Subjects: Australian economy; Labor's contradictions on budget surpluses; policy development; cricket
E&OE................................
KIRK:
You're predicting that the Australian economy will come off the boil. Are we headed for a recession?
PRIME MINISTER:
No.
KIRK:
Definitely not?
PRIME MINISTER:
Definitely not. Dr Ironmonger's views are I believe unduly pessimistic. He's often been a bit like that in the past. He's entitled to his view and I'm not going to attack him personally for putting forward a piece of economic analysis, but he is at odds with the National Bank. He's at odds with Access Economics, pretty respected on both sides of politics, forecasting 3.4% growth in 2001. He's also importantly at odds with the predictions of both the Reserve Bank and the Federal Treasury whose track record in economic predictions over the past few years has been more accurate than the combined advice of private sector economists. We are prone on occasions to you know perhaps slag off at bureaucratic advice but the Bank and the Treasury over the last few years have got the runs on the board and are a lot more accurate.
KIRK:
Well even the National Australia Bank's predicting 2.5% growth which is well below the Government's 4% growth forecast.
PRIME MINISTER:
Well, Alexandra I said that economic management this year is going to be a harder task than it was last year and everything that you've just said and everything that we've been talking about over the last couple of minutes confirms that. And that's a reason why it's not a time, if I can be very blunt, to consider electing a group of people who want to loosen fiscal policy.
KIRK:
But Dunn and Bradstreet are saying that business is blaming domestic factors rather than overseas factors including the GST.
PRIME MINISTER:
Well he's saying that, that's not the read that we're getting from other people. And there was an internal contradiction in the very words that Dr Ironmonger used. He said manufacturing had taken the biggest hit. Well, if you look at the GST, in many respects manufacturing was a net beneficiary of the GST's introduction because wholesale sales tax which applied only to manufacturing was removed. And if you'd have been looking for a correlation between the GST and economic activity you might have expected to see it in the service sector where in many cases an indirect tax under the GST was being applied for the first time.
But Alexandra this year economic management is going to be quite challenging and that is why as we move through the year the relative capacity of the two sides of politics to manage the economy will become even more prominent. And that's why yesterday Mr Beazley's comments about the Budget surplus were so significant because he said yesterday the golden rule would be that a Labor Government would maintain a Budget surplus over the economic cycle.
That represents a dramatic loosening of what he promised in 1998 when he said in the first three years of a Labor government there'd be a surplus each year. When you say there's a surplus over the economic cycle what you're really allowing for is that you will go into deficit during some periods in that economic cycle and then make up for it later on. Now what he said yesterday was quite different from what he said in 1998 and quite different from what Simon Crean has been saying in the Parliament and in an interview with the Financial Review late last year that Labor would have a bigger surplus than us.
I just wanted to make the point that you now have an Opposition Leader who is offering a weaker approach to Budget policy than he offered three years ago and his Deputy offered last year.
KIRK:
Well whichever way you look at it your key constituency, business, is saying that conditions are deteriorating seriously, some are blaming the GST. The likely scenario is that there'll be a fall in interest rates. In a perverse way that's good news for the Government going to the polls isn't it?
PRIME MINISTER:
Well our constituency Alexandra is all of the Australian people. We're not a business government, we're a government that cares for a good business climate and has pro-business policies but we are answerable to all of the Australian people.
KIRK:
And for all the Australian people interest rates going down is not a bad . . .
PRIME MINISTER:
Well unless of course you're an investor and there are some investors who are not all that keen on it. But generally speaking falls in interest rates are welcome. I don't know what's going to happen when the Reserve Bank meets and I'm not going to get into the business of giving them advice as to what they might do.
KIRK:
Most people see that as an inevitability now.
PRIME MINISTER:
Well Alexandra I can't say more than what I've just said. I'm not going to speculate about interest rates and it's a waste of time pursuing that line.
