PRIME MINISTER:
Good afternoon. Well ladies and gentlemen, the Treasurer and I have called this news conference to nail the first big Latham lie of this election campaign. He's been pretty free with this word, not only in the last 48 hours, but pretty free with this word over the last week. This morning on the John Laws Programme he was asked this question: 'and what about plans we hear, mumbling, about plans for a national payroll tax?' Latham: 'No, there's no such proposal. That's a myth. If anyone's putting that around, I have not heard that suggestion before, and Labor's got absolutely no intention of doing that, or anything like it.' Well sorry Mr Latham, people have been putting that around and the people who've been putting that around, is your own party because your policy dated the sixth of August, on employee entitlements, contains the following clause: 'Labor will guarantee 100% of employee entitlements, including superannuation. Labor's scheme will be funded by a levy of 0.1% of payroll for businesses with more than 20 employees. There will be no levy on small business. Now, either he's lying or he doesn't understand his own party's policy. On either score it's a demonstration on the first day of the campaign that he doesn't have what it takes. I mean, here is a straight question. I cannot believe that he doesn't know what's in his policy. Yet if he doesn't know what's in his policy, that's almost as big a condemnation. So the man who's been pretty free with the 'L' word over the last week, is himself guilty of deliberate deception or monumental ignorance of his own party's policy. I mean, maybe he thought he could slide through this, maybe he thought John Laws hadn't read the policy. But we have and we've been pointing out for ages that he's got a plan for a payroll tax and he has. And it is a national payroll tax because it will apply to all nationally operating companies. It doesn't apply to small business. I acknowledge that. But it applies to nationally operating companies and he was asked a very clear question. So here is his credibility on economic management, a central issue at the very beginning of the campaign.
JOURNALIST:
Prime Minister, are you now saying that levies are the same as taxes?
PRIME MINISTER:
I'm saying that Mr Latham is lying or doesn't know his own policies.
JOURNALIST:
One tenth of a cent is hardly....
PRIME MINISTER:
No, hang on. It's the principle of whether you're fair dinkum with the Australian people and of course once you get it in, you can always increase it. We have not misrepresented his policy. I quoted back what is in the document and I quoted what he said. Now he is either lying or he's ignorant of his own party's policy. He can't escape responsibility on either of those counts and he was so dismissive - 'no such proposal, that's a myth. I've not heard about it. I've got no intention of doing that or anything like it.' So he's not just sort of saying, 'oh well, you know, maybe this, maybe that.' He's totally dismissive. Now, the reality is that he's either lying or he doesn't understand his own party's policy.
JOURNALIST:
So all those levies that you've imposed since 1996 are now taxes?
PRIME MINISTER:
Look, we're talking here about his credibility.
JOURNALIST:
And yours Prime Minister and all those levies... ?
PRIME MINISTER:
Well, a levy on payroll...
JOURNALIST:
Well the superannuation levy was described as not being a tax?
TREASURER COSTELLO:
Well, can I take up that very point? First of all, we have raised this in the Parliament on numbers of occasions - Labor's payroll tax. It's been raised in the Parliament over, and over, and over again and it's never been disputed. Secondly, it's the Labor Party itself and here is the document that calls it a tax. And I have said over and over again in the Parliament that the Commonwealth got out of payroll taxes in 1971 and Latham wants to get the Commonwealth back into payroll taxes and there it is. Now, the third thing is we caught Bob McMullan up at a conference on the Gold Coast a couple of weekends ago making this same claim, right, that Labor did not have a payroll tax. I put out this press release on the 23rd of August 2004. When he was caught and nailed in the Courier Mail, Senator Bob McMullan, said, oh it's just like a super guarantee. Right, Paul Bongiorno's point. Let me say, as I said in this press release and they've been on notice of this. The super guarantee is money which is put aside for an employee in their account which they get back with interest and earnings. A payroll tax goes for the benefit of consolidated revenue. You do not get the payroll tax back. It is not an investment in your account. It is completely different to a superannuation guarantee. It is a tax like the Commonwealth used to put in place since 1971. Can I tell you, I outlined in that press release, they haven't just said this in one policy by the way, they've said in three. And they describe it as a tax in each and every one. Now there was a concerted move begun with Bob McMullan to start denying this a couple of weekends ago. Mr Latham on the John Laws Programme has denied a policy which exists and has been reiterated and he cannot be believed on his tax plans.
