O'BRIEN:
John Howard, not a great look is it, on the first day of an election day to see Peter Costello shadow boxing on whether he'd challenge your leadership in another Howard term. He was eventually boxed into a corner where he finally said, no challenge next term, in simple words but couldn't you two have rehearsed your lines a little better than that?
PRIME MINISTER:
Kerry, it's interesting, I looked up my records and on the 7th of October, 2001 we had an interview and you asked me very, very similar questions and three years later I am here and Peter is my very good Deputy and a wonderful Treasurer. I have to say that we are a great team. You know my position on my future. I'll remain leader of the Liberal Party for so long as my party wants me to, subject obviously to the goodwill of the electorate. I mean, I'm ultimately accountable to them. We've been a great team and I couldn't have had a more loyal and effective deputy over the last eight-and-a-half years. And can I just say that I found it amazing that Michael Brissenden, in his introduction, said that Peter's position was a structural challenge to the Government. It's some structural challenge to have probably the most successful Treasurer the country's had as a member of your Government as your Deputy. I see Peter Costello as an enormous plus for the Government and I am just amazed that the Labor Party thinks that there's some mileage in it for them to attack Peter. I mean, I think Peter and my attitude is, 'go on attacking him'. He grows in stature because they attack him and he deserves a great deal of the credit for the low interest rates and the high employment growth of the last eight-and-a-half years.
O'BRIEN:
I noticed you've said again, you've said it earlier today, that you think Peter Costello is the most successful Treasurer in Australian history. If he's a better Treasurer than you were, perhaps he'd make a better Prime Minister?
PRIME MINISTER:
Well, Kerry, I think Peter's turn as Treasurer has been more successful, I accept that. I think he's been very successful. The important thing is the team and we've been a great combination. And the choice that people have to make is whether they want the economy run under the stewardship of John Howard and Peter Costello or Mark Latham and Simon Crean. That's the comparison. Who do you trust better to keep interest rates lower and to keep the budget in surplus and to run a decent industrial relations policy. I think Peter has been a very good Treasurer and I hope the Australian people think I've been a good Prime Minister. I guess I'll find that out in six weeks time.
O'BRIEN:
Well, sir, there's argument about whether it was originally meant in the best sense or said sarcastically but you were once, a long time ago, called Honest John. You say that this election is about trust, which implies honesty, in terms of your own personal integrity, are you still entitled to be called Honest John?
PRIME MINISTER:
Well, it's not a description I've used myself, Kerry, others did. Like everybody else I value my reputation. I tell the truth, I try to be honest with people. I've been accused of other things by my political opponents, I accept that. In the end the Australian people will make a judgement about that. And when I say this election is about trust, I mean that in the broad sense of the word.
O'BRIEN:
Not in the personal sense as well.
PRIME MINISTER:
Well, of course, well the broad includes the specific, doesn't it, it includes it in every sense of the word but it goes beyond personal integrity, it also includes capacity, it includes focus, experience and the ability to deal with difficult issues in a fast changing environment and we live in a world where that capacity is required of a national leader.
O'BRIEN:
You say that Australians are sick of kids overboard and dismiss it as an issue that was there for three days at the last campaign. It was there for more than three days. But I suspect that there are another undefinable number of Australians who do want to know, still, whether you lied about kids overboard during the last election to enhance your prospects, do you acknowledge at least that?
PRIME MINISTER:
Well, Kerry, I didn't lie about it. The original statement was based on firm information, that wasn't the debate. Nobody's suggesting that we weren't originally told. The debate was about the extent of the communication of the reverse side of the story. But look, what I'm saying is that people remember of that period that I stopped the boats. They will always remember that and they will always remember that the Government was strong on border protection and the Labor Party was weak. I don't believe the last election was determined on kids overboard but what I'm saying is that this election is about the next 10 years, not about the last three days of the last election campaign and I believe very strongly that the overwhelming majority of the Australian people see it that way. But, in the end, like everything else, this will be determined by the Australian people, it will be resolved by the Australian people when the election takes place.
O'BRIEN:
And in the interim these issues will continue to be debated. In Mike Scrafton you have a former senior defence official who says he made clear to you at the time that no children were thrown overboard. He's backed up in his recollection of those conversations with you by two senior defence officers, a serving Major General and a Navy Commander and also another senior defence official. They say he told them all at the time that you knew that you had been told that no children had been thrown overboard yet you continue to tell Australian voters the opposite. What do their accounts and recollections say about your honesty?
PRIME MINISTER:
Well, they're not direct evidence Kerry. I mean there are only two people who had that conversation and I dispute his recollection but look, this is all known. People know that I dispute that recollection and I continue to dispute but there is really nothing I can add to that and my recollection is consistent with the recollections of my staff but in the end people will make a judgement about that. I don't seek to denigrate Mr Scrafton, I'm sure he believes what he's saying. I'm simply saying my recall is different and I'm also saying that what people remember about that issues is that we stopped the boats, we were very strong on border protection and the Labor Party was weak.
