O';BRIEN:
Prime Minister, on Budget day two years ago the Treasurer produced the Intergenerational Report showing that we would all be in trouble as an economy and as individuals in the decades ahead if we didn';t save more and work longer. Two years later in the shadow of an election you';re, it seems, spending like drunken sailors. Contradictory signals wouldn';t you said?
PRIME MINISTER:
No Kerry because a lot of the measures that we';ve introduced since that Intergenerational Report have in fact encouraged people to work longer and to save, I mean for example last night the superannuation co-contribution measure represents one of the most significant incentives that low to middle income earners have ever received to put aside out of their own savings something for their future. It';s a measure that hasn';t been talked about a great deal but it';s square on that issue and could I also remind you of the measures that the Treasurer announced a few weeks ago which liberalises superannuation arrangements in relation to quite a lot of areas and were all designed, not to force people to work longer, but to give them an incentive to work longer and of course the changes to the tax scales will make it more attractive for people in middle and upper middle income brackets to remain in the workforce a little longer. So I don';t accept that we have ignored those measures, mind you part of the challenge of the ageing population of course is to underpin the provision of affordable health services because as we live longer and healthier lives we';re going to need those services and that';s why we';re still trying for example to get a pretty modest measure through the Senate in relation to pharmaceutical benefits.
O';BRIEN:
I heard a caller named Anne on radio this morning making this point about your Budget, she said her mother is on a veterans'; pension and lives with her, until a year ago she was getting an hour service a day from Veterans Affairs for the mother';s breakfast and washing which allowed Anne, she said, to work full time. In the past year, she said, this has been cut from an hour a day to half an three days a week. Anne wondered, when you had to make spending cuts like that where you got your surplus money from for this Budget?
PRIME MINISTER:
Well Kerry I don';t know the background to that, as you';ve raised it I';ll find out and I';ll try, through your programme, to find Anne and offer her an explanation. That seems odd to me, I';m not conscious of any decision of the Government that would have brought that about. I can';t explain it without investigating and getting advice but I take the opportunity, as you mentioned veterans, of saying that in this Budget there is an additional $150 million to improve the payments to specialists so they keep honouring the Gold Card arrangements with the veterans and there was also a very significant veterans affairs package only six weeks ago which was announced outside of the Budget which responded to many of the recommendations of the Clark review.
O';BRIEN:
I suppose the wider point she';s making is that while perhaps there are people out there who';ve benefited from some of your spending programmes there are many people out there who';ve suffered the sting of your spending cuts. And her point there if she';s suffering a cut where are you getting your surplus from to splash the money around the way you are in the shadow of an election?
PRIME MINISTER:
I';m not prepared to accept without knowing the background that Anne';s changed circumstances are a result of a deliberate cut, there could be some other explanation.
O';BRIEN:
Okay. Would you really have us believe it';s pure coincidence that your biggest spending budgets are in election years?
PRIME MINISTER:
Well Kerry, nobody in my position sets out to be unpopular, anymore than if you had a Labor Prime Minister in office he or set would set out to be unpopular. But this Budget is a good Budget, it';s generous in areas where it should be generous and that has been made possible by the fact that we have run a very strong economy. This economy is in fantastic shape, we';ve paid off $70 billion of Labor';s debt, we';ve got the lowest national debt virtually of any developed country in the world, we have very strong business growth. The profit share of Australian companies at the moment is the highest ever recorded and one of the pleasing things to me is that a lot of the family benefits in this Budget are being funded out of increased company tax collections, not as a result of an increase in the company tax. In fact, we cut the company tax from 36 to 30 per cent but because the economy is performing so strongly, well when you provided for the necessaries and you have a low debt, why shouldn';t you return the money you have over to the people who gave it to you in the first place. It';s not my money and it';s not Peter Costello';s money, it belongs to the Australian people and we';ve tried to give it back in a way that we think is fair but also in a way that encourages families. I mean, I believe strongly that the family is the centre and the heart of our nation and I think we should encourage them and encourage them as much as we can.
O';BRIEN:
But when you talk about giving it back, my question was about perhaps the cynicism out there that you seem to give a lot more of it back in election years. You don';t think that there';s a danger if people do feel that you';re manipulating them rather cynically that some of them might say, we';ll take the money John but don';t assume we';ll vote for you.
PRIME MINISTER:
Well, Kerry, I don';t take the Australian people for granted. I still believe that we are the underdogs in this election and I am not overtaken by any sense of self satisfaction or complacency. We did give tax cuts across the board in the last budget. We have been#8230;
O';BRIEN:
#8230; know that that was very cynically received as a tiny cut.
PRIME MINISTER:
But you see, Kerry, that is right. That was reported at the time, but all you can do is to make a decision, provide benefits, fund programmes and go out and argue your case. But if you';re saying to me that I think in some smug way this Budget has sown everything up for the Government #8211; forget it, I don';t think that at all. I think I';m still a long way behind and we still have a big fight ahead of us and I will never take the Australian public for granted.
O';BRIEN:
Why shouldn';t people feel manipulated when they know that in Cabinet 18 months ago you were considering these very issues of pressures on families of the relationship, the balance between work and families, acknowledging in Cabinet that families did need precisely this sort of help, but after a lot of speculation and a lot of talk that you were going to do something in the last Budget, instead of doing it last year you chose to wait another 12 months and hold off until this pre-election Budget.
