MAKIN:
And good morning and welcome to the programme and I welcome the Prime Minister of Australia, John Howard. Welcome to Adelaide, John.
PRIME MINISTER:
Very nice to be here, Paul.
MAKIN:
Can I call you John?
PRIME MINISTER:
Please yourself.
MAKIN:
Okay. Well, I';ll call you John. First up – the date of the federal election please, we';ll get that out of the way and then we can do the interview.
PRIME MINISTER:
What';s your next question?
MAKIN:
Alright. Cricket. The second test starts today. Do you think Stuart McGill and Andrew Symons will get a guernsey?
PRIME MINISTER:
Well… I would… I think, well one of them I think will [inaudible]. But I think that';s pretty hard to tell. I';ll leave that to the selectors.
MAKIN:
Warnie';s going well.
PRIME MINISTER:
Going very well. I think everybody';s just delighted that he';s come back so strongly. It';s a great performance and I think it';s inevitable that he';ll pass Courtney Walsh';s record, he';s only got, what, another 19 … 519… so he';s got to get another 18 wickets. Muttiah Muralitharan probably because he';s younger will probably in time overtake him. I won';t get into debate about…
MAKIN:
No, don';t…
PRIME MINISTER:
The last mentioned person method of operation. I won';t get into that. I';ll leave that to others.
MAKIN:
Okay, let';s get into it. Mark Latham has come out and said that if Labor is elected, he';d reduce the super contribution tax and possibly even scrap it and he';s now calling it 65 at 65 plan. What are you thoughts on it?
PRIME MINISTER:
Well, I would like everybody to have a pot of gold some time in the future. He';s given no idea of how he';s going to get rid of the contributions tax. All he';s said that over four years, he';ll cut it from 15 to 13 per cent. I';m sorry that when we put up a bill in the Parliament last year to begin reducing the superannuation surcharge, I';m very sorry that the Labor Party voted against it and we were only able to get it through in an amended form with the help of the minor parties. So…
MAKIN:
They';re keen on it now.
PRIME MINISTER:
Well, I';m, you know, I';m a little suspicious. It';s really a question don';t listen to what they say, have a look at what they do. We have, of course, made a number of announcements in recent days about helping very low income people by providing a matching $1,000 for every $1,000 of contribution by… or up to $1,000 contribution by low income people and they';ll get the benefit of this if their incomes are up to $40,000 – that';s something that came into operation on Sunday. Clearly, there are advantages where you can in reducing the tax in these areas and providing extra assistance. But the talk about people eventually enjoying the benefit the abolition of something and not tell us how you';re going to fund it, when it';s going to happen is really a little disingenuous. I mean, we';d all like to promise the earth. I would like to promise years into the future, we abolish all forms of taxation…
MAKIN:
Terrific.
PRIME MINISTER:
Yeah, but, of course, there';d be no way I could responsibly do so. And while his promise is not quite in that category, it';s getting close to it.
MAKIN:
Alright. Still on super – it is tax free times. I mean, surely there is some relief here. Then the people, the Government, don';t have to pay the pension, self-funded retirees, they have a chance. Surely…
PRIME MINISTER:
There are some people… well… yeah, well let';s just take that proposition. The levels at which it';s taxed are, when it goes in, are of course concessional. It';s not taxed at the full rate and you talk about self-funded retirees. Well, a couple of years ago we brought down a budget that provided for a very generous tax treatment for retired people, effectively meaning that as an individual you didn';t pay any tax until you earned about $20,000, if you earned less than $20,000 as an individual you didn';t pay any tax for less than $31,000 or $32,000 as a couple. So we have already made some generous provisions. Look, we would all like to see taxes lower in every area, but the community would also like to see spending higher in just about every area. I don';t get many people as I move around the country saying I want the money taken out of pensions, I want money taken out of defence, I want money taken out of health, I want money taken out of education. I don';t get anybody saying that.
MAKIN:
But they talk about super…
PRIME MINISTER:
Well, they talked about a lot… they talk about a lot of things. They talk about super tax, they also talk about more spending on health, they want more money on defence. We obviously have to put more money… still further money into intelligence and security agencies. I';ve got to try and strike a balance. That';s why we put more money into Medicare, why we brought in this safety net, which is now in operation thanks to the support of people like Senator Meg Lees here from South Australia, who took a national interest point of view, rather than a selfish dog in the manger attitude, which is unfortunately the attitude taken by the Labor Party on this issue. We would never have got that through without the assistance of people such as Senator Lees.