JOURNALIST:
What's wrong with a fund for employee entitlements?
PRIME MINISTER:
That's not the issue. The issue here is Mr Latham's credibility. I mean, if he wants to argue his policy let him go out and argue it, but don't mislead John Laws listeners by saying something that palpably does exist, doesn't exist. That's the issue. I mean, he can argue his policy. Happy to have a debate on the credibility of his policy but this goes to his credibility. I mean, he's out there using the 'L' word. I mean, here he's been doing precisely that himself.
JOURNALIST:
Just on the question of economic credibility - you're saying that interest rates have always been higher over the past 30 years under Labor?
PRIME MINISTER:
No, I've said interest rates have always gone up under Labor. And what I'm saying is, that you can always be certain that interest rates will be lower under a Coalition Government, and that's based on our record of the last eight and a half years.
JOURNALIST:
Latham is in fact claiming that interest rates were lower during the Whitlam years, than they were during the Fraser years, and indeed when you were Treasurer.
PRIME MINISTER:
Well I would point to the fact that over the last eight and a half years when this team has been running the Australian economy at a Government level, a very successful team, interest rates have fallen to 30 year lows. And the contest is between the Howard/Costello management of the Australian economy and the potential Latham/Crean management of the Australian economy. And what we're saying is, who do you trust to deliver the lower interest rates? John Howard and Peter Costello or Mark Latham and Simon Crean?
JOURNALIST:
Treasurer, why can't you rule out a challenge after the election?
TREASURER:
Well I'm not challenging, and everybody who has listened to anybody... any of my pronouncements knows that. You know that.
JOURNALIST:
Well do...
TREASURER:
No, no. Let me finish this. What I said on that radio interview today, and I say it again, is, I have been part of this team for eight and a half years. I have given undivided loyalty. My loyalty is not under question. And I want to get re-elected to continue my work as Treasurer to John Howard as Prime Minister, and that's...
JOURNALIST:
So why don't you just rule it out?
TREASURER:
Well I thought I just did Michelle.
PRIME MINISTER:
Michelle, could I just say something...
TREASURER:
You know, can I just say, I am running for Treasurer. I am running to be Treasurer. I want to be part of a team which has delivered over the eight and a half years, and will continue to deliver into the future.
JOURNALIST:
(inaudible) the words I rule out a challenge in the next three years.
JOURNALIST:
Treasurer, do you still want to be Prime Minister.
TREASURER:
As I've said to you on a thousand occasions, I think I've been asked this question for the last 10 years, I'm very happy to be Treasurer. I'm running for Treasurer.
JOURNALIST:
(inaudible) rule out a challenge in the next three years?
TREASURER:
I have ruled out challenging. I am not challenging. Would you like anything else?
PRIME MINISTER:
Can I just say...
JOURNALIST:
(inaudible)
TREASURER:
Would you like anything else? Give me another formulation.
JOURNALIST:
...(inaudible) in the next three years.
TREASURER:
In the next three years, I am seeking to be Treasurer in the Government to serve under Mr Howard, and that's what I am doing, and ruling out challenging.
PRIME MINISTER:
And can I just say that, you know, from my part, nobody could have had a more loyal and effective deputy than I have had in Peter. He has not only been a remarkably loyal deputy, but he has been an incredibly successful Treasurer. I think we're a great team, and I find everything he said absolutely appropriate and I'm totally happy with everything that he said. And I want to win this election and I want to go on serving the Australian people as Prime Minister, but I will always want Peter Costello at my side as Treasurer.