O'BRIEN:
The issue that I'm raising Mr Howard is not border protection because the kids overboard case didn't alter your border protection policies one way or the other. The issue I'm raising is about integrity, morality, ethical behaviour. I know you reject that this proposition applies to you bit I'm curious to know whether you feel that a man who deliberately and irresponsibly whips up public emotions and prejudice against a boatload of asylum seekers for political gain deserves to the Prime Minister?
PRIME MINISTER:
Well, I certainly believe I deserve to be Prime Minister for a whole range of reasons. I reject your claim that I deliberately whipped it up. It was based on proper advice and I repeat that and I remind your viewers of that. The point I simply make, Kerry, about the boats is that the dominant concern of people in relation to border protection was the stopping of the boats, not the issue of whether children had been thrown overboard. But look, we can go on all night and perhaps you want to...
O'BRIEN:
No, we can end it right there. We can move on.
PRIME MINISTER:
Okay. I think that's a good idea. I think that's what the public wants to do too.
O'BRIEN:
You're happy to attack Labor's past all the way back to Whitlam, but you want to limit what we can ask about your own past - why isn't that hypocritical?
PRIME MINISTER:
What are you talking about?
O'BRIEN:
Well, you're saying that we can't....you've said this election isn't about the past, it's about the future but then in the next breath you'll tell us about how interest rates has risen under Whitlam, under Hawke, under Keating and so on. So you're prepared to talk about the past on some things but on other things where one might say it doesn't suit you, you say we should talk about the future?
PRIME MINISTER:
Well Kerry, let me base my comparison about interest rates under this Government and a potential Labor Latham Government. Now, to start with - I think interest rates would be higher under a Labor Government because they would return industrial relations policy to the control of the union movement. That would undermine productivity levels, that would produce wage rises that were inflationary and the response of the monetary authorities could well be to increase interest rates to control inflation. That is a proper legitimate economic proposition and when you look at the interest rates we've had over the last eight and a half years under the Howard Government. They're the lowest in 30 years, I think that is a valid thing to say both drawing on the past and also talking about the future.
O'BRIEN:
That's also true around the world. Interest rates are extraordinarily low all around the world - lower than in this country in many instances.
PRIME MINISTER:
But the thing to bear in mind is the contribution that our own domestic policy has made to those low interest rate settings and also to bear in mind the relatively higher risk of a Labor Government with a record in the past of running budget deficits despite what they now say about their commit to budget surpluses and also of course their desire to return industrial relations policy to a less productive union domination.
O'BRIEN:
But if we look at interest rates, if we look at budget deficits, if we look at surpluses, the fact is that Paul Keating delivered four surpluses as a Labor Treasurer, you couldn't deliver any in your five years of Treasurer. You inherited interest rates at 10.5% from Paul Keating in 1996 but he inherited interest rates from you of 13.5% after your five years as Treasurer. So why isn't that relevant too?
PRIME MINISTER:
Well, I'm very happy to have all of these things put in the mix and what they will demonstrate is that the interest rates we now have after eight and a half years of a Government lead by me with Peter Costello as Treasurer, they are the lowest we've had in 30 years. Now, that is an indisputable fact and it's also an indisputable fact that the average interest rates under Coalition Governments of that 30 year period have been lower than the average of interest rates under a Labor Government during that 30 year period. It is also in my argument, much more likely that interest rates will go up under a Latham Government for the two reasons I've outlined - they're abandonment of the productivity based industrial relations system with the potential that has for inflationary wage rises countered by tightening of monetary policy and also the propensity of Labor Governments to run budget deficits. Now, that is my argument about interest rates and it is central to economic credibility and I think I have a very strong case to put. I'm not disputing any of the figures you've put, they're there in the record but the figures that are surely most relevant are a comparison of what we have achieved over the last eight and half years under my leadership and the likelihood of a greater risk of higher interest rates under a Latham Government. That is the argument I am putting.
O'BRIEN:
And the common view in the market place is that a lot the results you've achieved, certainly not all of them by a long stretch but a significant number of the achievements that you can now boast of in your years of Government to a degree were handed to you by the reforms that were implemented under Labor, including financial market deregulation that you yourself were not able to deliver as Treasurer?
PRIME MINISTER:
Kerry, I have consistently acknowledged publicly on many occasions that contribution that financial deregulation and tariff reform made to the reform of the Australian economy. Unlike the current Opposition, when I was in Opposition I supported any pro-reform change made by the then Labor Government, I didn't negatively oppose it as the current Opposition has done. But the greatest contribution that we have made over the last few years to lowering interest rates have I believe been running budget surpluses and also the productivity induced real wage rises which have not been inflation. I mean it's been remarkable that under this Government not only have interest rates fallen but real wages have risen and they've risen because we have an industrial relations system based on productivity and not dominated by the union movement. And that has been a spectacular difference between this Government and former Labor Governments.
O'BRIEN:
John Howard, we're out of time, I look forward to our next interview in this campaign. Thank you.
PRIME MINISTER:
So do I.
[ends]