CARLTON:
The Prime Minister is on the line from Canberra, good morning.
PRIME MINISTER:
Good morning Mike.
CARLTON:
Looks like the ball is back in your court.
PRIME MINISTER:
Well can I just deal with the two amendments. We have local content rules now and all that was proposed by the Treaties' Committee of the Parliament and also by the Senate committee was that we put those rules in an act of Parliament or regulations. Now we're willing to look at putting them in regulations, but it doesn't in any way alter the existing local content rules and it doesn't alter the fact that we made sure that the local content rules were fully preserved and protected in the Free Trade Agreement negotiations. So this doesn't really add anything in relation to local content...
CARLTON:
But you don't have a real problem...
PRIME MINISTER:
No, no I don't because it doesn't, there's no downside to it and if the Labor Party feels happy with that well I'm not going to make a song and dance about that, that would be stubborn and churlish because we're dealing with a reaffirmation of the existing law and the existing rules and I'm quite happy to reaffirm our commitment to the local content, and also incidentally of course the Free Trade Agreement contains some provisions that fully reserve our position to introduce the local content rules in the new media forms, I think that's a very important point to make because some of the representatives of the media industry have apparently spoken in ignorance of that or have ignored it. I mean I am very concerned about local content, don't anybody think I want this country swamped by American material, there's a lot of American stuff on television I don't care for at all, I do want plenty of Australian and for that matter the programmes of other countries as well.
CARLTON:
Alright. The big sticking point then is this change that Labor wants for the Pharmaceutical Benefits Scheme, to stop, they say, US drug companies rorting it, keeping up the prices, grabbing their excess profit. What could possibly be wrong with that?
PRIME MINISTER:
Well what's wrong with it is that it's based on a misunderstanding of how the patent law operates in this country. In the United States you can obtain a patent extension if there is a minor use change in relation to the patent, whereas under Australian law you can only obtain a patent extension if there, so I'm advised by the experts, a substantial or unexpected use change.
CARLTON:
Yes, this is very complex...
PRIME MINISTER:
I know it's complex and I know it sounds arcane but the problem is you're not just dealing here with patents for pharmaceuticals, once you make a change of the type that the Labor Party is talking about, you have to look at the extension of that into other areas, otherwise what you're really saying you're going to have one patent law for one section of industry and another patent law for another section of industry and you're dealing here with people's inventions and their know-how and their rights and you're dealing here with potential investment, far away from the pharmaceutical industry and we're not willing just to sort of provide a political fix for our opponents, we're not willing to turn the patent law of this country on its head. Now what...
CARLTON:
This is really difficult for people to understand...
PRIME MINISTER:
Mike, I understand that, and that is precisely why I guess it's been chosen by our opponents as an issue to have an argument about.
CARLTON:
Can I put it this way, it's not unknown for US drug companies to try and block or delay cheaper drugs coming from their competitors by lodging these spurious...
PRIME MINISTER:
Yes, but it is...
CARLTON:
... no protection against it.
PRIME MINISTER:
Yes well there is a protection is against it because those claims will be thrown out by the courts. I mean that, what the Labor Party does not acknowledge: two things, firstly Mr Latham is not acknowledging that his own Shadow Minister Stephen Conroy said at the press conference when the committee's report was published, he said that after hearing all the evidence the concerns he originally had had essentially disappeared and he in fact gave the whole process a clean bill of health. I mean the Labor Party has alleged all along that the Free Trade Agreement did not adequately protect the Pharmaceutical Benefits Scheme...
CARLTON:
He's still saying that.
PRIME MINISTER:
Well of course they are. Now we argue, and we draw a lot of support from what Senator Conroy himself said, we argue that that claim is false, we point out that the patent law in Australia is very different from what it is in the United States and the sort of things that can happen in the United States can't happen in Australia because our law is different.
