Subjects: China-Australia relationship; trade relationship with Japan; Budget
E&OE................................
GRIMSHAW:
Good morning. Prime Minister how shaky is our relationship with China at the moment?
PRIME MINISTER:
I don't believe it's shaky at all. China's always had a different view about what international law allows the vessels of one country to do in the territorial waters of another. There's nothing new about that and I don't think we should overreact or exaggerate the significance of what has occurred in the last couple of weeks. The Australian vessels were acting completely in accordance with international law, but equally we don't want to get too sensitive about this. We've got to look at in the context of an overall relationship which is quite good. In fact much better now than it was a few years ago. And a relationship that economically is very important to this country.
GRIMSHAW:
You say that we don't want to overreact, surely it's more about their sensitivity. Clearly at the moment they are feeling agrieved both about your comments supporting President Bush and about the incident in the Taiwan Strait. Do you not concede that?
PRIME MINISTER:
Well this incident occurred before my comments as you call it over President Bush .
GRIMSHAW:
That's right.
PRIME MINISTER:
. So in that sense the two events are in no way connected.
GRIMSHAW:
Hindsight is an easy thing to have, but when you look at the fallout and I suppose the collective fallout from these two incidents now, do you think that perhaps the timing of the passage through the Strait was unfortunate given the spyplane incident? Do you think perhaps you might have benefited from being more neutral last week in your comments supporting President Bush?
PRIME MINISTER:
No I would say no to both of those suggestions. We were acting completely in accordance with international law. There is a right of innocent passage as it is called for vessels through territorial waters of another country. And as far as President Bush's remarks were concerned he was in a sense stating something that people have understood to be the American position. And I, if you look at the totality of my remarks, they were against the background of us having a very close and good relationship with China. There are sensitivities between China and the United States.We can't ignore that. But equally you have to have a situation in international affairs where you're not struck dumb or rendered mute every time something involving another couple of countries occurs. I mean to the Australian public that kind of approach is just not acceptable. They want their leaders to have a view, a measured view, a sensible view, a view that's in Australia's interests. But it's not a view to have no view.
GRIMSHAW:
Are we on a bit of a diplomatic tightrope though now though with China? Is it difficult, how difficult is it to maintain a friendly, diplomatic relationship with China as well as supporting our friendship with the US?
PRIME MINISTER:
Well we have more than a friendship with the United States. We have a defence alliance with the United States and the United States is our closest defence ally. That's been a constant with Australian defence and foreign policy for more than fifty years. So I mean that is a given. But if there are sensitivities between America and China and in way .
GRIMSHAW:
How is that going to impact on us?
PRIME MINISTER:
Well that depends on us. I mean we handle it correctly and with integrity. We maintain our close defence and strategic alliance with the United States, but we also act independently in our own interest and we don't always agree with the United States on each and every issue. We'll have different approaches. We had a different approach in relation to Hong Kong. We've had a different approach over the years in relation to human rights' dialogues in some American administrations. It's really just a question though of recognising that particularly with the change of administration, I think there's a bit of testing going on between Beijing and Washington and that is understandable and we maintain the integrity of our position but we stress that we have a national interest in maintaining a good relationship with China, consistent with our longstanding defence and strategic association with the Americans.
GRIMSHAW:
I want to move on from China, but will you direct some attention to restoring normality if you like in our relationship with China? Do you see any damage control that needs to be undertaken?
PRIME MINISTER:
No, no that's alarmist language. Normality has not been lost.
GRIMSHAW:
All right. There are reports today that our trade relationship with Japan is stagnating. Do you see it that way?
PRIME MINISTER:
No I don't. That's wrong. Our trade relationship, our merchandise exports to Japan in 2000 were 31% higher than they were in 1999. I don't think you can possibly say against that background that our trade relationship is stagnating. I think any close relationship needs nurturing, you've always got to water the plants of a close friendship like we have with Japan and that is what I was able to do for example on Friday night, I think I was probably the first foreign leader to speak on the telephone to the new Japanese prime minister and I was able to reassure him of how high a priority I placed on that relationship.
GRIMSHAW:
So when you say that you need to water the plants occasionally do we need to water the Japanese plants a little more right now?
PRIME MINISTER:
Well it's an observation about all relationships, you never take anything for granted.
