PRIME MINISTER:
Could I just start by thanking Geoff and Coral Duncombe for making their premises available, I've really learnt an enormous amount this morning. I've learnt that converters, the businesses that are converting to LPG, they are getting on average 200-300 calls a day and there is a three-month backlog of orders, it really has taken off.
The other thing that I learnt this morning was, and this is very important, and that is that the conversion costs for older cars are lower than for some of the newer cars, and that means that people who haven't been able to afford to buy a car recently, and are getting by on an older car, it means that the subsidy of $2000 for the conversion in some cases will cover the full cost of the conversion, or go very close to doing so, which makes the incentive the Government has provided, extremely valuable for lower income people.
And that's very important, because fuel costs for people on lower incomes are a burden. I don't want to represent this incentive being other than something that provides valuable, practical help at the margin, the fundamental cause of high petrol prices is the high world price of crude oil, and until that changes, then the price of petrol at the bowser is not going to fall markedly, and stay down. But while ever that persists, it's the responsibility of the Government to find different ways of trying to help at the margin. Now this incentive is a practical way of helping at the margin, and I am delighted at the response of the industry, and I have been reassured by industry people here today that the supply of the tanks and the necessary equipment for the conversion is increasing rapidly and the balance that we need will be achieved within a few months, but I want to thank again Mr and Mrs Duncombe for allowing me to come here and hearing the story of their firm, and obviously it is a good time to be in LPG conversion, and good luck to them.
Just before I take questions, could I remark upon a decision that's apparently been taken by the Western Australian Government to release more land in Perth for housing. There is a real problem in Australia about the affordability of the first home, and it's quite clear that the main cause of the high cost of housing in this country is the lack of supply of land. A survey last week showed that the price of land in the 30-year period in Sydney between 1973, and 2003 had risen by 700 per cent, 700 per cent, seven fold, yet the cost of the housing component of the package had only gone up by 4 per cent in that period.
Now nobody likes interest rate increases, I certainly don't, but the main cause of the unaffordability of housing for so many young people especially in Sydney, is the high cost of land. Interest rates 10-15 years ago were a lot higher than they are now, a lot higher. Yet the affordability of housing was more within people's reach, so the explanation is land, and I hope that all state governments take this to heart. They have got to stop using the development process as a means of raising revenue, they've got to release more land, it's a question of supply and demand. The supply is too little for the demand and until more land is released, we are going to condemn young people to not being able to afford - or only afford with a lot of parental help, and in some cases that's not available - not being able to afford their first home.
JOURNALIST:
Prime Minister, the Government is going to look at four-year terms tomorrow?
PRIME MINISTER:
We will but it's not really at the top of my [inaudible]. The question of a four-year term has been around for a long time and it's probably not a bad idea in principle but I am in no great hurry to deal with it.
JOURNALIST:
Can I ask about the AWMU has called for the Federal Government to step in and help with the Ajax Fasteners. Will you be looking at any sort of support for Ajax Fasteners and manufacturing?
PRIME MINISTER:
I think the first thing to do in relation to that is to let the industry see what it can do. And it's a difficult situation and I understand that discussions are going on involving the union, involving the car companies and involving Ajax. And at this stage, I don't want to comment further. I spoke to Mr Macfarlane, that's the Minister for Industry, about this matter on the way out here this morning, so I'm following it very closely. But at the moment, the sensible thing to do is to let the discussions involving the car companies and the unions and Ajax itself go on because in the end it's a commercial situation, but we're following it very closely.
JOURNALIST:
Do you think voters would ever support eight-year Senate terms?
PRIME MINISTER:
Look my view is that the public, and bear in mind that if you were to have a longer Parliament, it's got to be done by way of referendum, it's not something you can legislate for. I'm not sure that the Australian public would vote for it. That's my personal view and therefore it's not something that is very high on my agenda. Look I am interested in things like petrol prices and the affordability of the first home for young Australians. I am not interested in extending my term in office by altering the length of the term of Parliament. I'd naturally hope the public might support me at the next election, but I know I've got to work very hard to keep their confidence. I don't think the public wants to see us spending time about extending the time we are elected to serve. What the public wants me to do is to focus on their concerns and right here and now in Granville in western Sydney I am concerned about high petrol prices and I am concerned about ways of helping people.
JOURNALIST:
Prime Minister, on the petrol prices question, Lauchlan McIntosh from the Automobile Association has called on the ACCC to make oil companies more accountable in terms of...
PRIME MINISTER:
Yes, I saw his interview yesterday.
JOURNALIST:
Is the ACCC strong enough in this respect?
PRIME MINISTER:
Well I think the ACCC which now has a remit to look at E10 blends is doing a very good job in providing more and more information. But if there are ways in which the ACCC can provide still more information, then I will see that that happens. We, in no way, want to restrict the capacity of the ACCC to provide information, but nothing can alter the fact that crude oil around the world is more expensive than it used to be, and we're deluding ourselves if we think that some increase in this or that amount of information on a website is going to cut the price of petrol by five or ten cents a litre. Converting to LPG will certainly save you a lot of money and that's why we've provided assistance. But if there are other ways in which they ACCC can provide information, well I'll see that they do so.