JOURNALIST:
Mr Costello, you suggested earlier, or you made an allusion to the bombing in Madrid, do you have any evidence to suggest that there could be a (inaudible)?
PRIME MINISTER:
No, and I didn't say that I did. I was asked whether there would be a terrorist incident. I referred to the fact that there was one in Spain and I said everybody should be careful of terrorism. I'm not referring to any specific incident or intelligence.
JOURNALIST:
Treasurer, can you comment about the economic data out today and also what that says about the second quarter GDP figures on Wednesday. Are you expecting a bounce back in growth?
TREASURER:
Well today's Balance of Payments show that Australia posted a current account deficit of $12 billion, slightly down on the previous quarter. Australia's exports increased through the period by a strong 12.5%, continuing the recovery from the 2002/03 drought. Services exports fell by 3.1% but they remain 12.7% higher than a year ago, and imports increased 2% in the June quarter. Now we believe that that will detract 0.1% from the GDP figures which will be out on Wednesday. What we think that the GDP figures will show on Wednesday is continuing strong growth in the Australian economy and we believe that over the course of 2003/2004, as the world economy recovers, Australia's exports will pick up and the current account deficit will narrow, we believe, to around 5% of GDP.
JOURNALIST:
Treasurer, since (inaudible) 25% increase in company profits in the June quarter, what does that (inaudible)?
TREASURER:
Well, during the course of the election campaign, the pre-election fiscal outlook will be released, and it will update, in the light of all additional developments in the economy. But we had already factored in strong company profits. The company profit as a share of GDP is at an all time historical maximum. Now we want to see continuing strong company growth in Australia because that creates jobs.
JOURNALIST:
Mr Costello...
TREASURER:
It won't be helped by a new payroll tax, by the way, which would be introduced if there were a change of government.
JOURNALIST:
Mr Costello, previously Mr Latham has challenged you to a debate on the economy during the election campaign. Would you be prepared to debate him?
TREASURER:
Oh I'm happy to debate anybody that I can get my hands on.
JOURNALIST:
Mr Howard, how many debates will there be, and will you engage Mr Latham in a community forum?
PRIME MINISTER:
No, I'm very happy to debate Mr Latham. There will be one debate. I think it should be, the sort of, last night fortnight in just under two weeks. I thought the hosting arrangements that Channel 9 had last time were good. I think it would be appropriate for Channel 9 to provide an anchor. I think on this occasion it wouldn't be a bad idea to have a panel of journalists, provide a bit of variety, and you know, you can perhaps have somebody from the ABC, somebody from commercial television, Fairfax, News, perhaps somebody from commercial radio, but I mean I wouldn't...
JOURNALIST:
Channel 10.
PRIME MINISTER:
No, no, commercial radio I said. Commercial television.
JOURNALIST:
Channel 7.
PRIME MINISTER:
Yeah, yeah.
JOURNALIST:
Mr Latham has challenged to a community forum.
PRIME MINISTER:
Yeah, well look Opposition leaders always do that. I remember the first time I was an Opposition Leader, I didn't even get... you know, I don't think there was even one debate. And so look, we'll have a debate, quite happy to have a debate, but that will be it.
JOURNALIST:
Do you still know what the price of a litre of milk is Prime Minister?
PRIME MINISTER:
Yes.
JOURNALIST:
Prime Minister, just clarifying the point before, isn't it also a fact that the election is not between Prime Minister Hawke and Treasurer Keating, but between Prime Minister Howard and Treasurer Costello and Latham and...
PRIME MINISTER:
Sorry I've lost... you've lost me. You have totally lost me. So you want Latham and Costello on the panel?
JOURNALIST:
No, no.
TREASURER:
Channel 10 was just thrown out of the debate.
PRIME MINISTER:
Yeah, you've lost your position.
TREASURER:
You're out.