MAKIN:
Okay, in light of Peter Costello';s comments about people working longer in the workforce beyond retirement age – 65 – and still being able to draw on their super, could we clarify that because the perception out there that I';m feeling that they think it';s mandatory and not voluntary…
PRIME MINISTER:
No, what about working longer?
MAKIN:
No, no, no, about being able to work longer and then draw some of that…
PRIME MINISTER:
No, well you can do it if you want to - it';s optional. The whole idea, it';s not as the Labor Party dishonestly says “work until you drop”, what it is about giving a lot of older people in the community an opportunity of working longer if they wish and encouraging them to do so and I think that is a good thing and I think a lot of people listening to this programme who would like to still be in the workforce or who would like to remain in the workforce at least until the age of 65 would say that';s a terrific idea and we ought to encourage it. We hear a lot of talk about the retirement age of 65, we would make an enormous difference in this country if we could get people to work until they are 65 if they wanted to…
MAKIN:
Right.
PRIME MINISTER:
Because the real problem is people drop out of the workforce in their middle 50';s instead of continuing and we have as a nation a very low workforce participation rate in that age bracket of 55 to 64 – that';s the first task. And if we can fix that, then we';ll make a mighty contribution towards paying for the social services we need for an ageing population – that';s the key to this. And as time goes by, we progressively become older as a nation…
MAKIN:
And the baby boomers too.
PRIME MINISTER:
Well, exactly. And the cost of supporting people who are going to live longer and they';re going to live healthier lives, the cost of supporting them will rise unless we can get more people in the workforce is going to become harder and harder to pay for it. And that';s why we are exploring different options to encourage people if they want to to stay in the workforce and that';s the key to funding our future.
MAKIN:
Are you embarrassed about the bracket creep because after all inflation is really doing your tax collecting for you?
PRIME MINISTER:
Well, there is always, unless you have a flat tax, have one single rate…
MAKIN:
Yeah, but the bracket creep…
PRIME MINISTER:
Well, bracket creep, well there';ll always be some element of bracket creep unless you have one single rate.
MAKIN:
Yeah, but there';s 80 per cent, say for example, of wage earners have crept up from 30 cents in the dollar to 42 cents in the past year.
PRIME MINISTER:
You say 80 per cent?
MAKIN:
Well, that';s what I';ve been told.
PRIME MINISTER:
80 per cent of taxpayers you';re saying are on 42 cents? No, that';s not right.
MAKIN:
No, but I say in the past year…
PRIME MINISTER:
No…
MAKIN:
… the people who were on 30 per cent have crept up to 42 per cent.
PRIME MINISTER:
Yeah, well, last year there were about 76 per cent under 30. So you';re saying that 80 of that 76 have crept up – that';s not right.
MAKIN:
Okay, well let';s make it 76…
PRIME MINISTER:
No, well… the real figure is that when the tax changes were brought in in 2000, 80 per cent of individual taxpayers were on a top grade of no more than 30 cents in the dollar. My understanding is that figure is now down to about 76 per cent. So that';s quite different of saying 80 per cent are paying 42 cents. About three quarters of people, individual taxpayers, are on a top grade of no more than 30 cents in the dollar. Now, inevitably, there is bracketcreep and come the budget, if we have the capacity to provide tax relief – and I want to stress that there';s no automatic guarantee of that – if we have the capacity to do so because we do have to make greater provision for defence and security spending…
MAKIN:
But you';ll fix that?
PRIME MINISTER:
Fix what?
MAKIN:
The bracket creep.
PRIME MINISTER:
Well, if there is capacity to give tax relief in the budget we will, but I';m not going to specify what form that will take.
MAKIN:
What about linking say the tax brackets with CPI?
PRIME MINISTER:
Well, that';s indexation.
MAKIN:
Yes, to be fair.
PRIME MINISTER:
Well, that is one way you can give tax relief. People might argue that, for example, you spent a few minutes talking about superannuation tax. You can';t do it all. You have to make choices. I don';t have the luxury of being able to fix everything at once.
MAKIN:
I understand that. Now, terrorism in Australia. I mean, how safe are we, taking in to account the Spanish attack?
PRIME MINISTER:
Well, we are a target for terrorists and we have been a target for terrorists for quite some time. The best intelligence I';ve had that we were a potential target for a terrorist attack back before the 11th of September 2001 and we are essentially a target for terrorists because of who we are rather than what we';ve done. I don';t think we';re as big a target as some other countries because we don';t have terrorist cells operating in Australia. But remember there was an al-Qaeda presence in Spain. There';s not an al-Qaeda presence in Australia. But I have to say that we are a potential target, I cannot guarantee there won';t be an attack on Australia and we have to do everything we can to try and make this country as safe as possible.
