companies, and we intend to make that a reality. So we are ensuring on that front, just as we saw to it when the GST was introduced, we gave the ACCC special powers then and it worked very well because the price rises under the GST have been less than we predicted last year when the GST was introduced. So the ACCC can be very effective in these monitoring operations and we are determined to do everything we can to make certain that the full benefit of the excise cut is passed on to the motorists.
CARROLL:
But even when you're subsidising country motorists at the moment and yet they're still paying an extra 14 cents in Roma and Longreach compared with what people are paying here in the southeast of Queensland for instance.
PRIME MINISTER:
Yes but the subsidy scheme that we introduced last year was not designed to eliminate that. It was designed to ensure that the impact of the GST on the differential between country and city prices was not such as to produce a price differential bigger than what would otherwise have been the case.
CARROLL:
All right coming back to home. You're heading out to the Ryan electorate to help Bob Tucker in his campaign. You're launching his campaign this afternoon.
PRIME MINISTER:
I'm launching it today yes.
CARROLL:
Okay. Can you tell us why, and tell the constituents of Ryan, why John Moore resigned?
PRIME MINISTER:
Well John Moore's been in Parliament for 27 years, or 26 years, and he came to the conclusion that he wanted to leave politics and to leave Parliament. Somebody who's been in power for 26 years, they often reach the conclusion that they've decided to quite the ministry and quit the government it would be a time to leave Parliament all together. Now that's the reason why he went. It's not as if he'd resigned just after he was re-elected, or it's not as if he'd been in Parliament only five minutes and decided to resign. He had been in Parliament for a very long time.
CARROLL:
Of course this has been a big issue with our talkback callers here. And they're saying why couldn't he have stayed on, save the taxpayer $500,000 dollars. Why couldn't he sit on the backbench until the next general election.
PRIME MINISTER:
Well that in the end is something that, you know, it really has to be addressed to him. I mean I can't control the decisions of individual members. It was appropriate in my view to (inaudible) for there to be some rearrangement from the ministry, John indicated to me that he wanted to leave the ministry around about Christmas time, and he then decided that having quit the ministry that he would leave parliament. Now that was the decision that he took, and it's not a decision over which I had direct control.
CARROLL:
Alright. Now, we'll be going to our brief headline news around about 9.30, and then the Prime Minister will be taking your calls immediately after that. Now I understand you've got a fairly significant announcement relating to drugs. Can you give us a taste of what that.
PRIME MINISTER:
Oh yes, I'm going out to the Bridgidene college in Indooroopilly to make an announcement of an $80,000 grant towards a drug initiative which involves a number of the schools and also drug arm, which is Queensland based drug agency. This is some funding out of our Tough of Dugs strategy and is of a piece with a large number of individual announcements that the Government has made and continues to make all around the country that involves partnerships between local community groups, school and others to educate young people against the dangers of commencing drug taking. And I think there are some very hopeful signs emerging that this long campaign is starting to win some results.
CARROLL:
Now Prime Minister, actually, I've just been informed that we won't be going to news headlines, we will go to talkback now and our first caller this morning is Ron. Good morning Ron. Hello Ron?
CALLER:
Yeah, congratulations on your five years.
PRIME MINISTER:
Thank you.
CALLER:
Listen, I'm a pensioner and we use LPG in our car. And at the moment we're paying about the same price as petrol, less excise. Can you jump on them from up high on this?
PRIME MINISTER:
What do you mean?
CALLER:
The price of it is far excessive from a waste product from the refinery.
PRIME MINISTER:
Well unfortunately, like others, it is governed by market influences and world prices. You say can we jump on them, well we'll see if there are ways of, to use your expression, jumping on them. But it's a commodity, you don't less the excise, which is governed by world prices, like all the other commodities.
CALLER:
It's not imported, it's all made locally.
PRIME MINISTER:
I realise that, but one of the reasons why you have a strong local industry is that they can get the world price. And the advantage of world parity pricing in all of these things is that it provides a continuing incentive for people to invest in production and exploration. And if you tried to artificially peg the price you'd lose that investment. That's the justification for world parity pricing.
CALLER:
Well 18 months ago we were paying 20 cents a litre for it, now it's gone up to over 50.
PRIME MINISTER:
That's true, but that is not due, as you rightly point out, to Government taxes.
CALLER:
That's true.
PRIME MINISTER:
(inaudible) it's the world price.