JOURNALIST:
No, I'm just going to the historical point that interest rates were under a previous Labor administration...
PRIME MINISTER:
Paul, I've stated my position. That is my position. I've explained it and I'll be there in just under two weeks time, 7.30.
JOURNALIST:
Will you be offering further tax cuts...
TREASURER:
Look, hang on, in the last Budget we cut taxes. It was the third instalment of income tax cuts, which began in 2000, continued in 2003/4, were introduced in 2004/5 and are legislated to continue in 2005/6. We have a situation where 80% of Australians are going to be on a top marginal tax rate of 30% or less. Now, I'm really pleased you asked that question because there is one huge question hanging over this campaign and it's this. Where is Mark Latham's tax policy? We thought we had part of it when he renounced his payroll tax, but that disappeared this morning. Where's the rest of it? He promised it in budget week. He has promised every Australian a large tax cut. Now, by my reckoning, that probably means he's promising $30 a week to every Australian, because that was the dimensions of the tax cuts that we've introduced. Now, if it's such good news, $30 a week, why isn't it out there?
PRIME MINISTER:
And when it comes out, is he going to allow it to be costed by the Department of Finance and the Treasury as is permitted and required under the Charter of Budget Honesty. Or is he going to sort of try and sneak it through on some bodgie justification and assume growth dividends and all that sort of stuff? I mean, we have six weeks, minus a day, minus two days, and this tax policy is going to come out, what, three weeks before the election? And the Australian people will be asked to believe that it's affordable and properly funded. Is he going to submit it to the Department of Finance as is required by the Budget Honesty procedures. Our policies will have been costed, our policies will be affordable and our policies will leave a strong surplus, which according to Mr Latham, is one of the things that contributes to downward pressure on interest rates.
JOURNALIST:
How far back is it fair for us to look, I mean, in the interest rate and deficit history, I mean...?
PRIME MINISTER:
Well, I am very happy to look at the last eight-and-a-half years. Everybody knows...
JOURNALIST:
[Inaudible]...
PRIME MINISTER: Well, I'm stating a fact, I'm stating a fact and I'm very happy to stand by those facts. I mean, this is a contest between the economic management of John Howard, Prime Minister and Peter Costello as Treasurer and the potential economic management of Mark Latham and Simon Crean as Treasurer. And if you want to engage in a discussion about interest rates, Australians know that interest rates are hundreds of dollars more affordable on the average mortgage since this Government came to office. And that is the direct result of the economic policies that have been followed by this Government.
JOURNALIST:
[Inaudible]..the past though?
PRIME MINISTER:
Of course we are and we'll make projections about the future based on past performance.
JOURNALIST:
In terms of interest rates, what did happen to interest rates when you were the Treasurer?
PRIME MINISTER:
Interest rates were higher then than they are now. I'm not denying that. I've never denied that. But what I'm saying is that the comparison is to look at interest rates now, under my prime ministership and Peter Costello's treasuryship and the potential for them under a Latham government. If you look at the track record of Labor, interest rates go up under Labor because they run big deficits. Don't listen to what they say, look at what they did. I mean, they left us with $96 billion and $10 billion annual recurring deficit and interest rates are dramatically lower now than what they were. I mean, you can engage in all the comparisons you like. Out there in mortgageville, they know the pain of interest rates is a lot less severe now than it was and they know that there's a real risk under a Labor government that they'll go up again.
JOURNALIST:
You left a $9 billion deficit, Mr Howard, so...
