MITCHELL:
First today in our Sydney studio is the Prime Minister. Mr Howard, good morning.
PRIME MINISTER:
Good morning Neil.
MITCHELL:
Prime Minister headlines today tell me several respected organisations, and one of your own top officials, believe the world economy could be on the verge of crashing. Is it?
PRIME MINISTER:
No, it's not, that's alarmist talk. There are a lot of people who think the American budget deficit and current account deficits are too high. I certainly would like to see the American budget deficit reduced. It's a great pity that America has gone into deficit again but it's too alarmist to talk about a crash.
MITCHELL:
International monetary funds suggesting it and so is your own Treasury Secretary.
PRIME MINISTER:
I think the word crash in the minds of most people when you see it in a headline is associated with 1929 isn't it? And I think when you actually read the fine print of what Ken Henry said he was referring to what you might calling the bursting of the dot com bubble.
MITCHELL:
So what are the dangers here? What are we facing?
PRIME MINISTER:
Well I think the dangers are not of a crash. I think that is just exaggerated and we had a presentation to our Cabinet by the Governor of the Reserve Bank on Tuesday and he certainly wasn't talking in that alarmist fashion. In fact the outlook that we have before us is still of pretty strong world growth. But the economy would be better and stronger, the world economy, if the Americans were not running such a large budget deficit. I have been expressing concern about the size of that budget deficit now for some time and whilst the American economy is very resilient because it's a very flexible economy and whilst there is no sign to me or to our advisers that the world won't go on financing America's current account deficit it would be better all-round if the budget deficit in the United States were not as great. But to be talking about crashes is really inaccurate and alarmist.
MITCHELL:
People will be rattled by it; what word would you use?
PRIME MINISTER:
Well I don't know that people will be rattled by it because they will react to what they know to be the condition of the real economy and there is nothing artificial about the security and the strength and the stability of the economy in Australia at the present time.
MITCHELL:
Well if the danger is not of a 'crash' what word would you use?
PRIME MINISTER:
Well I think if the American current account deficit, if the American budget deficit continues at the current level, we could well have slower rates of economic growth than we might otherwise have.
MITCHELL:
What does that mean to Australia?
PRIME MINISTER:
Well it mightn't mean a lot, but it might mean something.
MITCHELL:
How are we protected?
PRIME MINISTER:
Well we are protected by the strength of our own economy. We don't run a budget deficit. We have been running a budget surplus for a very long time. We have low inflation and we have strong business investment and we continue to...
MITCHELL:
But we are a pimple on a pumpkin of a world economy; surely any such problem has to affect Australians?
PRIME MINISTER:
Neil, there's no prospect in my view, if you're asking me for my view; there is no prospect of the American economy crashing.
MITCHELL:
Interest rates, we now seem to have accepted will go up very soon. Do you feel you have misled the Australian people?
PRIME MINISTER:
No I do not feel I've misled the Australian people. I never at any stage in the election campaign gave a guarantee that interest rates would never move.
MITCHELL:
Did you give an impression that they would stay down?
PRIME MINISTER:
No I sought to give the impression, and I believe I did give the impression that the Labor Party in office had very high interest rates. We had much lower interest rates and that if Labor got in again the likelihood was that policies would be followed that would produce much higher interest rates.
MITCHELL:
Are you surprised they're going up?
PRIME MINISTER:
I think small movements either way are to be expected. I do not believe and I don't think anybody believes that interest rates in this country in the foreseeable future are going to be back to anywhere near what they were under Labor. Remember they got to 17 per cent for housing rates. We're now talking about somewhere in the order of seven plus per cent. Now there's a huge difference and the impression I sought to create, the impression I did create, and the impression I don't apologise for creating, is that under us interest rates were always going to be lower than under a Labor Government because we had different policies. But I never guaranteed there'd be no movements. In fact I was asked specifically can you guarantee there will be no interest rate rise of any kind and I think my reply pretty well uniformly was I don't give guarantees about individual movements.
MITCHELL:
So are you surprised by this movement?
PRIME MINISTER:
Well I don't know whether there's going to be a movement yet. The Reserve Bank has said that conditions are such that it is more likely that there will be an upward movement in the near future; that is a summary of what the bank has said. The indicators, the economic statistics that would properly influence the bank's board are mixed. Inflation is still very low, the wage price, the wage cost index rather that came out a few days ago was quite moderate and didn't show any sign to me and to many economists that wages in this country were starting to accelerate unacceptably which is one of the things that sometimes provokes central banks into tightening monetary policy.
MITCHELL:
Can I ask you about something else? Our immigration policy seems to have gone a little out of whack. I mean we were going to through out a 104 year old Chinese woman who had been here 10 years and now this Melbourne schoolboy, Nak, been here 10 years, he's more Australian than Bazza McKenzie and he's due to be thrown out today. Is there no room for compassion or commonsense in these things?