JOURNALIST:
Okay. For how long will the LPG price, I guess people are looking for guarantees to a certain degree, they can convert to LPG...
PRIME MINISTER:
Well if they convert to LPG they will have cheaper fuel. But we don't intend to, having just introduced this subsidy, we're not in any hurry to take it away and we want to provide ongoing incentives for people to convert. Obviously if at some time in the future the price of petrol comes down, then the incentive for people to convert will also come down. I mean that's the way a market operates. This is a great incentive at the moment and it will remain a great incentive while ever the price of petrol remains as high as it is now.
JOURNALIST:
Prime Minister in and around Sydney there's been an apparent jump in race hate crimes against Jews....
PRIME MINISTER:
Race hate? Yes.
JOURNALIST:
Yes. Graffiti attacks on synagogues and so forth. Are you concerned about that and what do you say to the people behind this sort of...
PRIME MINISTER:
Well I condemn any violence, any discrimination against a person based on that person's race or religion. It's unacceptable to the mainstream of the Australian community, irrespective of who the perpetrator is, and who the object of the attack happens to be.
JOURNALIST:
Prime Minister, do you think teachers in state schools should be awarded performance-based wage increases?
PRIME MINISTER:
Yes I do, very strongly. I have believed in performance-based pay for teachers for a long time. In Australian Technical Colleges, these are the colleges we are establishing around the country to train people in trade skills, we have performance-based pay and I would strongly suggest to state governments, who control this area, and also the industrial bodies in the states and to the teacher unions to get behind performance-based pay. I think a good teacher should be a revered identity in the community. I don't think we value good teachers enough. I think we need to change our attitudes, not only to teaching, but also to what is taught. You know my views about teaching Australian history and I'm delighted that there's strong surge of support for that. And I just take the opportunity of saying to the state governments that have stand alone history courses, there are in New South Wales and I welcome that and I appreciate that, but in relation to performance pay, I think it is the way to go and it is a way of, how shall we put it, treasuring the value of a really talented teacher. Thank you.
JOURNALIST:
Can I ask you Mr Howard lastly about Telstra?
PRIME MINISTER:
Yes, you can ask me about Telstra. What do you want to ask me about Telstra?
JOURNALIST:
What are you thinking in terms of...would you be seeing the float going into the Future Fund? There's been discussion about that.
PRIME MINISTER:
I don't really have anything to add to what I said on the AM Program this morning.
JOURNALIST:
Are you fearful of the price and it could affect the mum and dad investors?
PRIME MINISTER:
I don't intend to comment further than to say that we are looking at this matter this week and there's not much point in speculating as to what we might do. Except that we'll try and do the right thing by the current shareholders of Telstra.
JOURNALIST:
Prime Minister shortage of land, just one final ...obviously there's the first homebuyers grant that was brought in., we're at a crisis point from what you're saying, is the Federal Government now perhaps even considering bringing all state governments together, is there summit or something in the offing because this is obviously a major crisis?
PRIME MINISTER:
Well, I think the first thing is that people have to face the truth and the reality. And if the cost of land in Sydney, and that's the most expensive city in Australia, if the cost of land has risen by 700 per cent in the 30-year period between 1973 and 2003, and the cost of housing itself has only gone up by a fraction, clearly the cost of land is the problem, the biggest problem. Now why has land gone up so much? Because so little of it is being released. And the ordinary operation of the laws of supply and demand tell you that if you have an increasing demand, and you have a reducing supply, the cost of the product is going to go up and we all understand that. Now this is the central problem.
And the point I'm making, the point the Governor of the Reserve Bank made in his testimony on Friday was that 10 or 15 years ago interest rates were much lower than they are now.*
So whilst we don't like interest rates ever going up, none of us do, unless of course you're living on the investment as your income, but if you're a homebuyer, nobody likes interest rates going up. But the fundamental cause of the high cost of the first home is the cost of land. And until state governments understand and accept that, and they stop bowing to green pressure and they release more land - and this applies particularly in Sydney - we're going to have a problem. And I just think this issue has got to be faced. And those facts are, you know, absolutely incontestable. If it's gone up 700 per cent - the cost of land - it's not the cost of the bricks and the mortar and bear in mind that when we brought in the GST we brought in a home savings grant to make sure there was no additional cost. It's the land cost and the way in which state governments are in effect taxing new homebuyers to pay for the costs of subdivisions by loading charges, kerbing and guttering and all of those things.
You talk to any developer in Sydney and he will tell you that that is the problem. And until this is faced, we're going to continue to have this in a diminishing Australian dream for younger Australians. It's not the increases in interest rates of the last few weeks, don't like that, nobody does, but there are economic pressures which brought that about. But that's not the reason because 10 or 15 years ago those interest rates were more than double, I mean they got to 17 per cent, they're now what? For housing, seven and something. So that's not the issue, the issue is the cost of land and the land cost is high because there's so little of it available.
Thank you.
[ends]
* Current mortgage interest rates are 7.8 per cent, compared to 10.5 per cent in March 1996 and 13 per cent in August 1991.