MCGRATH:
Mr Howard, good morning.
PRIME MINISTER:
Good morning.
MCGRATH:
Good morning. On the issue of ethanol Mr Howard, the Opposition has got a freedom of information request supplied to them now from the Office of Prime Minister and Cabinet which discloses a meeting that you had with Dick Honan from the Manildra Group on August the 1st last year. Now they say you misled Parliament over that.
PRIME MINISTER:
No, I didn't. What I was asked about in Parliament specifically related to a shipment of ethanol from Brazil by a company called Trafigura, I think it's called. And at the time I had the meeting with Mr Honan I didn't even know about that shipment and I don't believe Mr Honan did, although he can speak for himself on that, and the best evidence of that is that after the meeting, I think on about the 28th of August, he in fact wrote to my office drawing attention to this shipment and asking that certain steps be considered and I disclosed to the Parliament that he'd written that letter. So all of my questions in the Parliament, all of my answers rather, were in relation to questions about that particular shipment of ethanol and the discussions I'd had with Mr Honan who I've never disguised I know and there's nothing wrong with a businessman coming to see the Prime Minister, there's nothing wrong with a businessman putting his point of view and promoting his own interest, businessmen do that all the time…
MCGRATH:
However looking at the Hansard, which I have in front of me, the questions are also quite general and relate to the general issue of ethanol from Brazil not necessarily that specific….
PRIME MINISTER:
No, but if you look at the whole chain of questions, the first one was about the Trafigura shipment… well that was the context in which the question was asked and that's what I denied, and I at no stage have denied that I know Mr Honan, I at no stage have suggested that representations weren't made to the Government. But I was specifically asked about that shipment, I didn't know about it at the time and that shipment was not raised in the meeting I had with Mr Honan and that is what I told Parliament.
MCGRATH:
Well, over three days in Parliament though, you were questioned about this and at no time did you volunteer the information that you had in fact met with him on the 1st of August.
PRIME MINISTER:
But I was questioned about the shipment from Brazil, that was what I was asked about.
MCGRATH:
But there were opportunities to talk about the general context of the meeting… was that relevant to Parliament?
PRIME MINISTER:
No, no. What's relevant to Parliament… I mean, what they were saying was that we altered the regime in relation to ethanol specifically because of Honan's concern about the shipment from Brazil. Now I dealt with that issue, I defended the reasons for making the change. And in any event, if you look at the freedom of information bit that's been released to the Fin Review, it in fact records Mr Honan as putting a point of view about policy to me, which subsequently the Government didn't pick up.
MCGRATH:
Prime Minister, if we can move onto the issue of housing in this new housing inquiry. How much can possibly come out of it? Can you promise first homeowners that houses prices will be cheaper as a result?
PRIME MINISTER:
Well, look, I'm not going to make any promises about what can come out of it and can I make the point that there's nothing wrong with people having more valuable houses. This is a problem for first homebuyers, for people who are already in the housing market the increase in the value of their homes has been welcomed. I don't get people stopping in the street and saying - John, you're outrageous, under your government the value of my house has increased. In fact, most people feel more secure and feel better off because the value of their homes has gone up. But there is a problem if you're trying to get in and I can't promise that we're going to be able to slash the cost, I can't do that. But it may well be that we can make valuable changes at the margin that will help, and that's the purpose if this inquiry.
MCGRATH:
Now what about claims from the States, Bob Carr has been saying this morning that what really has to be examined is immigration rates and particularly the large number of people settling in Sydney.
PRIME MINISTER:
Well, that would be a sustainable argument perhaps if there weren't significant increases in the cost of housing in all parts of Australia…
MCGRATH:
So, any room for inquiry on the general issue of immigration…?
PRIME MINISTER:
Well, I think immigration is at a sustainable level and I've never been somebody who said you should have unlimited immigration and I think people are aware of that. But I do believe that immigration can at an appropriate level add to economic growth and most people believe that the evidence of what's happened to Australia since the end of World War II will bear that out. But the argument about immigration is not so strong when you look at the fact that the cost of housing has gone up in all parts of Australia and not just in Sydney.
MCGRATH:
Well how about these claims from the States though, I mean are the Premiers, Peter Beattie for example, says that in his State GST import into the cost of the house is much greater for new homeowners than is the cost of stamp duty.