PRIME MINISTER:
What we chose to do last year was to give some across the board tax relief and the other point I make is that our financial position for this Budget and particularly our financial position as we come to the end of the current financial year has turned out to be better and stronger than we anticipated. I mean, we took a decision last year to give tax relief that I think involved about $10.5 billion over the four year period of the forward estimates. Now we could have decided last year to direct that money elsewhere, but we decided at the time that the best thing to do was to provide that across the board tax relief. Now people can say that was the right judgement or the wrong judgement, but it';s not as if we deliberately squirreled that $10 billion away.
O';BRIEN:
On bracket creep Mr Howard when you talk about the tax cuts, governments have had it over taxpayers for as long as you';ve been in politics on bracket creep, haven';t they? It was an issue when you were Treasurer 27 years ago. It';s true, isn';t it, that governments have simply come to rely on it as a sneaky way of raising tax and only occasionally, like now, giving some of it back.
PRIME MINISTER:
Well, Kerry, there';s truth in what you say. It';s also fair to say that the amount of bracket creep is less as a result of the tax reforms of three years ago than it used to be because, and it';s going to be even further extended as a result of last night';s announcement, it';ll be possible for a wage and salary earner to pass from an income of $21,600 through to $63,000 once last night';s announcements have been fully implemented without going into a higher tax bracket.
O';BRIEN:
But as the accounting body, CPA Australia pointed out today, the $1.9 billion tax cut next year doesn';t even cover this year';s bracket creep of $2 billion.
PRIME MINISTER:
Well, Kerry, by the two instalments of tax cuts we announced last night, we will guarantee that 80 per cent of Australian income earners will be on no higher marginal rate than 30 cents in the dollar. And that was one of the central goals of tax reform way back when we introduced the GST. And I';ve always felt that we had to keep faith with that commitment and that was one of the reasons that we made the changes we did last night. Now, I';m not saying we';ve abolished bracket creep, but I';m saying that by the changes we';ve announced last night we have greatly ameliorated bracket creep and you won';t have this absurd situation with people going into a 42 cents in the dollar tax rate at $52,000 a year.
O';BRIEN:
On Iraq, Mr Howard, your Defence Minister Robert Hill has admitted that your Government was told three months ago of a Red Cross report detailing torture and abuse of Iraqi detainees by occupying forces. As a coalition partner in Iraq, did you ask America or Britain about the truth of the Red Cross report in Iraq?
PRIME MINISTER:
Well, Kerry, we were certainly told by our man in the CPA in Baghdad of the Red Cross report. It wasn';t sent to us because it wasn';t a report delivered to us and we were told that the Red Cross having presented the report were pleased with the American and British response and the reason that matter was not taken any further Kerry was it did not involve Australians. There were no Australians involved in these abuses. There';s no suggestion that there';s been any Australian complicity and there';s absolutely no suggestion that it was necessary having received knowledge of that, officials in Canberra received knowledge of it, there was no necessity at that time of any further action being taken because the Americans and the British having received the report indicated to the Red Cross that they would pursue their further investigations and I think, as you know, investigations were already under way and, indeed, it';s my understanding that announcements had been made before this report was delivered that some American soldiers had either been disciplined or discharged. I forget which.
O';BRIEN:
Senator Hill has also revealed Australian soldiers have captured more than 100 Iraqi prisoners, but Australia has no responsibility for them because they were handed over to US troops. Can we really wash our hands of the fate of those people so easily?
PRIME MINISTER:
Kerry, he hasn';t I think said exactly that. What he said was that because we had no capacity to detain prisoners, because our forces weren';t big enough and we had no prison facilities, it was always the case that there was an American or#8230; I think American only, not British also, an American officer with one of our units who had responsibility for the custody of people who were captured by Australian soldiers. I can tell you and your viewers that I have been assured by the Australian military that at all times when Iraqi prisoners were in the physical presence of Australian forces, they were treated strictly in accordance with our obligations under the Geneva Convention.
O';BRIEN:
As a coalition partner though, we are linked to the actions of American and British soldiers whether we like it or not surely? In which case, you must be terribly concerned about what is still to come.
PRIME MINISTER:
Kerry, I do not accept that we';re linked with illegal, improper behaviour. No I do not.
O';BRIEN:
In broad terms Mr Howard, in the eyes of the world.
PRIME MINISTER:
No I';m sorry Kerry, I do not accept that. That implies that in some way we have been involved in or we have condoned this behaviour.
O';BRIEN:
No, that';s not what I';m implying at all Mr Howard. I';m talking about the perception on the rest of the world#8230;
PRIME MINISTER:
No, I';m sorry Kerry#8230;
O';BRIEN:
We are a part of a coalition, that these actions have occurred for better or for worse, and that some people will link us as a part of that coalition.
PRIME MINISTER:
Well Kerry, that is a different thing from what you just said. Well I think#8230; I mean a lot of people would say #8216;linked with these deeds'; suggests that in some way we';ve sanctioned them, we knew of them, that we';re involved in them. We';re not. Now I deplore them, but I also applaud the fact that immediate action is being taken by the Americans and the British to bring those responsible to justice. When atrocities are committed in other countries, people are not brought to justice and punished, and it';s a mark of the difference between American and British societies and our own that when things of this kind happen, that we believe people should be punished and brought to justice, not applauded and promoted.
O';BRIEN:
John Howard, we';re out of time. Thanks for talking with us.
PRIME MINISTER:
Thank you.
[ends]