CARLTON:
Yes, but isn't it right that they don't have to lodge the patent application in Australia. One of these drug companies can lodge a new patent application, spurious or otherwise in the States, that's enough to block the cheaper drugs coming to Australia isn't it?
PRIME MINISTER:
No, no, no if the claim is made and it's insubstantial it'll be thrown out.
CARLTON:
Yes but if it's done in the states there's nothing we can do about it.
PRIME MINISTER:
Yes, but look companies have got to operate under Australian law in Australia, just as they've got to operate under American law in the United States.
CARLTON:
Yeah alright. We've got a situation now where the two of you are toe to toe in the Senate on this. Who's going to blink?
PRIME MINISTER:
Look I'm not getting into this commentary, I'll leave that to you and...
CARLTON:
Yeah, but we are...
PRIME MINISTER:
Look Mike, we have consistently argued all along that this is a good deal. Now the Labor Party in effect has come to that conclusion, but they've thrown up these two amendments to provide themselves with a bit of political cover. Now if the Agreement is really as bad and if it's really going to wreck havoc on the Australian pharmaceutical industry then why didn't the Labor Party say well we're not going to support the Agreement? And can I just offer one other comment, that for two and a half years the Labor Party said that something we were proposing in relation to the Pharmaceutical Benefits Scheme would destroy it and hurt the weak and the poor and the vulnerable, namely those very modest increases in charges. And then all of a sudden overnight they found a reason that that wasn't the case. So their street credibility on claims in relation to damage done to the Pharmaceutical Benefits Scheme is not all that great.
CARLTON:
Alright, if you don't budge, and you say you won't, Labor then rejects the FTA, the Agreement, they say they will, will you go to the voters and tell them Labor's wrecked the deal?
PRIME MINISTER:
Well, the Labor Party, I will say to you now irrespective of what I might say to the voters during an election campaign and that is that the Labor Party has been all a long very negative about this deal and if the Labor Party votes the enabling legislation down in the parliament and they have to vote on it, I mean, they have to vote. At some point they have to vote on the Free Trade enabling legislation. Now, if they vote against that they will be voting against the Free Trade Agreement. They can't have it both ways. They can't say that we're in favour of the Free Trade Agreement but on the other hand we're not in favour of it unless we get these other things. They've got to make a decision and what they're putting up is not something that's part of the Free Trade Agreement. They're saying that you've got to make these changes. We are willing as I've indicated with the local content provisions, we're quite willing to accommodate them on something which is sensible, but we're not going to accommodate them on something that will produce a bad law, will unsettle the existing intellectual property laws in this country, create a situation where you might have to extend it to other parts of industry and thereby call into a question a procedure which in this country has worked extremely well. I mean, it has worked very well in this country.
CARLTON:
Risky though isn't it because Labor will say that you've caved in with the big American drug companies?
PRIME MINISTER:
Well, that is ridiculous because there's nothing in the Free Trade Agreement that gives the big American companies anything. They wanted something, they wanted something that would have delayed the coming on to the market of generics and I knocked that back in the final days of the negotiation.
CARLTON:
Labor's saying that's what they've got?
PRIME MINISTER:
Well, that is wrong and even Senator Conroy says that's wrong. Even Senator Conroy admits after all the examination and can I ask another question - when Mr Latham and Senator Conroy put that statement out yesterday before his press conference there was no reference in that statement to these two amendments being deal breakers?
CARLTON:
Well, he's always said the PBS would be a deal breaker....
PRIME MINISTER:
Yes, but a deal breaker sure if we were undermining it, but we're not undermining it.
CARLTON:
He'll say....