PRIME MINISTER:
Well there's a lot of room for compassion and commonsense. I do not, I'm afraid I'm not across the detail of that particular case but I will be talking to Amanda Vanstone later this morning, I don't know what her response to it is. It is impossible for somebody in my position to know in advance each individual decision that is going to be made by the immigration authorities in what are in potentially hundreds of cases.
MITCHELL:
You would have been surprised to see a 104 year old woman deported?
PRIME MINISTER:
Well on the face of it that sounded like a decision that lacked both compassion and commonsense.
MITCHELL:
And now we have a 15-year-old boy who can't speak Thai being sent back to Thailand.
PRIME MINISTER:
Well I'd like to know more about that.
MITCHELL:
Today it happens - 5.30.
PRIME MINISTER:
Yes. Well I will obviously, and I think even separately from anything I might say to her, Amanda Vanstone will have something to say about it.
MITCHELL:
Calls for the Prime Minister, Graeme, go ahead please Graeme.
CALLER:
Thank you Neil, good morning Mr Howard.
PRIME MINISTER:
Good morning.
CALLER:
Look we've had a number of major financial crises offshore in the last four or five times, in the last 10 years, including the Asian financial crisis. I'd like to know how well we are protected from the USA or any other crisis, and particularly why.
PRIME MINISTER:
Well Graeme I can't give an absolute guarantee that things that happen beyond our control won't impact adversely on the Australian economy - nobody in my position can give that. But I can point out, and as you mentioned it, that we had the Asian financial crisis but it didn't drag us down. And the reason that it didn't drag us down was that our economy was better run than many of those economies. We had a flexible exchange rate. It meant that we could absorb the adjustment brought about by the Asian downturn and the economic reforms of this country had undertaken help to insulate our economy against the effects of the Asian downturn. The best protection we can have against an external economic shock is to have a strong domestic economy, is to have the budget in surplus, to have low inflation, to be continuing to open up our own economy so that it can adjust adversely to shocks. It's the rigid, tightly regulated economies that do worse when there is an external economic shock.
MITCHELL:
So are we as fireproof as we can be?
PRIME MINISTER:
I believe we are as fireproof as we reasonably can be, yes. But no economy can be completely fireproof.
MITCHELL:
We'll take a break and come back with more from the Prime Minister in a moment, including calls, 9696 1278.
[commercial break]
MITCHELL:
The Prime Minister is in our Sydney studio. We'll take more calls for him in a moment. Mr Howard, the Pope's condition has worsened overnight. Does the Australian Government send a message of good wishes?
PRIME MINISTER:
Of course. I spoke only a few days ago, when talking about other matters, to the Senior Catholic prelate in Australia, Cardinal Pell, and I enquired then about the Pope's general condition and certainly I convey on behalf of all Australians, my very good wishes for His Holiness in this present, very significant health challenge. He is not a young man, he's been a wonderfully strong figure and he's had to endure illness, and of course that attempt on his life. It's a very onerous job and I wish him well.
MITCHELL:
Another international matter, will Australia be represented at the wedding of the Prince of Wales?
PRIME MINISTER:
I don't expect so. I haven't received any invitation and I wouldn't expect to receive one. I would not, in any event, be planning to go because I have enough overseas commitments and enough things on my plate domestically for most of the year at the moment. I wish them both well, but my understanding is that it is a pretty small affair. It is impossible to call it a low key affair because it is going to attract a lot of publicity and a lot of coverage. But it is plainly, for reasons which are obvious, not a royal wedding in the more traditionally understood sense of that term.
MITCHELL:
Hello Ian, go ahead please Ian.
CALLER:
Morning Prime Minister. I noticed the Bush administration has warned both North Korea and Iran about their nuclear programme. I just wanted... something we're concerned about, would you rule out providing the same support to America to disarm these two as we have in Iraq?
PRIME MINISTER:
Well, we are certainly concerned, very concerned about North Korea's nuclear ambitions and capacities and we also continue to encourage the Iranians to talk a peaceful solution of their issues with the three European countries. As to us providing any forces, that is simply not an issue.
MITCHELL:
Could be one day though?
PRIME MINISTER:
No I don't deal with hypothetical situations like that. I don't expect it will. I hope it won't and I am not aware of any plans on the part of the United States for it to become so therefore the answer is - the issue simply does not arise.
MITCHELL:
Just as we're on the issue can I just get absolutely clear on our position with troops in Iraq? Where do you stand on the prospect of sending more or extending the period for the second lot of troops?