CALLER:
Yeah, I know, I think it's just right over the top actually. Someone, I don't know how you can do it, but somehow you need to talk to these people and say listen, fair go. I was talking to a taxi driver the other day and he's gone back onto on running petrol. Doesn't use gas any more, he says it's not economical any more. That's what it's getting to at the moment.
PRIME MINISTER:
Well there's no doubt that the price of fuel, right across the board is uncomfortably high. I recognise that, and that was the reason why the public felt so very strongly about the need for the Government to take some further action. Even though I think most people acknowledge that it's not Government taxes that has pushed fuel up, it's really the world price.
CARROLL:
Okay thank you very much Ron. Good morning to Glen.
CALLER:
Good morning, Andrew. Good morning Mr Howard, welcome to Queensland.
PRIME MINISTER:
Thank you.
CALLER:
I'm calling in regard to a philosophical point. With regard to the excise itself, I have a question about the, what seems to be a, like a blinked reliance on raise, I don't know, is it 10-15% of our national tax revenue, you'd correct me. Against the base.
PRIME MINISTER:
Well it's a lot, whatever the percentage is, I don't have the precise figure.(inaudible).
CALLER:
Against the base whose value could fluctuate by up to 300%, and I think, if I'm correct, by about 20% in the past 12 months. This is all at the whim of a group of oil sheik's. We have on control over them
PRIME MINISTER:
But the excise doesn't fluctuate with the price of petrol.
CALLER:
No, what I'm saying is.
PRIME MINISTER:
.GST can, but the excise doesn't.
CALLER:
The excise doesn't?
PRIME MINISTER:
No the excise is a volumetric tax.
CALLER:
Right, okay.
PRIME MINISTER:
Irrespective of the price, the excise is the same.
CALLER:
Right, okay. The point I still make is that why do we raise that excise on this commodity which is the lifeblood of the country, as you say yourself, you just said that any movement upwards impacts on the inflation rate. I'm simply asking you, why do we have what's, I say again, like a blinked reliance of raising this tax on petrol which is impacting like steam on the bush, as you know, and on the social existence of people across the country, let alone the communists of the country. I'm putting the suggestion, have you looked at other means of raising this tax.
PRIME MINISTER:
Well we did look a long time ago, when we were looking at bring in the GST, as to whether you should have no excise. Then you would have had to have a much higher rate of GST. I guess the answer, Glen, to your, which we decided strongly against, the answer to your question Glen really is that historically this country used to raise money from indirect taxes like excise and customs duty on things like petrol and tobacco and alcohol, it had a small wholesale sales tax and it had an income tax. Now over the years pressure built to get rid of the wholesale sales tax and to have a broad based indirect tax, and we now by and large have that with the Goods and Services Tax. If you get rid of petrol excise or you reduce it further, and quite dramatically, then you have to impose the revenue of raising efforts somewhere else and you can't look at these things in isolation. So the answer is we do rely heavily on it, if we reduce that reliance it means that we have to rely on other sources of revenue or eliminate areas of Government spending that most people would regard as essential because to replace the large amounts of revenue you get from petrol excise you wouldn't just be shaving at the edges of government spending, you would be getting rid of programs that most Australians would regard as quite essential. And I certainly don't support that.
CARROLL:
You're on 612 ABC Brisbane, you're talking with Prime Minister John Howard. Good morning Kate.
CALLER:
Good morning. Good morning Prime Minister.
PRIME MINISTER:
Good morning Kate.
CALLER:
Welcome to this beautiful state of Queensland.
PRIME MINISTER:
Thank you. Great to be here.
CALLER:
Well it's a privilege for you to be here and it's a privilege for me to live here.
PRIME MINISTER:
I won't argue with any of those propositions.
CALLER:
I'll say to you 'little John', but I'll just say that a term of endearment to me because good things come in small parcels.
CARROLL:
Okay, Kate.
CALLER:
Yes, why I'm ringing is about the decision by the Treasurer, Mr Costello, in relation to the pension increase.
PRIME MINISTER:
You mean that 2%?
CALLER:
Yes.
PRIME MINISTER:
Well there's, tell me.
CALLER:
Yeah well I'm a pensioner.
PRIME MINISTER:
Yes.