PRIME MINISTER:
Well, that really is outrageous and Mr Beattie should blush at having made such an argument. To start with, the GST doesn';t apply to existing dwellings. It applies largely to the construction component of a new house and land package. Secondly, when the GST was introduced, can I remind Mr Beattie, we also brought in a first homeowners' grant scheme which was designed substantially to offset the cost impact of the GST. We didn't have a first homeowners' scheme in this country for 20, what, 20-25 years. And one was brought in on the 1st of July 2000 with the GST at $7,000 to help offset the cost of the GST on new houses. We doubled that for new homes for March of 2001 and when we did that I wrote to all of the Premiers asking them as their contribution to reviving the home building industry if they would please consider reducing stamp duty at least for a short period of time and they all wrote back and said no we're not going to do that. But they were very happy to get the additional stamp duty revenue through the boost in housing construction that flowed from the doubling of the First Home Owners' Grant for new homes.
MCGRATH:
But they're all claiming, of course, that this is an attack on them, an attack on state revenue. What about some of the federal policies? Are they up for grabs? Can this inquiry look at GST? Can it look at the release of defence land?
PRIME MINISTER:
Well if the inquiry can look at what it chooses to look at and the Productivity Commission has a long history of acting in a very transparent independent fashion. But this argument that you can equate to GST with stamp duty, for the reasons I've just explained, is quite fallacious. And in any event can I remind your listeners that the proceeds of the GST go to the States, every last dollar and Mr Beattie incidentally is the first cab off the rank as a State Premier whose State is much better off as a result of the GST revenue than would have been the case for that State under the old Federal Labor revenue sharing arrangements.
MCGRATH:
However, if this inquiry does want to look at GST, can it? Does it have that power?
PRIME MINISTER:
Well, this inquiry can act in accordance with its terms of reference. I mean, in the end it's an inquiry, it doesn't have the power to change the law. We don't, you know, we think the taxation laws of this country are sound, obviously the inquiry can make whatever comments it wants. And the purpose of this inquiry is to assemble information to try and get at the causes of the barriers to entry for first homebuyers and I'll be very interested in what it reports. It is not an attack on the States, but everybody who understands anything about housing in this country knows that the land release policies of State Governments, the charges imposed by local governments, things like stamp duty, things like land taxes, all the revenue imposts that come from different levels of government, they are important factors. But let's keep a sense of perspective, one of the reasons why housing has gone up in value is that we have had a sustained period of very low interest rates. Now what has happened is that because we have low interest rates people have borrowed a lot more, they can afford to borrow more, they therefore borrow more to buy more expensive houses and as a consequence the whole price structure of housing around the country has gone up. Now that's not going to change and I think we have to keep that in mind.
MCGRATH:
Well on that point, while you're moving to try and see if they are some ways to cut costs so that housing prices can go down for first homeowners, isn't this really market forces? Isn't the fact that people are talking about this, that it's a big barbecue stopper, as you say, people want houses to be cheaper. Isn't this the first signs of the market possibly moving to correct itself?
PRIME MINISTER:
Well, there's a lot of that in it, Catherine, of course market forces are important, market forces are always important. But I don't think people want their own houses to be cheaper, you know, I'll repeat what I said a few moments ago - nobody has complained to me that the value of their principal asset in life, their family home, has increased over the last seven years. In fact, people are very grateful that that's happened, but that inevitably has created a problem for people who are trying to break into the market for the first time.
MCGRATH:
Have you looked at any of the policies overseas, for example in the US, where interest payments are tax deductable? Would Australia consider that?
PRIME MINISTER:
No, well we wouldn't consider that. We had it some years ago but then overseas I think there are different arrangements for capital gains tax on the family home and we are certainly not going to bring that in, I can assure you.
MCGRATH:
Prime Minister, just quickly, you're off to Cape York this week. What do you expect is going to come out of that trip?
PRIME MINISTER:
Well, I'll learn about the indigenous communities in the Cape and their policy changes that have produced alcohol free areas and policies which are designed to lift the self-sustainability of aboriginal communities, to break the culture of welfare dependency, to put a greater emphasis on economic individualism and economic empowerment. It is largely an exercise in talking to the people and listening to what has been the result of what they have done. I've been invited by the Cape York land council to a special gathering that they are having near Weipa and it will give me an opportunity of talking first hand to people like Noel Pearson about the practical implementation of policies which are designed to help communities break the cycle of domestic violence, excessive alcoholism and all the tragic abuse that flows from both of those things.
MCGRATH:
Mr Howard, thanks for your time this morning.
PRIME MINISTER:
Thank you.
[ends]