JONES:
Prime Minister, good morning.
PRIME MINISTER:
Good morning, Alan.
JONES:
PM, are you concerned about the sharp increase in the proportion of voters who now seem to believe that the Iraqi war was unjustified?
PRIME MINISTER:
I can understand it and yes I am and the reason that's happened is that the news out of Iraq and surrounding Iraq over the last couple of months has been all negative. There's been an upsurge in violence; there's been revelations about prisoner abuse and although the Americans are responding very swiftly and are bringing people to justice and are determined to punish those responsible, it doesn't alter the fact that it paints a bad picture.
JONES:
But there never seems to be any focus on the progress that has been made in Iraq.
PRIME MINISTER:
I endeavoured in a speech I gave the week before last to talk about the 2,500 schools that have been refurbished; about the fact that 60 times more money is now being spent on public health than occurred under Saddam Hussein; about the universities being open; about commerce recovering; about the inflation rate being reduced to a still very high 20 per cent, but it was at hyper inflation levels before that. There is quite a good picture but that's not colourful, it's not dramatic and it can't possibly compete in capturing public attention with those awful photographs which have done, certainly in the short term, great damage to America's reputation, she's very aware of that and from the President down they're responding in the open American style and they are to be congratulated for responding. Remember, far worse, far far worse was done under Saddam. You didn't get tried then, you got a pat on the back and you got promoted.
JONES:
Just, if we're to believe the polls, it's hard to believe that Australians don't understand that there are gangs motivated by religious obsession with dreams of ruling Iraq only if they can drag it into chaos, it's hard to believe that Australians don't actually understand that.
PRIME MINISTER:
Alan, I think what happens with something like this is you have a solid group who are opposed for a whole combination of reasons, you have an equally solid group who understand exactly what you've said and then you have a group in the middle who do tend to change their views according to the most recent reports. Now that is understandable. If an intervention of this kind is regarded as having been successful, then people are more likely to support it. If it is for a period of time surrounded by bad images, such as these photographs represent, or reports of an upsurge of violence, people start to think - gee, it's perhaps not as successful as I thought and therefore I shouldn't be supporting it. I think that public opinion will fluctuate. The important thing for me to say to you this morning, Alan, is - we're not going to change our view. If there were to be a coalition "defeat", if I can put the word defeat in inverted commas, in Iraq that would be the most monumental victory for terrorism. It would be bad for us. It would be bad for all of the countries of the world, the free countries of the world that are the targets, potential targets of terrorists. And anybody who says this has got nothing to do with terrorism should remember that the terrorists are investing an enormous amount in Iraq in order to achieve their goal, which is to prevent the emergence of a free and democratic Iraq and that's why the hand over on the 30th of June must and will go ahead.
JONES:
Anthony Cordesman of the Centre for Strategic International Studies told the US Senate foreign relations committee last week that Iraq and Afghanistan may well be battles in a generational Middle East conflict and he said that because this will require peacemaking, nation building and economic reform, the challenge will require broader international support than the United States have so far been able to (inaudible). When you're talking to President Bush, will you talk about the need for broader international support for the ends that you seek in Iraq?
PRIME MINISTER:
Well, I certainly will and I'm sure he understands the need for that and the Americans are trying very hard to get that broader international support. Things in Iraq would have been a lot better if that broader international support had been given in the first place. I don't want to go over old ground, but the attitude taken by countries such as France and Germany earlier on, I think was anything but helpful. I hope there has been some change of heart there. I know that the Americans and we are and the British are and there are 35 countries contributing already to the coalition in Iraq. People forget for example that countries such as the Philippines and Korea and Japan, partners of ours in the Asian Pacific region, they have a presence alongside us and the Americans and the British in Iraq. This is not just an American/British/Australian operation.
JONES:
You said yesterday that western forces need to stay in Iraq to avoid a disaster for a rise in the price of crude oil and you're saying if the Coalition were to collectively cut and run from Iraq, the country would be plunged into chaos and the impact of that on the crude oil price would be disastrous. And you said if you want crude at $50 a barrel US, support the Latham policy on cutting and running from Iraq. Can I just ask you given, and this is the argument that the oil price is likely to stay because of this Middle East factor fairly high for some time, and given that almost 50 cents say of the 106 cents a litre that some motorists have been paying in Sydney goes to the Government in tax or excise, would you consider placing a ceiling on the point at which you claim tax? In other words, if the price were to go beyond a litre, the Government tax on the petrol would stop.
PRIME MINISTER:
Alan, before I answer that question, and I will directly, there are two taxes. There is the excise, which is a fixed level of 38 or something cents in a litre and there's the GST which is affected somewhat by the price. Now the GST, all of that of course goes to the states. We've looked at this in the past and the answer is that we would feel unable to do that. The revenue implications of that would be very significant, very significant indeed and there's an argument as to whether the potential of hundreds of millions of dollars that could be involved in that, there's an argument as to whether the public believes that that sort of money should be as it were spent on giving (inaudible) excise relief or might it not be better spent on other things that are sought from the Government...
JONES:
But your budget... sorry to interrupt, your budget didn't calculate revenue based on petrol prices at 106 cents a litre.
PRIME MINISTER:
Well (inaudible) revenue is the one, it's the swing item. The excise doesn't vary according to the price because it's levied on the volume of the product, it's not levied on the value of the product.
JONES:
I see. Okay...
PRIME MINISTER:
The swing item in this is...
JONES:
The GST.
PRIME MINISTER:
And the GST goes to the states and I'm sure the Premiers...
JONES:
So the excise is on volume so the increased price of petrol doesn't affect the revenue of the Federal Government?
PRIME MINISTER:
It doesn't affect the excise, no.