MAKIN:
Okay, the Spanish Government was hammered at the ballot box. Tony Blair';s in trouble. George Bush could also face a voter backlash. Could there be a voter backlash against your Government because of our involvement in Iraq?
PRIME MINISTER:
Well, that is one of the many things that people will take into account in going to the polls later this year. There';ll be an election some time, probably before the end of the year, certainly will be one before the end of the year unless there';s anything unforeseen. Then that is something that people will take into account and I don';t have any regrets about the attitude we took in relation to Iraq. It was, in my view, the right thing to do. Australia was a terrorist target before we entered the war in Iraq. Australia remains a terrorist target after we went in the war in Iraq. And this idea that some people are implying that we should alter our foreign policy under threat from terrorists is not a policy that I will ever follow and I don';t believe the majority of Australians would want any Government to be intimidated and cowered and bullied into changing its position on foreign policy issues because of terrorist threats.
MAKIN:
Okay, I';ve got a question from my mum. She is a pensioner and I thought, yeah, she';s going to ask a question about pensions, if I had John Howard… now, I';ve got John Howard in the studio. No, nothing about pensions. She wants to know why you';re buying American second-hand tanks when you can get other tanks from Europe at half the price.
PRIME MINISTER:
Well, these are better value, they';re stronger and according to the experts, they';re a better buy even second-hand. But when you say second-hand, I mean it doesn';t mean to say that they';re broken down. They';re in tip top condition and it';s not unusual to buy military equipment that has had some use.
MAKIN:
One owner?
PRIME MINISTER:
I think it';s had one owner. I';d have to check.
MAKIN:
Okay. Do you regret not handing over the reins to Peter Costello last year and are you intending to do that after the upcoming election?
PRIME MINISTER:
Well I';ll remain the leader of the Liberal Party for so long as the party wants me to and it';s in the party';s best interests that I do so. The answer to the first question is that I decided to remain as leader because that is what my party wanted. I felt very committed to the job. I remain very committed to the job. I';ve got plenty of energy, plenty of ideas and plenty of enthusiasm, not only about the remainder of this year, but the challenges of a new term if the public re-elects us.
MAKIN:
Well I certainly think you';re not too old. I mean at, you know, 64, gee you';re a young bloke.
PRIME MINISTER:
Well in the end, people make judgements on how good you are, not on how old you are or how young you are. And often they take into account additional experience as a determining factor.
MAKIN:
Is Peter Costello the anointed one?
PRIME MINISTER:
Well I don';t anoint leaders of the Liberal Party. It is not in my gift. It belongs to the party room. But I have no doubt…
MAKIN:
You';ve got a lot of influence.
PRIME MINISTER:
I have no doubt that if I went under a bus tomorrow, the party would and should elect him as leader.
MAKIN:
So if you went under a bus tomorrow, he would be leader of this country?
PRIME MINISTER:
That is my very, very strong belief and prediction. I wouldn';t be around to see it, but that is my prediction.
MAKIN:
Okay. We';re going to take a break now and then back in a moment with the Prime Minister of Australia, John Howard.
[break]
MAKIN:
Back with the Prime Minister of Australia, Mr John Howard. And John, your comments about the poor surprised me. You were quoted as saying, and you can correct me if I';m wrong, but you were quoted as saying the rich are getting richer, but the poor weren';t getting any poorer. Now that doesn';t make the poor feel better.
PRIME MINISTER:
Well no, but I asked a question and I did say that. And it was in the context of the gaps between various levels of income and I was making the point that it is true that the gap has widened, but the gap has widened because there are more people in the upper bracket. It';s not because of the level of support and income for the lower end of the income range has fallen. And in fact, there is plenty of evidence to suggest that income support and income levels for people at the bottom have improved. Now that is not to say that there aren';t people doing it hard. That is not to say that I';m sensitive to that. It';s not to say that we don';t have still areas of unemployment and we don';t have challenges in relation to homelessness. It';s not to say any of that. But I was just stating the honest truth because critics of Governments are fond of these glib expressions such as the rich are getting richer and the poor are getting poorer. Well I decided to adopt the same sort of language to make my point. It is true that the rich are getting richer, but they';re not getting richer at the expense of the poor getting poorer. They';re getting richer because we are becoming a more affluent country. We have a much higher level now of households where there are two incomes at a high level. Take a city like Canberra. It has the highest aggregate household incomes I think of any city in Australia, simply because you have a very high incidence of two people working, both drawing quite high salaries - not perhaps high by financial community standards or people who are top media performers or so forth - but certainly high by average standards. And that was the point I was illustrating. But it';s important also to understand that with unemployment having fallen and having brought in things such as the linking of pensions - you mentioned your mum and the pension - well one of the things we did was to link the pension not only to the CPI, but also to 25 per cent of male total average weekly earnings, which is a guarantor of a higher rate of increase in the pension than was previously the case. We';ve brought in a Medicare safety net, we have brought in quite a lot of other additional benefits, all of which are designed to strengthen the safety net. But having said all of that, I';m not pretending that there aren';t people who are still poor, there aren';t people who are missing out, and I';m very conscious of that.