PRIME MINISTER:
Well as far as sending more is concerned, I think that is highly unlikely but I cannot, and will not, give a categorical guarantee that under no circumstances will any further people be sent. I am simply unwilling to do that - not because I think it is likely, or I think it's in contemplation. But I don't want to be in the ridiculous position if we did have to do something, more people then turning around saying oh you've broken a promise et cetera, and in these situations that I think you reasonably noted earlier in the week, you can only speak of your intentions at a given time, and we didn't intend to send more forces up until a few weeks ago, when we reconsidered the matter in the light of a number of circumstances, which I have outlined and decided to send this 450.
MITCHELL:
And could they stay longer than a year?
PRIME MINISTER:
They could. I hope it won't be necessary but they could. I don't want to put it any stronger or weaker than that. The initial deployment commitment is for a period of a year with a rollover of people after six months and we will review the deployment after it's been in place for six months and obviously in another six months after that. Now it could go longer than a year, although the initial deployment is for 12 months.
MITCHELL:
Prime Minister, I noticed fresh discussion this week about Peter Costello and leadership, is it inevitable that he'll be leader one day?
PRIME MINISTER:
I have no doubt that he will be the next leader of the Liberal Party.
MITCHELL:
Next Prime Minister?
PRIME MINISTER:
Well he'll be the next leader of the Liberal Party, and I am certainly planing to keep the Labor Party out of office, so the answer to that question is yes as well.
MITCHELL:
I see Jackie Kelly said she may step down if you go.
PRIME MINISTER:
Well Jackie is a great Member. I think Jackie will do the right thing by her constituents and her family.
MITCHELL:
Have you discussed this issue with Peter Costello since the election?
PRIME MINISTER:
No.
MITCHELL:
Is he a leader in training?
PRIME MINISTER:
Oh Peter is a very capable person who could do the job extremely well but it's not vacant.
MITCHELL:
Why has it come up again this week?
PRIME MINISTER:
Look I just think it's inevitable after you've been around for a few years, which I have and these things just come up from time to time, but Neil, I don't care.
MITCHELL:
You don't care that it's come up?
PRIME MINISTER:
No.
MITCHELL:
So you haven't given any fresh consideration, that's not what?
PRIME MINISTER:
No, no nothing's changed - situation normal.
MITCHELL:
I did like his line about doing his penance as Treasurer, maybe he has had enough.
PRIME MINISTER:
It's a hard job. It's about the second hardest job in the country, although Opposition Leader is pretty hard.
MITCHELL:
I was going to say, what's the hardest?
PRIME MINISTER:
Prime Minister.
MITCHELL:
William, go ahead please William.
CALLER:
Yes good morning Prime Minister Howard, how are you?
PRIME MINISTER:
I am great thanks.
CALLER:
That's good, you are doing a wonderful job as Prime Minister - I hope you stay on a long time.
PRIME MINISTER:
Thank you.
CALLER:
I have been unemployed for a while and I know there are a few jobs going out there. Is it... when they say there is a lot of jobs out there, is the employment... I am a bit nervous at the moment.
PRIME MINISTER:
No William don't be nervous, please I want to talk about this because I want to help in any way I can people who are out of work and I've got a couple suggestions to make about people you might talk to.
MITCHELL:
Yes relax William, it's only the Prime Minister.
PRIME MINISTER:
Don't worry, I mean Neil Mitchell might growl at you but I won't.
CALLER:
Yeah, I have been out of work for eight years and it's, they always put me...
PRIME MINISTER:
You have been out of work for eight years?
CALLER:
Eight years.
PRIME MINISTER:
Yeah.
CALLER:
And I've just, all they look for is experience. I had an experience last year at the showgrounds and they had thousands of people go in and they just pick and choose who they want to and it's just quite hard out there and I am just wandering.
PRIME MINISTER:
How old are you William?
CALLER:
I am forty three.
PRIME MINISTER:
And what work did you do before you became unemployed?
CALLER:
I was with the Williamstown Hospital.
PRIME MINISTER:
Yes, yes, I see. And what work did you do at the hospital?
CALLER:
I was a theatre orderly.
PRIME MINISTER:
Yes I see and have you tried to get that kind of work again?
CALLER:
My wife used to work at Williamstown Hospital and they used have 35 domestic staff and they've only got one person doing the...
MITCHELL:
So have you tried to get work William in that same area?
CALLER:
I have tried that Neil, yep tried that.
PRIME MINISTER:
Does your wife have a job William?
CALLER:
No she just had a [inaudible] operation.
PRIME MINISTER:
Oh dear.
CALLER:
And she is on a disability support pension.
PRIME MINISTER:
And you're on the unemployment benefit are you?
CALLER:
That's correct.
PRIME MINISTER:
And do you have a family?
CALLER:
No I don't have a family.
