HADLEY:
Prime Minister, good morning.
PRIME MINISTER:
Good morning Ray.
HADLEY:
It';s always a great pleasure to talk to you.
PRIME MINISTER:
And you too. Your programme is doing well.
HADLEY:
Yes, thank you. Doing particularly well and we';re happy about that. You';ve had a busy morning.
PRIME MINISTER:
I have indeed.
HADLEY:
I';ve seen you everywhere.
PRIME MINISTER:
I started early. You';ve got to.
HADLEY:
Did you get the walk in?
PRIME MINISTER:
Do you know this morning I felt as though my throat had been cut. It';s the first time in a fortnight that I haven';t walked because the early starts with the media and this time of the year, it was just impossible. I';ll be back at it tomorrow.
HADLEY:
Good, good. One day off isn';t too bad I don';t think.
PRIME MINISTER:
No, no. But I miss it.
HADLEY:
Now, I notice a number of headlines this morning #8211; #8216;The mother of all spending sprees';. I guess the answer to that is at least we';ve got it to spend.
PRIME MINISTER:
Well that is the key. This Budget has been made possible by a very strong economy and if you';ve got a strong economy and you have very low debt and you';ve funded education and health and defence and intelligence services, then why shouldn';t you return it to the people who gave it to you in the first place. It';s not my money, it';s not Peter Costello';s money, it';s your listeners'; money. And we took the view that if you';ve got it over, you don';t squirrel it away, you hand it back to the people who need it. And we tried to target families. There is no argument about that. This is a very pro-family Budget and we think people raising children are doing the most important thing in the country and we think they need extra help.
HADLEY:
Well of course we are in election year, but I make the point again #8211; if you didn';t have fiscal responsibility, we wouldn';t have the money to spend in the first place. I guess it';s what coincidental that it comes up in an election year. The cynics say no, it';s an election-winning Budget.
PRIME MINISTER:
Well Ray we';ve given benefits in other budgets. But we found this year that our fiscal position was particularly strong, not only in the current financial year that ends on the 30th of June, but also in the years ahead. And a lot of that was due to the fact that we collected more company tax than we thought likely, and that is due to the fact that companies in Australia are doing better now than they have done in the time that records have been kept. And although we cut the company tax rate from 36 cents in the dollar to 30 cents in the dollar when we introduced tax reform a few years ago, we have in fact collected more company tax because the economy is doing better and companies are earning higher profits. There is quite a lesson in that, that sometimes when you cut tax, you collect more tax. And that I think can apply to individuals as well as applying to companies.
HADLEY:
You';ve said here this morning and previously, families are the big winners. But if you';re single, and you';re young and single, there is no benefits there for you in real terms. Married with no children no benefits now, but I guess that';s answered by well if you have some children, you';ll get a benefit.
PRIME MINISTER:
Well obviously if you are single, you don';t get as many benefits from this, depending a bit on your income, although you do get access to the superannuation co-contribution and some people might argue that single people with fewer expenses can afford to put more money away for their retirement than people with family responsibilities. But life is a cycle. People who are single one day, often they want to get married and have children the next. And many of the people who are without family responsibilities now of course are retired people who once did have family responsibilities and their children have grown up. Many of those people, self-funded retirees, of course got a very significant tax break three years ago when we introduced that aged persons'; tax offset which effectively relieved self-funded retirees of tax on about the first $20,000 of their income and they also got the benefit of the dividend imputation credit under tax reform, which means that if you get a dividend, you get the full benefit of the tax on that up to your marginal tax rate. So the point really is, without getting too complicated, that we';ve done quite a number of tax things in relation to those groups in the past and we decided on this occasion that we would really very directly target families. But also with the tax cuts, recognise that if you';re earning $52,000 a year, you';re not rich and you should not be paying 42 cents in the dollar on some of your income. And we were determined to give some relief in that middle to upper tax bracket because those higher marginal tax rates come in far too early in this country, and that has quite an effect on incentive. I mean you just walk around and talk to people in your studio. Leave aside the well-paid presenters, leave that aside, just talk to the others and you';ll find they work a bit of overtime and they';re saying gee if I do too much of that, I';m going to go into a higher tax bracket. The police sergeant who works a bit of overtime#8230;
HADLEY:
They';re all nodding.
