BYNER:
Prime Minister, thanks for joining us today.
PRIME MINISTER:
Very good to be with you Leon.
BYNER:
And congratulations on 30 years in the Parliament.
PRIME MINISTER:
Thank you.
BYNER:
In your view, what's been the most significant contribution you've made in the 30 years?
PRIME MINISTER:
I'll leave that to others, I guess, to finally assess. I would have thought leading the Coalition back into Government in 1996 after a long period in the political wilderness and being fortunate enough to lead a very stable government that has brought a record period of economic growth and stability for Australia, a record certainly since the end of World War II. That is certainly something I'm very proud of. But in the end, I tend to leave these things for other people to make an assessment.
BYNER:
The budget is the thing that's getting a lot of discussion around Australia at the moment. I'm just interested to know, given the way in which the tax system has been slightly modified, for the record could we have a definition Prime Minister from you of the battler? Is it somebody who earns $50,000, $30,000 where do you stand, when you talk about the battler, what do you mean?
PRIME MINISTER:
Well, I normally mean, but it's not an exclusive definition, the battler is somebody who finds in life that they have to work hard for everything they get.
BYNER:
Well, that could be anyone.
PRIME MINISTER:
Well, of course it could. But normally you then look at it in terms of somebody who's not earning a huge income but somebody who is trying to better themselves and I've always been attracted to people who try to better themselves and you can be on different levels of income. And one of the things that, the changes Peter Costello announced last week will deliver, when they're fully implemented is a situation where your income could rise from $21,600 a year to $63,000 a year. That's a range of, what, $41,000 without you passing into a higher tax bracket. You'd still be paying only 30 cents in the dollar on the income between $21,600 and $63,000. Now that was one of the goals that we set ourselves when we brought in tax reform in 1999. And it's one of the reasons why we made the changes we did in the last budget to deliver that kind of outcome. And, as you could imagine, that range of $21,600 to $63,000 embraces an enormous number of tax payers).
BYNER:
Prime Minister, the thing that we don't appear to have done though is address, except from a one off point of view, bracket creep.
PRIME MINISTER:
Well, bracket creep for people passing out of the 30 cent rate has certainly been addressed over the next three or four years for all of the current tax rate for 80 per cent. Now we've got a situation where over the forward estimates period, three or four years, nobody apart from the 20 per cent of top income earners is going to pay more than 30 cents in the dollar. Now that is a mighty contribution towards reducing the impact of bracket creep, and obviously I'm not making a promise about this because it's too far into the future, but obviously a government of the future, hopefully a coalition one, would have an opportunity of looking at this issue again to ensure that the benefits that were announced last Tuesday night are maintained.
BYNER:
It was suggested by most of the pollsters around Australia that were an election were held now, and of course this is purely a hypothetical and we know that what really counts is when the election really is not when it hypothetically may or may not be, but what do you think explains the fact that Labor on a two party preferred basis is about eight points in front of you? Why would that be?
PRIME MINISTER:
Well, I think it indicates at the moment that if an election had been held today, last weekend the Labor Party would have won. Why? It's a combination of reasons. We've been in power for eight and a half years. There's always interest when there's a new leader taking over an opposition party. Mr Latham has done better than Mr Crean. On the other hand, as we get closer to the election, people will face the choice of whether they want the economy managed by the Howard/Costello team or by the Latham/Simon Crean team because if we lose the next election Mr Latham becomes the Prime Minister and Simon Crean becomes the Treasurer. People will think about that and they'll contemplate whether it's a good idea to hand over economic management given the record of this government over the last eight and a half years to Mr Crean as Treasurer with Mr Latham as Prime Minister. Now, there are a lot of reasons why people indicated they do. I've said all along that we are the underdogs and maybe it's now being accepted by commentators that that is the case. I still believe that we have a good prospect of winning if we focus people on the choice and remind people of the advantages of this government and of course as I'll be doing over the weeks and months ahead, outlining some of our further plans for the next few years.
BYNER:
Prime Minister, the price of fuel at the moment is exceptionally high, we in Adelaide are paying the highest, according to the poll published in The Australian. We're 101.9 - that's the average price, Sydney's just 0.1 of a per cent less. How long do you think we will endure this and what kind of affect do you think in the shorter term is going to have on the economy?