PRIME MINISTER:
Look I don't have an immediate answer, but have you thought of talking to your local Federal Member of Parliament? I don't know who it might be, but whoever it is, Labor or Liberal, I am sure that person would be willing to talk to you and try and give you some advice and help. Now I am not saying that that is going to be the answer but I often get people in my own electorate who drop in when I am having electorate days and haven't been able to get work, and sometimes I can help and sometimes I can't, but...
NEIL MITCHELL:
William, if you hold on, we'll find out where you live, privately...
PRIME MINISTER:
Yes
NEIL MITCHELL:
And help you with a contact number for your local Member.
PRIME MINSTER:
Because I think you know, there's a lot of goodwill - politics are put aside for these things. There is a lot of goodwill - all these people trying to find work and yet there is a shortage of labour in certain areas but there are still some people who are finding it tough and who are genuinely trying and you sound like a very genuine bloke to me so I hope there's some way that we can help.
NEIL MITCHELL:
Prime Minister, another thing. We had a bit of a test on our airport security during the week and it seemed to me that it failed pretty badly in the way that we handled it, are you aware of that case?
PRIME MINISTER:
Well I am generally aware of it. Once again I have been in the West. I haven't had all the details of it, but this is a difficult issue. I suppose there is no limit to how much you can put into airport security and you could probably bring the whole process to a stop. It would frustrate the hell out of everybody but you'd be able to say well the airport is now more secure than it was two years ago. It's a delicate balance but all the time things go wrong, we investigate them. I know John Anderson is always investigating things and trying to make them better.
NEIL MITCHELL:
New industrial laws to be outlined today, now it's your intention to keep minimum employment conditions is that right?
PRIME MINISTER:
Yes we are going to keep a framework of minimum conditions. I don't think the Australian ethos will accept, or should accept, a situation where people have no guaranteed minima.
NEIL MITCHELL:
Will that include a minimum wage?
PRIME MINISTER:
Oh yes.
NEIL MITCHELL:
What will it be?
PRIME MINISTER:
Well I don't know. I mean it was not for me to nominate the minimum wage - the minimum wages should be determined through a process which is open and transparent. At the moment it is determined through the Industrial Relations Commission and there are various options about how it might be determined in the future and we are looking at those. But the point is that we will keep a minimum wage but it has to be a minimum, in my view, that takes account of the employment opportunities that are available and we must never have a minimum wage that prices people out of work and sometimes, in some situations, that does occur. One of the things we would like to have taken into account - minimum wages are fixed - is the impact of the minimum wage level on employment. We have tried to amend the law thus far to create that circumstance. but up until now we've been rebuffed in our attempts to do so. So we are going to try again and we will probably have more success after the 1st July.
NEIL MITCHELL:
The Tax Office is spending $1.6 million on some flash consultants. They are even looking at new logos which I think has now been ruled out. Is this the sort of money they should be spending? What's the corporate image of the Tax Office got to do with anything?
PRIME MINISTER:
Well people often complain to me that they don't mind paying their tax and they acknowledge that the Tax Office has got a tough job but they don't like how the Tax Office speaks to them or deals with them. People often say that to me. Now I am not saying that's a fair criticism because it is not an easy job. Therefore the idea of the Tax Office devising ways of perhaps being seen as a little more user friendly is not as crazy as it sounds. I don't know if we need to change logos. I tend to agree with that. I think everybody keeps changing their logo and I think it can become a bit confusing. It's like continually changing the name of government payments; so much so that people don't understand what they are.
NEIL MITCHELL:
They also... there's also a report of a clamp-down on promotion of tax reduction or evasion.
PRIME MINISTER:
Yes.
NEIL MITCHELL:
Are we into a new round of this?
PRIME MINISTER:
Well I don't know if we are into a new round but we have had a couple of bad examples in recent years of the promotion of mass participation schemes which offer a quick dollar for no return and apparently little risk and a lot of decent people, some of them gullible, have been induced to participate in these schemes. It's cost them a lot of money and the people who promote them perhaps have not been subjected to the penalties that they should and that's what Peter Costello and Mal Brough have got in mind and it's a very sound move in my view.
NEIL MITCHELL:
And just a final quick question any luck with the Ashes cricket on the ABC?
PRIME MINISTER:
Well we are still working on that. I can report to your listeners that I am keen that the Ashes be on free-to-air. I won't say where, but I am keen that they are on free-to-air and we are, within the limits of reasonableness, we're working hard to bring that about.
NEIL MITCHELL:
Could be with Kerry Packer do you think?
PRIME MINISTER:
I am just not in a position to say where it is at the moment.
NEIL MITCHELL:
Thank you very much for your time.
PRIME MINISTER:
Okay.
[ends]