PRIME MINISTER:
Well it';s right. I mean this is the reality of middle Australia and it';s particularly so in Sydney. Not just Sydney, but you know, you don';t have to be a millionaire to sort of get#8230; I mean you';re entitled to get a break if you work a bit harder, do some overtime, and you shouldn';t get clobbered with 42 cents in the dollar when you go over $52,000. Let me just give you one figure. There are of all of the male full-time earners in Australia, 37 per cent of them, 37 per cent, earn $52,000 a year or more. And what that means is that that 37 per cent would all, but for this change, start paying 42 cents in the dollar or be already paying 42 cents in the dollar on some of their income. Now this will encourage them. And of course people who are now in middle 40s and that, they hope to go higher. I mean somebody said to me this morning you keep talking about the police sergeant, what about the police constable? Well, most constables want to become sergeants and most sergeants want to become inspectors or superintendents. I mean that';s what life is about. This is progression and we ought to encourage people to aspire to a higher position.
HADLEY:
The ACTU says what about the 63 per cent earning less than $52,000?
PRIME MINISTER:
Yes, but many of those people of course are part-time earners, many of them are, and many of them are married women who have children who are working part-time who get very, very significant benefits under the family tax changes #8211; not only the $600 increase in the Family Tax Benefit A each child#8230;
HADLEY:
And they get that in June, don';t they?
PRIME MINISTER:
Well you get one payment in June and if you put your tax return in July or August, subject to any overpayment adjustment, you';ll get the other $600 as soon as you put in your tax return.
HADLEY:
And you punted that complicated system where you had to try and guess what you were getting for the next 12 months.
PRIME MINISTER:
Well we';ve effectively, by having this extra payment of $600 a year, it means that many of those people will not be affected by that in the future. But there is also another important change. We have liberalised what the taper is. In other words, once you get to a certain level of income, some of your benefits phase out. We';ve softened the rate at which they phase out, and very particularly if a woman has a child and she stays at home for a few years looking after the child full-time, which many mums do and is always a desirable choice that should be available, I support that very strongly #8211; if they then say okay, my child is four, in kindergarten, I';m going to go back into the workforce, they find that they lose their extra benefits for being at home pretty quickly under the present system, and we';re going to significantly liberalise that so that a woman could be back in the part-time workforce earning up to about $18,000 a year and still get some of that mum-at-home allowance that she had while she was at home full-time.
HADLEY:
Were you surprised by the biblical nature of your Treasurer';s speech last night, when he said go forth and procreate?
PRIME MINISTER:
No, no. I endorse it very strongly. I mean I can remember#8230;
HADLEY:
I';ve done my bit. I mean I';ve got four Prime Minister.
PRIME MINISTER:
Well I know you have. Well I';ve only got three and the Treasurer has got three, so you';re one better, but I mean, you know, okay congratulations. But there';s a joke between the Treasurer and I that some years ago when#8230; we joked about this when he only had two children, and I mean I';m quite sure my advice was not that heavily listened to, but I think it';s a pretty good injunction to people because we do need more children in this country.
HADLEY:
You';re not suggesting you told the Treasurer to go forth and procreate yourself, are you? He took your advice.
PRIME MINISTER:
We have a joke about it Ray, we have a joke about it. The really important thing is that newborn babies are a great asset. I mean some people may say I';m being treacly and sentimental. Well so what? I happen to believe it. I do think that this country does face an ageing problem. We are an ageing population. Not as bad as other countries, but not as good as say the United States and a few other countries. So we have to try and have a tax and benefits system which is as friendly and accommodating to families. I';m not saying it';s going to make a huge difference, but even if it makes some difference at the margin, I';m very happy.
HADLEY:
Are you worried that some people might start having children for the wrong reasons, for the $3,000?
PRIME MINISTER:
Some people have raised that with me. Look I think the instances of that will be very small. I certainly hope it is. There are not too many people who willingly, despite a popular view to the contrary, there are not too many people who deliberately have children without some expectation of support, either through a marriage which is obviously very desirable, or a relationship where support is given to that child. In fact the teenage pregnancy issue is not as big a problem in Australia as it is in some other societies, and for example the great bulk of single mums in this country were once married or in relationships and there is a bit of a popular misconception about this. That';s not to say there aren';t some examples of irresponsible teenage pregnancy, but it';s not perhaps as grievous a problem in Australia, according to the figures, as it is elsewhere.