MAKIN:
I mean I';ve spoken to people here on the programme who actually can';t afford to put meals on their table, you know who…
PRIME MINISTER:
Well there are people in that situation, and that is why you have to always have as a society a safety net that looks after people. And if you are out of work and you have a wife or husband and children, you get not only support for yourself and your wife or husband, but also for those children, and there are I think family benefits now which have been significantly improved. And although it is not a lot of money, it is a better and stronger safety net than it used to be a few years ago. I mean the family tax support payments that we have now are very strong and they do provide not a fortune, no country can provide a fortune in this area, but they do provide a level of support that if people are careful and sensible, prevents them from falling into real hardship and abject poverty. Now some people are in difficult circumstances through no fault of their own, some people sadly get into difficult circumstances because they find it hard to organise their lives and hard to behave with a sense of personal as well as family responsibility, and governments have got to have a welfare system that encourages responsible behaviour, but also looks after the genuinely needy, and it';s a hard balance. Because I often get criticised to the effect that the welfare system discourages people from finding work. Now a lot of people come along to me and say the welfare system discourages people from finding a job because the difference between the benefits they get through the welfare system and what they get if they get a low paid job is not very high, so there';s no incentive to go out and look for a job. Now the answer is not to cut the welfare payments as some suggested, I reject that completely, but you have to keep the… always keep these interactions in mind.
MAKIN:
John, health is still a huge concern for people and I imagine that will be part of the upcoming federal election. Your recent reforms to Medicare, I mean clearly demonstrates you';re committed to health, there';s no doubt about that.
PRIME MINISTER:
Very strongly. There can be no debate about that.
MAKIN:
No, well I can see that. But waiting lists, for example, for elective surgery, that continues to grow. Can you stem that? Can we stem…
PRIME MINISTER:
Well hang on, I don';t run the hospitals.
MAKIN:
No I know.
PRIME MINISTER:
We provide about 50 per cent of the money for the hospitals.
MAKIN:
But there is thought now that the Federal Government could take over the…
PRIME MINISTER:
Well people raised that in the party room, but that';s not part of our current policy.
MAKIN:
Oh okay. Is that rubbish? It won';t happen?
PRIME MINISTER:
No, no. What happened was it was raised in the party room and you asked me is it current policy to do so. No, it';s not current policy to do so. But we have to make the present system work, and the present system is the hospitals are owned and operated and run by the State Governments. Now I';m not criticising them per se for that, but we can';t be held responsible for waiting lists. I mean if something goes wrong with the Army, I can be held responsible, but if something goes wrong with public hospitals in South Australia, well the South Australian Government has to answer for that. It';s their responsibility. But if we';re going to continue to have a federation in this country, the different levels of government have got to have responsibilities as well as rights. You can';t run around the country saying I';m the State Premier, I';m the State Government, I';m going to have my say and throw my weight around, but whenever there';s a problem, say oh that';s Canberra, if only Canberra would give us more money, we could have heaven on earth. State Governments can';t be allowed to get away with that.
MAKIN:
Okay. Your people are starting to wind us up, so we';ll have to go. But just one last question. You';ve always been pretty fit, out there brisk walking every morning, whether you';re here or Washington.
PRIME MINISTER:
I went around the Torrens this morning.
MAKIN:
Did you?
PRIME MINISTER:
Yes.
MAKIN:
Good?
PRIME MINISTER:
Great spot. One of those beautiful spots of Australia to walk. Just magnificent.
MAKIN:
Any advice to say Mark Latham about getting rid of those man boobs?
PRIME MINISTER:
No, I will stay right away from that. I don';t make personal observations of that kind about anybody.
MAKIN:
Yeah, but people need to get fit though?
PRIME MINISTER:
Well I try to remain fit, but I';m not going to give free advice to anybody else. That';s their business. I don';t get into that.
MAKIN:
He';s getting a bit large now, Mark, isn';t he?
PRIME MINISTER:
I don';t get into that.
MAKIN:
Alright John, it';s just been an absolute pleasure. I';d like to thank you for coming in. And that was the Prime Minister of Australia, John Howard.
[ends]