PRIME MINISTER:
No, we're not undermining it. He has had a problem inside his own party and he wants in the name of placating the people who don't want him to sign up to the agreement, he wants to make a bad change to Australian patent law. Now, we're willing to accommodate changes that are benign but we're not going to accommodate a change that introduces an undesirable element into our patent law because that has ramifications beyond this Free Trade Agreement and intellectual property laws, the stability of them is basic to investment and we're not going to agree to something that produces a bad law. Now, if there something that is benign, that's a different matter and something that doesn't have a bad outcome and even though it mightn't be necessary, if it doesn't have a negative outcome that's an entirely different matter but the proposal that he's put forward is not benign - it will unsettle our intellectual property laws and I don't think it's a good idea.
CARLTON:
But a lot of Australians I would suggest will think - look, this is a small sticking point. Latham is sticking up for cheaper medicine.
PRIME MINISTER:
Yeah, but he's not sticking up for cheaper medicine.
CARLTON:
Well, that's what he says he's doing.
PRIME MINISTER:
Yes, I know. Well, with respect, I mean he said for two and a half years that he was sticking up for the poor and the vulnerable in relation to Pharmaceutical Benefits Scheme increases and when it suited his convenience he threw that out. So he doesn't have a lot of credibility on the Pharmaceutical Benefits Scheme because he said one thing for two and a half years and then because he wanted some extra money for political expediency he changed his position. Now, I don't think he has a lot of cred on that, but anyway these things will be argued out. Our position all along has been....
CARLTON:
Are you going to change at all. Have you got any room to budge?
PRIME MINISTER:
Look Mike, I've explained my position. I can't put it any better.
CARLTON:
Well, in this case it looks as if you might be prepared to spoil the FTA simply for the political pleasure of not giving Mr Latham what he wants?
PRIME MINISTER:
No, it's got nothing to do with political pleasure, it's got everything to do with supporting a good agreement. He's said he's in favour of the Free Trade Agreement but then he says, I'm only in favour of it if you make two changes. One of which is completely benign and we have no problem with. The other of which we think is not only unnecessary but on the information available to us it would create a less desirable patent law in this country.
CARLTON:
You've made that point, but is it worth stymieing the whole Free Trade Agreement?
PRIME MINISTER:
Well, it always a good idea with these things to examine them, propositions that are put forward by political parties on their merits and people in your position often exhort us to look at the merits of the issue and that's what I'm doing and I think the proposal that's been put forward is not only unnecessary but it's also something that is going to weaken and produce a less effective patent law in this country and that's why we don't like it.
CARLTON:
So if you don't budge and Labor doesn't budge this then is a crucial election issue, isn't it?
PRIME MINISTER:
Well, there are a lot of election issues and one of them is the ad hoc anti-Americanism of many of Mr Latham's stances, but that's not the only election issue. There's a lot of election issues - there's who's more likely to provide a stable economy and strong defence, there's a whole lot of issues but our position has been consistent all along and I've done my best this morning and I hope you agree, I've done my best to explain it.
CARLTON:
I'm deeply impressed. Time here is of the essence in a sense, we've got to tell the Americans by October the 1st whether we want this deal or not, don't we? That puts a lot of pressure...
PRIME MINISTER:
I'm not adding in there, I'm not bringing some kind of breathless time imperative into this. I've explained our position and I can't do it in any different way.
CARLTON:
Yeah, alright. But someone's got to give haven't they? Someone?
PRIME MINISTER:
That's the language of the commentators. I'm dealing with the merits. We have a good Free Trade Agreement and even the Senate Committee now agrees it's a good Free Trade Agreement. Mr Latham is saying, we won't finally support it unless you make a bad change to the patent law.
CARLTON:
Alright. What are you doing on September 18?
PRIME MINISTER:
What am I doing on September 18, getting up in the morning and going for a walk.
CARLTON:
And placing your vote in a federal election by any chance?
PRIME MINISTER:
Mike, I haven't made any decision about that.
CARLTON:
It'll bring the decision close if you can't get the FTA through the Senate though won't it?
PRIME MINISTER:
That's commentary.
CARLTON:
Prime Minister, good to talk to you.
PRIME MINISTER:
Thank you, bye.
[ends]