JONES:
Alright. Now let's just then take then to the alternative - the LPG thing - which is now about 36 cents a litre of which currently about 18 cents is tax. Now can you give, because there's a lot of talk now about people converting, can you give the LPG users a categorical assurance that LPG won't be further tax which would thereby significantly raise its price?
PRIME MINISTER:
Well, we have laid out a schedule to move to a higher rate of excise over the years ahead. I think it kicks in in 2008 and we've already announced that, we announced that last year. But because there is a need to move gradually towards a neutral tax treatment and different forms of energy. But...
JONES:
Given that crude oil is a finite resource...
PRIME MINISTER:
...the likelihood of anything being imposed in the current climate, no.
JONES:
Right. I mean, given that crude oil is a finite resource and we're dependent on overseas countries, we've got our own resources of LPG, why wouldn't we be creating incentives through price to keep people or to make people go to LPG?
PRIME MINISTER:
We've had a massive incentive through the excise system now for 20 to 25 years and we are over a period of time going to reduce the level of that incentive but it's not going to disappear altogether.
JONES:
The budget. It's been said by those who conduct polls and so on that there's been a mixed reaction. My correspondence tells me though that people are concerned that if you're on less than $52,000 you get no tax benefit at all. And the argument that, oh well there are certain family benefits available doesn't apply to people who are single or to people who are 55 and on $51,000 or $48,000 and their kids have left home and so on. What do you say to those people? I mean, is there likely to be relief for them say in a policy speech?
PRIME MINISTER:
Well, I'm not going to talk about the policy speech, I haven't really given that any thought. What I would say to them is that when tax reform was brought in four years ago, we had tax cuts across the board which have been supported by the Australian people in the 1998 election and when those reforms got to the Senate, the impact of those reforms on middle and higher income earners were cut back by the Labor Party and the Democrats and we couldn't get them through. But the cuts for people under $52,000 did go ahead. For example, somebody on $50,000 which is just under the point at which the new changes cut in is now paying $56 a week less in tax than they were paying prior to tax reform and the same in a proportionate way can be said about people earning lower amounts than that so...
JONES:
But the person (inaudible) the middle and high is also getting that tax benefit - that's the point of the criticism.
PRIME MINISTER:
Yes, but you've got to understand that $51,000 or thereabouts is now the male average weekly earnings of a person who works full time and we took the view that the best combination was to have generous family benefits which are available to essentially everybody except those who earn very high incomes...
JONES:
And those who don't have families or whose families have left home, the kids have grown up.
PRIME MINISTER:
Look, obviously, we have placed a greater emphasis on families. The choice we faced was to do something about that 42 cent rate which cuts in at a level where a lot of people who are working a bit of overtime, the policeman, the fireman, the whole range of people who work a bit of overtime and very quickly go into $53,000, $54,000, $56,000, $60,000 a year, those people did not get the full measure of the tax relief that the Australian public voted for in 1998 and which was part of the original tax reform package, and we took the view and the public will judge whether we were right or wrong and we accept that not everybody agrees with what we did, but the rationale was that we think it's important to give people incentive at that level by guaranteeing under our reforms that you can go from $21,600 a year in annual income to $63,000 a year without paying more than 30 cents in the dollar on any part of your income. Now that is an attraction for people to work harder, it provides people with incentive and it provides people will proper rewards for their hard work.
JONES:
Okay.
PRIME MINISTER:
Now, that's the rationale behind...
JONES :
Can I take you to this Biosecurity Australia? Their Executive Manager, Mary Harwood, has conceded now to the Senate, to an Estimates Committee that she didn't - there were seven members of her import risk analysis panel and they didn't agree with the contents of a report that recommended banana imports.
I mean, isn't it time to put this biosecurity outfit to sleep and start again and call the dogs off the banana industry, the pork industry and everything else? Why do we need to import stuff that we can grow here?
PRIME MINISTER:
Alan, a couple of points on that. Australian farmers now export two-thirds of what they produce - two-thirds - and they, of course, expect to gain access into foreign markets based on scientific import risk analysis and we cannot, as a world trader, say, well, we won't apply any rules of science or balance in relation to people who want to import into Australia.
JONES:
But see, if the pork bans are exporting two-thirds of what it produces, PM, why the hell are we importing pork?
PRIME MINISTER:
Alan, for the very same reason that countries to whom we export might also produce that product and if we adopt an attitude that if we produce something in Australia we don't allow any of the same product into this country, other countries will feel free to do exactly the same thing and two-thirds, two-thirds of our rural exports could be at risk.
Can I just say that we have not made final decisions on allowing imports of bananas and I know that there is still a lot of debate going on and we've said, repeatedly, if there is scientific evidence presented which is to be preferred to the scientific conclusion that's been reached, well, obviously, that will influence our final decision. That is the whole purpose of this process.
But I do have to defend our quarantine system. It's worked very well over the years and we're very committed and we've been very successful in preserving Australia's pest and disease-free status. We do have a strong reputation around the world with our science based quarantine system.
JONES:
It is 7.30, I should to the news. But I do want to ask the Prime Minister one question - whether you are aware of this Australian company that was appointed to supply 75,000 seats for the (inaudible) for the Athens Olympics, it has now been dumped with 80 days to go until the opening ceremony. There is a suggestion that it was dumped simply because of a recent travel advisory upgrade that Australia has issued for Greece. My understanding is that Australian officials are now negotiating with Greek officials to have that decision reversed. Do you know anything about that?
PRIME MINISTER:
Well, I'm generally aware of it and I'd rather not say too much except to make the point that we issue travel advisories based on security advice and we don't apologise to anybody for the travel advisories we issue, not to anybody. But I would hope that matters relating to contracts are treated on their merits by the Greek Olympic authorities.
JONES:
Good to talk to you and thank you for your time.
PRIME MINISTER:
Thank you Alan.
[ends]