PRIME MINISTER:
It's very hard to say how long. It's obviously a reflection of the instability and concern coming out of the Middle East. I'm hopeful that it doesn't last too long. It is a particularly sharp spike. What impact will it have? In the short term if it doesn't last very long the impact will not be lasting. Clearly, if it lasts for a very long time it will start over time to have an effect on activity and inflation. That in turn will depend again on what happens to the Australian dollar. Variations in the level of the dollar have differential effects. A lot of exporters don't like the dollar to get too high. On the other hand, if the dollar goes up that moderates the flow through effect of petrol prices because of the way in which crude oil is measured in American dollars. So there are swings of roundabouts in the currency. But clearly, I don't like this at all. I don't think anybody does but it's something that's happened completely beyond the control of any Government in Australia. This is entirely dictated by the world price of oil and we hope that it will stabilise and come down. And if the OPEC countries, that's the oil producing countries decide to lift their production quotas that will have a beneficial effect. But there are other demand factors that are influencing the price.
BYNER:
There's also the fact that (inaudible) Sydney, 47.4 is the excise in tax we're paying all up, very high?
PRIME MINISTER:
Well, yes but that has not been the reason the price of petrol has gone up.
BYNER:
May not have been. But...
PRIME MINISTER:
Well, obviously that's an understandable reaction but then the price of petrol was 15 or 20 cents a litre lower the amount of excise is the same and indeed, can I remind you that three years ago we abolished the automatic, six monthly indexation of excise. Remember, three years ago every six months the level of excise, which is levied on a volumetric basis and not a value basis, increased according to the cost of living. Now, we got rid of that three years ago as a way of responding to legitimate community concern about the price of petrol then and I'm very pleased that that reform was undertaken. It was very costly to the revenue, but it was a fair measure and a very desirable measure for motorists.
BYNER:
So Prime Minister, what you're really saying also is the fact that whatever the price may or may not be of fuel there's no room to move now on the excise tax?
PRIME MINISTER:
Well, excise of course is levied on the content, levied on the volume; it's not levied on the price. The GST affects the price and the GST revenue goes to the states. But there's not a capacity to vary either of those measures at the present time, there really isn't. We must hope the world price comes down.
BYNER:
We're talking to Prime Minister John Howard at 5AA. Let's go to Banksia Park and Harry. Harry, you're talking to John Howard.
CALLER:
G'day Mr Howard. Look, I would like to know why in your budget the average battler under 52,000 has not got one cent in these cuts. I mean, these people who do the average job, who (inaudible) these are people who should get it, not the people at the top end because these people, a lot of them are casual or a part time wage. They find it very, very hard to make ends meet and you can't find (inaudible). Well, I think it's very scrooge like?
PRIME MINISTER:
Well, Harry is it?
CALLER:
Yeah.
PRIME MINISTER:
Are you talking about people who have children and earn less than $52,000 a year?
CALLER:
I'm talking about everybody under 52,000.
PRIME MINISTER:
All right. Well, people who have children under $52,000 a year do get quite a bit out of this budget - quite a bit. And one of the reasons why we focused tax cuts on the people earning $52,000 and immediately above was that in 1998 when we went to the public with tax reform we said that one of the goals of tax reform was to make sure that 80% of the tax payers in Australia pay no more than 30 cents in the dollar by way of income tax and the only way to meet that goal, to meet that commitment, which was seen as commitment, was to make the changes that were made on Tuesday night. In fact, it was originally part of the tax plan that was voted on by the Australian people that we have different rates applying in the middle to upper middle levels of income and $52,000 is not rich, it's not a high income by community standards. If it was something like the average male full time wage, I stress - the average male full time wage is just over $51,000 a year. The average wage male and female I'm told is about $49,000 a year. So we're not talking here about rich people - we're talking about a situation where as I mentioned earlier, we want to have as many people as possible who know that they can work and increase their income and do some overtime without going into a higher tax bracket.
BYNER:
Harry, thank you for your call. We're talking to Prime Minister John Howard at 5AA. 8224 0000. Prime Minister, there's been a lot of discussion recently about Iraq and the (inaudible) has been suggested that we might be thinking about committing more troops to that country - are we going to do that?
PRIME MINISTER:
We're not planning to commit a whole lot more troops. I've said all along that we don't have any capacity to have a significant numbers of troops on the ground. We do have people who are doing very valuable work and I haven't ruled out the possibility that there could be some small adjustment in the numbers either way. But any suggestion that we're planning a significant increase is not right.
BYNER:
So, how significant would the increase be if we did?
PRIME MINISTER:
Well, we don't have any in contemplation at the present, but I'm not ruling out the possibility that you might by factor of 10 or 20 or 30 or 50 have some kind of variation. But I repeat - I don't have any in mind but I'm leaving that qualification in case we do make that adjustment and somebody comes back and says, we'll you said we weren't going to increase it.