HADLEY:
We';re all preoccupied, and I';ve heard you answer this question or deflect it all morning, about when there is a possible election. You';ve said that you will be away in June.
PRIME MINISTER:
Yes I will.
HADLEY:
And Mark Latham has said what, that he won';t go overseas because he';s worried about you calling an election while he';s away?
PRIME MINISTER:
Well he';s said that he#8230; I haven';t seen the full statement, but I understand what he';s saying is that I';m cancelling, this is Mr Latham speaking, my trip to America because I think the Prime Minister is getting ready to call an early election. Well I';m going to America early in June. I';m going principally to lobby Congress to pass the Free Trade Agreement that will be worth billions to the Australian economy in the future. I';ll also see President Bush and senior people in the Administration. I';m then briefly going to Europe, I';ll see Mr Blair and I';ll take part in the 60th anniversary commemoration of the D-Day landing, there';s a very big gathering in France and I was invited to that by the President of France and the Russian President, the American President and British Prime Minister and all the others will be attending and then I';ll be coming straight back to Perth. I';ll be away for probably no more than five or six days, perhaps a week. There won';t be an election in June, no. I mean, that';s#8230;
HADLEY:
It';s more likely August, September, October#8230;
PRIME MINISTER:
Well, I haven';t made up my mind but it will be in the second half of this year. So#8230;
HADLEY:
Okay.
PRIME MINISTER:
Just exactly when#8230; look, it';s possible it could be early next year #8211; that';s very unlikely, but I just mention it for completeness sake because the law would allow that. But the normal thing would be to have the election some time in the second half of the year and just when, I haven';t decided.
HADLEY:
You';re a pragmatist and you';d realise that this is a Budget that will garner you many votes because it';s aimed at the people who perhaps would be contemplating voting for the Opposition as opposed to voting for the Government so it';d be better to strike while the iron';s hot.
PRIME MINISTER:
Well, look, I hope I';m both visionary, thoughtful as well as being pragmatic. I try and do the right thing by Australia. But obviously anybody in my position you don';t set out to damage your own party';s political position. I';ll follow things closely but it';s just a little too early for me to be thinking about hardening on some election date. But it will clearly be in the second half of the year. Although, I think there';s a certain weekend in October that a lot of people, including the bloke I';m speaking to think ought to be a bit sacrosanct as far as other activities are concerned. And there';s another one in September, too.
HADLEY:
Yeah, exactly. So obviously we won';t be looking at AFL or Rugby League then.
PRIME MINISTER:
Well, I mean, you know, you don';t rule anything out. But I am sensitive to the other interests and priorities of the Australian people on those weekends.
HADLEY:
Obviously if St George-Illawarra were to make the Grand Final.
PRIME MINISTER:
Well, mate that would be a very compelling thing. Bit disappointed about last weekend but they';ve had great form this year but the injuries got them last week.
HADLEY:
Now just away from all of that, our State Treasurer #8211; it';s a most important debate this and it';s your home state, it';s the biggest state for many reasons, population, economy #8211; Michael Egan appears to be thinking he';s the defacto governor of the Reserve Bank. He';s making all investors pay land tax in New South Wales. He said at the time, and also this stamp duty when you get out of an investment property, that he';s trying to slow the housing market. Now most people believe the housing market nationally as well as locally was slowing anyway and then we saw the weekend before last the lowest clearance rate in 14 years. Do you think that Michael Egan as New South Wales Treasurer has overstepped the mark in terms of trying to regulate the national and New South Wales housing markets?
PRIME MINISTER:
Oh, absolutely. Those new land tax measures could not have come at a worse time. They have pleased some people. I met a group of them the other day, Queensland property developers and I mean, I am the Prime Minister of Australia, I don';t play favourites between the states. I';m happy if there';s investment in Australia. But can I say that the housing market was slowing. There was signs that it was slowing even before the very modest interest rate increases that the Reserve Bank brought about at the end of last year and these additional imposts have really hurt the investment property market. It will result in investment going to other parts of Australia and, as I say, I don';t offer a criticism of that because I don';t play favourites between different parts of Australia but I am concerned about the impact of these measures on such a large chunk of the property market. I mean, he';s done this to get money. He';s not#8230; I mean, this business about I';m trying to save the property market, he';s not saving it he';s hurting it. And it';s not really, as you say, his place. The management of the national economy is our responsibility. We accept that. I think we';ve done a pretty good job and the Reserve Bank';s done a pretty good job. We';ve got a very good central bank and they';ve been given independence by the Government and sometimes we worry, well maybe we shouldn';t have done it. But overwhelmingly, it was a hugely successful decision and they operate independently of the Government. But I think they';ve run monetary policy very well and it really is not the place of the Treasurer of New South Wales or the Treasurer of the any other state to play pretend governor of the Reserve Bank. He doesn';t have the understanding and this is a clumsy ill-advised, unwanted and damaging Budget decision by the New South Wales Government. There';s debate about who will lead the Government if your Government';s returned into the next election after this one.