PRIME MINISTER:
I am aware of all of that history but I'm also aware of the fact, Michelle, that I've been Prime Minister for eight-and-a-half years and this country has had the lowest interest rates in a generation under me, as Prime Minister, and Peter Costello, as Treasurer. And we will always have that to our credit and we will always be able to remind the Australian people of that. And it is a comfort to the Australian people, particularly young families in the outer suburbs of Sydney, that interest rates are sharply lower under this Government. There is a real risk, not only because Labor always runs budget deficits, but the other thing Labor will do, is, they'll wreck the industrial relations system we now have, which will deny the productivity gains of past years, you'll have wage increases not based on productivity. And the only response that the monetary authorities have to that development is to lift interest rates. You see, it's not only budget deficits that impact on interest rates but it's also the interaction of industrial relations policy and productivity. You can afford wage increases based on productivity but if you have wage increases that are not based on productivity, you inevitably cause unemployment and the response of the monetary authorities, for anti-inflationary reasons, is to lift interest rates. And that happened in the past and if we go back to the old industrial relations regime, which obtained 20-25 years under governments of both persuasions. I mean, the Coalition changed its industrial relations stance after it lost office in the early 1980s. Do you remember the debates that went on inside our party about that in Opposition? So we're really dealing now with a new order and the new order is post the Fraser Government, it's a new order of a more deregulated industrial relations system that has brought forth huge productivity gains. You change that, you change the productivity equation and you bring back the specter of the monetary authorities using higher interest rates to control inflation and that, of course, is what's happened in the past and that is the difference and that is the risk of Latham Labor, because Latham Labor will hand back control of industrial relations to the unions.
JOURNALIST:
Are the problems in Iraq, particularly in Najaf, are they an issue for average Australian voters or do you think that it's just all going to be economics, health, and education?
PRIME MINISTER:
Oh, I think there's a whole range of issues but I think the dominant issues are living standards, interest rates because they affect living standards, people's personal and financial security. But I think they also recognise that they want a strong, experienced team leading the country in relation to international affairs and defence. I mean, I'm happy to deal with those issues. I've never run away from the decision we took in relation to Iraq, I never will. I will always believe it was the right decision and it remains the case that we took a decision that was properly based on intelligence advice and it was in the long-term interests of this country. But I don't think that's going to be as big an issue as domestic economic management. We'll have two more and then Mr Costello and I are going to have something to eat.
JOURNALIST:
Prime Minister, given the pledge of loyalty that we've heard here today, can you now say that you'll serve a full term?
PRIME MINISTER:
I will remain the leader of my party, subject to the goodwill of the Australian people returning us, for so long as my party wants me to. Look, I am the creature of the Australian people, I'm at their disposal, all of us are. But the office I hold in the Liberal Party is the gift of my colleagues, it is not my property, it is the gift of my colleagues and that is why I correctly say I'll remain the Leader as long as my party wants me to. And you know the commitment I bring to the job, you know the energy, and the physical as well as mental commitment I bring to the job, I don't think could be in doubt. But I am greatly aided in the discharge of my responsibilities by a person who I regard as having been the best Treasurer Australia has had. And I recognise the full implications of making that observation. I think we've been a tremendous team and he's been very loyal, very understanding and very able and I'm delighted to have him by my side as a friend, as a deputy and a remarkably effective Treasurer.
JOURNALIST:
... Prime Minister that this is an issue?
PRIME MINISTER:
I beg your pardon?
JOURNALIST:
Don't you have to accept...
PRIME MINISTER:
You're engaging in some commentary are you? Look I answered the question, I'm the player...
JOURNALIST:
(inaudible)...Labor...
PRIME MINISTER:
Well, well a huge surprise.
JOURNALIST:
Mr Costello, given the Prime Minister's obvious enthusiasm for the job, how do you rate your chances of ever becoming Prime Minister if you win the election.
TREASURER:
Look, you know I think the last eight and a half years as Treasurer is a record that speaks for itself. I think it stacks up well by Australian standards and I think it stacks up well by international standards. And to be frank with you, nothing worries me more than the prospect, that having come so far, this could be turned over to the failed mayor of a failed council. That really worries me and actually what motivates me on a daily basis is to ensure that all of the runs that have been put on the board are not wiped out by the incompetence of the Labor Party. So I'm very, very happy to work, to make sure that doesn't happen.
[ends]