CALLER:
And I'm fortunate, in inverted commas, to live in a retirement village, for which my daughter bought for me. And I was able to manage the fees when I first moved in. Four and a half, nearly five years ago, they were $186 a month. Last year they jumped with the CPI increase to $241.33 in July last year. But before July was out the owners of the village sent us a lot of documentation, they'd done forward planning over the next 10 years to what their costs, etcetera, where going to be. And our $241.33 jumped to $295. Now that was an increase of over 61%. And that comes out of my pension. You know.
PRIME MINISTER:
Well, I, that is certainly a very steep rise, and there's, sorry I've lost you.
CALLER:
We've been to the Government.
PRIME MINISTER:
.certainly a very steep rise and.
CARROLL:
Sorry, I've lost him.
CALLER:
We've been to the government here, a member here, several members and I went down to his office last year.
PRIME MINISTER:
He's the State member is he?
CALLER:
Yes.
PRIME MINISTER:
And what, did he say it was my fault, did he?
CALLER:
No.
CARROLL:
This is a Labor member, he should have done.
CALLER:
He had two members from, I think, Judy Spence's department there taking details of what we were saying and in due course, well last week I got a letter from him enclosing a thing from Judy Spence which tells you nothing.
PRIME MINISTER:
Well, can I just have a go at it. I don't know the reason for the operator of the retirement village lifting that fee. And without knowing all that detail I can't comment whether it's fair or unfair. But as far as that pension adjustment is concerned what happened was that when the GST was introduced we paid a pension increase of 4% upfront on the 1st of July. And that involved bringing forward an increase that would have come through months later. And all that happened months later, which is about now, was that we're ensuring that the increase that would have otherwise been due now, which was paid on the 1st of July, was not paid twice. And we made that clear at the time. And in no way shape or form is the Government in any way, any sense, cutting the pension increase by 2%. It is merely ensuring that there's not a double payment.
CARROLL:
On the face of it though it seems as though costs for pensioners, certainly in retirement villages, could well be.
PRIME MINISTER:
Well, there's no way you could just.there's no way anybody - if any retirement village operator anywhere in Australia is trying to justify a 61% increase on the GST then an operator ought to be investigated, investigated from start to finish. Now, I'm not saying that the person operating this home is doing that. There may be other reasons. But there's no way - I mean, I've had a lot of examination of the impact of the GST on retired people and pensioners and anybody who runs around saying 61% is just telling untruths.
CARROLL:
So Kate, maybe, should get in touch with.
PRIME MINISTER:
Well, I would be very interested if she could send all of that information to one of the Coalition Senators from Queensland, Senator Mason or Senator Brandis. We'd be very happy if she leaves her number with your station, to give her the telephone number.
CARROLL:
We've got that, Prime Minister.
PRIME MINISTER:
I may not be able to help. I'm not promising that I can but that's got nothing to do with the GST.
CARROLL:
Okay, thank you very much, Kate, and we'll certainly get back to you. Good morning, Wendell.
CALLER:
Good morning, Mr Howard.
PRIME MINISTER:
Good morning.
CALLER:
I'm in the Ryan electorate and I'm a doctor who works in prisons and the community and I had 11 patients die from heroin overdoses last year. The reason they died was that they took unknown doses of heroin. And I'd actually like you to say sorry for the National Drug Strategy which resulted in their death.
PRIME MINISTER:
Well, I don't accept that the policy that we are following was responsible for their deaths and therefore.
CALLER:
The doses are unknown.
PRIME MINISTER:
Therefore we're not going to.I mean, I will express sorrow and regret and apology for my own mistakes. I don't think the drug strategy that we're following is increasing deaths, in fact, some of the signs, admittedly very limited, are that over the last year or two heroin deaths in a number of States have, in fact, fallen. Now, I'm not saying that that's due to.
CALLER:
[Inaudible]
PRIME MINISTER:
Well, I'm not saying that's due directly to what we have done. All I'm saying is that it ought to be put against the stories of, you know, fairly negative stories that are usually put around about the heroin problem. And it is very distressing whenever a death occurs from heroin overdose but I don't think abandoning the Tough on Drugs Strategy is going to reduce the number of heroin deaths.
CALLER:
Tough on Drugs means that the control of the dose will always be in the hands of the dealers which means the dose will never be known as our children experiment and die rather than experiment and learn. And I think every parent would like their child to be able to experiment and talk to them and learn from it.
PRIME MINISTER:
I'm sorry. I don't think every parent does want their child to experiment with drugs. Most parents I talk to are horrified at the thought that their children would ever experiment with drugs. I couldn't disagree, with great respect, doctor, I could not disagree with you more. The notion that the solution to this problem is to encourage kids to experiment so they can learn to control it is a notion I will never accept.