PRIME MINISTER:
Well, I will. I mean, obviously I';m going to the next election.
HADLEY:
Exactly, but I';m talking about the one after that.
PRIME MINISTER:
Oh, look, my position is that I';ll stay leader of the Liberal Party for as long as the Party wants me to and it';s in the Party';s best interests. And when you';ve been Prime Minister for eight years and you';ve been in politics for almost 30 years as I have, that is the only sensible answer to give. My health is very good, my enthusiasm is unabated. But I';m very fortunate, we';ve got very good people. I can understand why Peter Costello would have an ambition to lead the Government and be Prime Minister. He';s contributed enormously to the Government. He';s been an outstanding Treasurer and he more than anybody else has contributed to the strong economic architecture that Australia has at the present time. But right now, Ray, I said to somebody the other day, they asked me about my time and I said that reminds me of that Jindalee, the over the horizon
HADLEY:
What would#8230;
PRIME MINISTER:
I respond to the job. But equally, I am sensible that there comes#8230; everybody leaves at some stage. I';ll be governed by the views of the party and the interests of the party. But more importantly than all of that, my future';s in the hands of the Australian people. I won';t be Prime Minister after the next election if the Australian people vote the Liberal Party out and they may well do that #8211; I don';t know.
HADLEY:
You love sport, you love a game of golf, you';re also a person who will not stop working. Now many of us get carried out of our jobs kicking and screaming#8230;
PRIME MINISTER:
Nobody';s going to carry#8230; look#8230;
HADLEY:
No, what I';m saying is #8211; are you worried about the fact that when you retire having had this job for so long and most people think you';ve done a rather good job, that what';s John Howard and Janette Howard going to do in retirement? I mean, is there some other things you wish to do with your life, the private sector perhaps? Or would you just be prepared to go fishing and golfing and walking and have a nice relaxing time with your wife and hopefully your grandchildren in the future.
PRIME MINISTER:
Well, we haven';t frankly talked about it a lot because we tend to#8230;
HADLEY:
She doesn';t want you at home, does she?
PRIME MINISTER:
Well, you know, she';s a very independent woman, she';s sort of#8230; she made it very clear to me #8211; don';t imagine that any stage in your life you';re ever going to get a situation where I make lunch for you or any of that sort of business, you will be on your own whenever the times ultimately comes. That was made very clear to me over a long period of time. We haven';t really talked about the future except in a very general way. I';m quite sure that when I leave politics, and I will at some stage, I';ll adjust. I have a lot of interests, not only sporting interests, but I read a lot and I';d like at some stage to do something for a charity and when you';ve been in public life you ought to try and put something back. That';s just general, I';ve had those sort of views now for some years. I haven';t really crystallised them in any way over the past little while.
HADLEY:
Alright then. Just finally, on the question of Peter Costello. I note how you';ve both handled this often asked question about what';s going to happen in relation to that. Do you think you have a better relationship now with Peter than perhaps you ever had in relation to this single issue, I mean about#8230;
PRIME MINISTER:
Look, we have a good relationship. We have very similar views on a lot of things. We disagree on some things. He';s, what, 17 years younger than I and obviously there are some differences, obviously they';re not enormous, but we get on very well and there';s certainly never been any bad blood between us. And when I look back on the other relationships between prime ministers and treasurers there';s never been the element of poison that has entered some of those and I';m thinking of the difficult years that Mr Hawke and Mr Keating had, although they had a very good partnership for a long time. We will never allow that kind of thing to happen.
HADLEY:
Alright, I appreciate your time on a busy day.
PRIME MINISTER:
Thank you.
[ends]