BYNER:
What circumstances would deem that you would make the adjustment?
PRIME MINISTER:
Well, I don't know of any at present. But I'm leaving that possibility open in case it does arise and I don't want to be accused of misleading the public. But we do not have anything in contemplation and if there were any adjustment at the margin, it would be only at the margin - it would not be a significant number.
BYNER:
Let's talk to Tony now. Tony, good morning. You're talking to Prime Minister John Howard.
CALLER:
Good morning, Leon. Good morning Prime Minister.
PRIME MINISTER:
Good morning.
CALLER:
How are you?
PRIME MINISTER:
Good.
CALLER:
Yep. Just carrying-on on income taxation. One thing that bothers me is this fact where, especially nowadays with permanent, part time and causal working ever increasing the fact that, you know, some people, low income earners - they can only work, say three hours here or two hours there and sometimes they have to work for more than one company to make up a eight hour day and the big problem I find, that I have is the fact that you get double tax pressure on your second job. Whereas a person who's lucky enough to have full time work can work eight hours in one company and only get the one rate of taxation?
PRIME MINISTER:
Well, in the end when everything is reconciled at the end of the year you don't pay any higher tax in respect to how many jobs you have. No, I mean, there isn't in reality a double tax on a second job. There may be a PAYE deduction at a certain level, but at the end of the year on assessment that gets ironed out. If you're earning $50,000 in one job, your tax is the same as if you're earning $50,000 in two jobs - the final tax. I mean, I understand your point. I think you've got a point about the incidence of casual and part time work, and we do live in a society now where is a lot more casual and part time work. One of the reasons for that is that many industrial relations laws make it so expensive and difficult for small firms to employ people on a full time basis and you do have a case, a situation now where it's a case of cutting off your nose to spite your face. These rules are designed to protect workers and employees but they end up making it so expensive and complicated for small businesses to employ that they look at, understandably, they look at ways around employing people on a full time basis and on a permanent basis because it is so expensive and when I hear the unions complaining about the lack of full time and permanent work, I feel like saying to them - well, if you weren't so insistent on rigid rules in relation to unfair dismissals, if you weren't so insistent on some other things then maybe small firms would be more disposed to employ people on a permanent full time basis.
BYNER:
Tony, thanks for your call. Prime Minister John Howard joining us on 8224 0000. Prime Minister, before we take some more calls. There's just a couple of things that in South Australia and I think these are problems right across the country that I'm sure you'd appreciate. Our public hospital system at the moment is under extreme pressure. We have a situation specifically where the QEH, the Queen Elizabeth Hospital, one of our great hospitals now has to decline obstetric services because five specialists deemed to go elsewhere, that's what the CEO says. But this business of dual funding of state and federal gives both Governments of any persuasion the opportunity to duck shove. Have you thought in your 30 years there's got to be a better way?
PRIME MINISTER:
Well I think if we were starting a country all over again, we'd have a national government and a whole series of regional governments, we wouldn't have states, if we were starting all over again, but we're not so that's quite academic. I don't think our present system, federal system is working all that well and one of the things that disappoints me greatly is that we brought in the GST to provide a growth tax to the states, for years states complained to the Federal Government that they didn't have access to a growth tax, now they have access to a growth tax it doesn't make any difference. You mentioned public hospitals, we don't run the public hospitals, we contribute on average more money to run them then the states do, the states run them, and we have no control whatever over their administration and generally speaking whenever anything goes wrong after a bit of pressure is applied to the states they say oh well everything will be okay if the Federal Government gave us more money, well we are giving them more money, we're giving them access to a growth tax, every state in the coming financial year will be better off under the GST than they would have been under the financial formula that we replaced the GST with and on top of that we've increased the money going to public hospitals around Australia by 17 per cent in real terms over the next five years. Now I know that's of no particular comfort to people who find something wrong with their local hospital, but you ask me the question, I had to answer it as factually as I can, we do not run public hospitals and one of the difficulties of the federal system in Australia is that you have some things which are clearly the responsibility of the national government, defence and foreign affairs and immigration and all of those sort of things and family law, and you have some things that are clearly the responsibility of states such as urban transport and police. But you've got a lot of things in the middle where there are shared and joint funding arrangements and you always get these arguments and you get attempts by the governments, particularly state governments because they like to fuel the idea that it's only the federal government that's got any money, it's always the fault of the federal government instead of copping their own responsibility.