CARROLL:
If there's proof that your drug strategy does not work, would you be prepared to change it?
PRIME MINISTER:
Well, I'm always willing to alter something when after a long period time or an appropriate period of time I'm convinced that it's not working.
CARROLL:
You're not convinced that it's not working.
PRIME MINISTER:
No, I'm not. No, I am not. In fact, there's evidence accumulating we have had an impact on the markets with a number of seizures. They have gone up over the last couple of years. There are signs, particularly in New South Wales, that the deaths from heroin have declined. Now, it's early days and I'm not claiming that that's just due to what we've done. I congratulate the State police all around Australia on the work that they have done as well and State governments of all persuasions that are co-operating on this issue. But the alternative to the approach we're adopting seems to me to be the idea that you can never persuade people out of starting experimentation with heroin so you try it and see if you can control it. I think that is a surrender and it's something I wouldn't agree with.
CARROLL:
All right, we've spoken to Wendell on numerous occasions and he's one of the key doctors in this area so obviously it's an issue.
PRIME MINISTER:
Look, I respect different views but there are as many doctors who take the view I take on this as there are doctors who take Wendell's view. I mean, there is a division of opinion in the community and the community has to make a decision as to whether they adopt the sort of approach that he has advocated or the sort of approach that, can I say, by and large, that Labor governments around Australia adopt too. I mean, whatever they may say on the margin about me in a political arena, when push comes to shove there's not a great deal of difference between the attitude that I'm taking and the attitude that Bob Carr and Peter Beattie are taking.
CARROLL:
Right. Now, we are actually, I think, in the electorate of Ryan. Do you envisage that you might lose it?
PRIME MINISTER:
I think it's very tough. I think it's going to be very, very tough for us because, you know, by-elections are always unpredictable and you often get big swings in by-elections and I don't take anything for granted and Bob Tucker, our candidate, is not taking anything for granted. He's a local bloke. He knows the electorate very well. He's lived here for, I think, 40 years, raised a family here, started a business here, been associated with a lot of organisations for Ryan. I think he's an ideal local candidate.
CARROLL:
He's also been the leader of, an administrative leader, of a local Liberal Party that has now less members than it's ever had before.
PRIME MINISTER:
Well, in fact, when he was President of the Liberal Party in Queensland it had two of its greatest electoral successes - 1995 State election victory and he was the President of the Party in 1996 when the Liberal Party won a record number of seats. But he is running as a candidate, he's a very good administrator. I mean when he was there the party did very well. I'm not criticising those who are there now, I'm just making the observation that on his watch when he was president the party did very well. But the important thing is that he's a person who understands this electorate and he's somebody who knows he's got a fight on his hands. He's not mesmerised by the fact that Ryan has always been held by the Liberal Party. He doesn't assume because of that he's going to win. I think it's going to be very hard for us because in a byelection and coming off the back of all the publicity that followed Queensland and Western Australia where people were making all sorts of deprecating comments about the federal government, about me and the party. The climate is there for a very difficult campaign and a very difficult outcome and in no way does Bob take it for granted, or the Liberal Party doesn't take it for granted. We're working very hard. We have to fight for every vote and we're asking people not to reward an Opposition Labor Party that's essentially adopted the lazy option of always criticising us but not really putting forward an alternative. And they've had five years. I mean it might be my five years as Prime Minister today, it's also Kim Beazley's five years as Opposition Leader and over that five year period he's done less than any Opposition Leader I've known in 27 years of politics to build a policy alternative. I mean five years after Gough Whitlam had become leader of the Labor Party, I think he became leader of the Labor Party in 1967, five years after that it was 1972 and he had built a philosophical alternative, he'd tackled the internal problems of the Australian Labor Party, he'd restructured the Victoria Branch which was a festering sore. He used his five years in Opposition. You've got to do that. I mean Opposition Leaders have responsibilities as well as Prime Ministers. But we're fighting. It's going to be very tough for us in Ryan and if people don't want to reward a lazy Opposition than they shouldn't flirt with a protest vote.
CARROLL:
All right Prime Minister. I thank you very much. You're obviously heading out now. Thank you for your time this morning and we hope you have a good time out in the electorate.
PRIME MINISTER:
Thank you.
[ends]