GRIMSHAW:
All right, well let's go on to domestic issues. Statistics from the Bureau of Statistics point to a fairly alarming increase in prices in some areas post-GST. House and car insurance up 38%, electricity up 12%, sports fees 12%, taxis and public transport 11%. Are you conceding that the GST has had a greater impact than you might have thought?
PRIME MINISTER:
No I am not and if you look at what Alan Fels said, he pointed out that many of the reasons for those price increases were quite unrelated to the GST. I also saw in the paper this morning that in the context of that same claim, price rises for food and food's not subject to the GST. So I think we've got to be very careful that every time the wind blows we don't say that's the GST and there is a tendency by the Labor Party and by our opponents to do that. But if you look at the cost of living index, it has in fact risen less than was predicted when the GST was introduced.
GRIMSHAW:
All right. Mr Beazley says he will target rollback to benefit pensioners and single income families. Will they receive special attention in the Budget?
PRIME MINISTER:
Well single income families have already received special attention from this Government through our tax changes which gave a boost to single income families that they've been wanting for twenty or thirty years. And pensioners were of course very well compensated when the GST was introduced. I don't speculate about what is in the Budget. I do recognise that some sections of the retired population have not benefited from falling interest rates the way that homebuyers have. And I am aware of the challenges that some self-funded retirees have and we're understanding of their position.
GRIMSHAW:
Will that be addressed?
PRIME MINISTER:
Well all I can say is that low interest rates are terrific unless you're living off fixed investments and many retired people are and therefore low interest rates are not as good for them as perhaps for their children who are paying off the mortgage and have never had it, you know, well haven't had it as easy for thirty years because interest rates are so much lower now than they used to be.
GRIMSHAW:
How generous are you going to be able to be in the Budget given the global economic downturn, our own downgraded growth forecasts and the cost of recent decisions on beer and petrol excise and road funding. How generous can you be?
PRIME MINISTER:
Well we have to get a balance. We have to worry about having a balanced Budget but where we can we'll try and assist. I noticed yesterday Mr Beazley was attacking me for the fact that the surplus would be lower because we'd spent money on things like petrol excise and beer and road funding. But I thought he was wanting us to do that. I mean the man is the ultimate opportunist. You ask the government to spend money on road funding and when it does, he says 'oh this is outrageous, they're running down the surplus'. You actually block an excise increase in beer, I mean they forced us to refund that money with the Democrats, we had no alternative, and then he said, ' this is terrible, you're depleting the surplus'. I mean this is the ultimate cynical, political opportunism of somebody who doesn't believe in anything but can't even now tell us whether he thought blocking the Shell bid for Woodside was a good thing. He still hasn't made up his mind.
GRIMSHAW:
10,000 people turned out in Sydney yesterday to protest about the funding and the management of the ABC. It is shaping up to be an election issue, certainly that is the wish of the ABC supporters. Are you hearing what they're saying?
PRIME MINISTER:
Well I hear them complaining about the fact that their budget was cut in 1996, everybody's budget was affected in 1996 except defence because Mr Beazley left us with a huge debt. We had to do things to get it back into order. The ABC was no more severely treated than any other section, in fact less severely than some. But we had no alternative. I mean you can't, you can't go on forever with a $96 billion government debt, you have to do something about it. And we've repaid $50 billion of that. Now the ABC is an important Australian institution. I believe in the ABC. From time to time I'm critical of their coverage of certain issues, like I am of other news outlets in this country. But it's a great Australian institution. As for the management, well I have total confidence in Jonathan Shier and the Board.We appoint the Board, the Board appoints a Managing Director and I think they're doing a very good job in very difficult circumstances.
GRIMSHAW:
One final very quick question, there was speculation at the weekend that you will go to the polls in December. Is that about right?
PRIME MINISTER:
Well we'll go to the polls when it's right to do so.
GRIMSHAW:
Mr Reith and Senator Vanstone have ..
PRIME MINISTER:
Oh everybody has their theory, but I am, I'm generally in favour of parliaments running their full term. The term of this parliament is up towards the end of the year.
GRIMSHAW:
How does December the 8th sound?
PRIME MINISTER:
Oh, I haven't given any thought at all to a particular date Tracy. It's months before I do that.
GRIMSHAW:
All right thank you very much for your time.
PRIME MINISTER:
Thank you.
[Ends]