KIRK:
Today Kim Beazley releases some more policy pledging to foster greater tertiary education take up as part of his knowledge nation push in a bid to gazump your innovation statement next Monday. And in a tit for tat policy race there's a bit of your package that's been leaked today that the government plans to allow state schools to keep some of the money that they would lose as students shift to private schools - $130 million over four years channelling that into science, maths and technology programs. It's an admission isn't it that you've previously done the wrong thing?
PRIME MINISTER:
No. No, it's part of a policy of giving more resources to government schools on the condition that those additional resources be channelled into providing more support for science and mathematics.
KIRK:
But you were channelling the money...
PRIME MINISTER:
No we weren't.
KIRK:
..before half of it.
PRIME MINISTER:
We weren't giving it to the private schools. I mean that is just a complete distortion and a misrepresentation of the policy. That money was not being taken from the government schools and given to the private schools.
KIRK:
No I didn't say that.
PRIME MINISTER:
I'm sorry, I thought that's what you..certainly that's been the representation. That money hasn't been shifted. What was happening was that we were taking back half of the savings the states got if a child left the government system. Now we've decided as part of our science package to say to the states who might have otherwise have lost that money that you are entitled to keep it providing you spend it on science and mathematics.
KIRK:
And how are you going to make sure that they do that?
PRIME MINISTER:
Well there are ways.
KIRK:
Such as?
PRIME MINISTER:
Well it'll bore your listeners for me to go through the bureaucratic steps but it can be done. I mean this is federal money and the states will only get it if they abide by the rules we apply in relation to their receiving it.
KIRK:
Now, you've been calling on Labor to release its policies. Now, you're saying that the time has long passed when they should be putting out their policy manifesto. But back in 1995 ahead of the 1996 election you said when you were in opposition we had 13 years to develop policy, but you would hold onto your policies until the election campaign itself and that that was what every successful opposition have done. So it worked for you. Why shouldn't Mr Beazley be able to do the same?
PRIME MINISTER:
Well that isn't what happened in 1995. The difference between now and 1995 is that when I returned to the opposition leadership in January 1995 the Australian people knew what I stood for. They knew that I stood for reforming our industrial relations system, and reducing the power of the Industrial Relations Commission and elevating the power of workplace agreements. They knew that if favoured privatisation. They knew that I favoured incentives for private health insurance. They knew that I favoured a tax policy that would give greater support to the cost of raising children.
KIRK:
And you hung onto your policies and the funding attached to it.
PRIME MINISTER:
No I'm sorry Alexandra. People knew what John Howard stood for when he returned to the leadership in 1995. And if I may say so one of the reasons I returned to the leadership of the Liberal Party was that was seen as a person who was policy driven, that I was in politics to bring about change and improvement and reform. Mr Beazley frequently talks of the years he spent as a minister and he did so again yesterday and yet for all the years he's been a minister we don't really have a clear idea of what he really believes in. And what I'm saying is that this is a policy lazy opposition. They think the path to power lies in exploiting public discontent which inevitably arises through the introduction of change and reform by governments. He said he would surf to victory on the back of the GST. He hoped it would fall over in a heap. He is constantly negative. He has no alternative policies and he's policy lazy. And there's a vast difference between an opposition leader who was brought back to the job because of what he believed in and an opposition leader who may have had years of ministerial experience but has still not transmitted a very clear idea of what he believes in.
KIRK:
And finally for the sake of your beloved cricket, would you like Mark Waugh to talk to the match fixing investigators?
PRIME MINISTER:
For the sake of my beloved cricket I think it's important that the prime minister of the country, cricket lover though he may be, respects the role of the Australian Cricket Board in this. It's not for me to interfere in what is obviously a difficult position between a very talented player and a group of people whose responsibility is the name and the image of the game. And the Australian Cricket Board is made up of a lot of very dedicated people. I don't want to offer any gratuitous advice to anybody. I respect their role and I don't think it's helpful for even cricket loving prime ministers to be giving running advice on how other people should do their job.
KIRK:
Prime Minister thanks for joining us.
PRIME MINISTER:
You're welcome.
[ends]