BYNER:
I think there is one issue though that you'd want to look at surely and that is that we've got to go overseas to find specialists, and this is not just in medicine but let's stick to medicine as the example, where we don't have enough people coming out of our universities locally, we train those for overseas consumption who'll eventually go back or we have to poach them from somewhere else and a lot of locals can't get in and do these courses and then of course you can't force people to be obstetricians, I think the business of public liability has frightened an enormous number of people.
PRIME MINISTER:
It certainly, it has and I'm sympathetic and the medical profession would now acknowledge that over the last six to nine months the Federal Government has done an enormous amount, I mean we've put our hands in our pockets to indemnify and help the medical profession even though the laws which have given rise to the increase in the premiums and the dispensation of those laws is something under the control of the states, I mean we don't control the negligence laws of Australia, they're controlled by the states. Now I acknowledge that quite a number of the states have worked co-operatively to change those laws, I'm not going to sort of go through each one individually, I think it varies a bit around the country, but by and large states have tried hard. It is a problem and we set about trying to do quite a bit about it and we have put a great deal of money into reducing premiums and providing indemnities and guarantees and subsidies and additional assistance and whilst the situation is by no means perfect it is a great deal better than what it would have been if we hadn't of intervened.
BYNER:
Ian, good morning, you're talking with the Prime Minister John Howard.
CALLER:
Good morning Leon, Prime Minister. I've got a question which affects quite a majority of people in South Australia and the question is, can you live on about $380 - $390 a week?
PRIME MINISTER:
Look I would find that extremely difficult, and look I acknowledge that and I feel for people who are in that situation, that is why we have increased the safety net for pensioners in this country, we not only now have half yearly indexation of pensions but we also guarantee that they'll never fall below 25 per cent of male total average weekly earnings which is an additional level of guarantee that did not exist before we came to government.
CALLER:
The reason why I ask you this, is I thought possibly they may have been able to increase the amount of money a pensioner is allowed to earn because if you earn any more than a certain amount they belt you for 40 cents in the dollar. Now it is fairly hard to live on that money, even with the petrol prices now.
PRIME MINISTER:
That is, I do, there have been some adjustments made to that allowance I think over the past few years, I forget exactly when, but it's a legitimate point to make.
BYNER:
Prime Minister, I want to thank you for being available to join us on 5AA and both you and the Leader of the Opposition are welcome at any time, I'm sure you know that.
PRIME MINISTER:
Thank you.
BYNER:
But what significant announcements can we await, do we have to get closer to the election before we hear any more or will you be feeding the public of Australia, particularly South Australia more? Because I mean people want to know, they know there's an election this year, we think it may be August, now they think no, no, no it could be later, irrespective people would like to know what their options are going to be, how long do you think we have to wait?
PRIME MINISTER:
Well I haven't made up my mind when the election's going to be, it has to be sometime towards to the end of the year, that's for sure. We've just had a huge announcement, a budget, and it's a bit odd to be canvassing new announcements when they're only a week out from having made those big announcements. I said at the weekend that we'd make other announcements on future policy, none of them will represent changes to what we announced last Tuesday night, obviously. But we are very keen to do that. We're also incidentally very keen to hear from the Opposition Leader as to what his alternative plan is, there seems to be a lot of confusion on the other side, they attempted to rule it out than signing it up yesterday but I notice that Bob McMullan said on the PM programme last night that he didn't think there was a no go area in relation to taxation measures that we have brought down which seems to conflict with what his leader said earlier in the day and seems to reconfirm what South Australia's own David Cox said in the paper yesterday morning that the money for family tax benefit tax had not been quarantined. So I think that confusion on the Labor side still goes on and people know where we stand, they know the colour of our policies and there'll be more policies revealed before the election. But we've laid out a very detailed blue print and the public want to hear in detail from Mr Latham and they want to know where the money's coming from, you can't go on month after month talking generalities and smiling at everybody, that's fine, that's good, there's nothing wrong with that, we all like doing that, but in the end the rubber's got to hit the road and you've got to say well this is what I am going to do, this is what I'm not going to do and this is how I'm going to pay for it.
BYNER:
Well Prime Minister I'll be looking forward to hearing from you again when your rubber hits the road.
PRIME MINISTER:
Okay, well quite a lot of it has already.
BYNER:
Yes.
PRIME MINISTER:
But there's still more to come.
BYNER:
So thanks for joining us.
PRIME MINISTER:
Thank you.
[ends]