ubjects: The Australian Dollar; Business Activity Statements; Petrol prices; attack on Ambassador McCarthy; Heroin Addiction.
E&OE……………………………………………………………………………………
FAINE:
The Prime Minister of Australia, John Howard, joins me in the studio. Good morning to you Mr Howard.
PRIME MINISTER:
How are you Jon?
FAINE:
I’m well, thank you for joining us. The Australian dollar is at an all time low against the US dollar overnight, I know you won’t comment on where you think the dollar should be, and all of that, and I’m not going to ask you that, but surely the Government budget settings and economic policy has to take into account that the Aussie dollar now is at a point where you never thought it would be.
PRIME MINISTER:
Well we make an assessment of where we think the dollar might be when we put a budget together, and we also keep that under review during the year, and clearly the dollar has moved around a lot, but we do take those things into account.
FAINE:
You can’t have taken into account that it would be at 50.85.
PRIME MINISTER:
Well I’m not going to fall back over projections that were made. I can tell you however that we do, in putting budgets together, allow for fluctuations in the level of the dollar and nobody should imagine that if there is a fluctuation that that is lethal for the budget.
FAINE:
What changes do you make to economic policy because of the current position of the dollar?
PRIME MINISTER:
Well it’s no secret that one of the consequences of a lower dollar, if it’s sustained over a long period of time, can be a slightly higher rate of inflation. One of the reasons why petrol is higher than everybody would like in price is the low value of the Australian dollar against the American dollar. It’s something that people perhaps forget, this is something over which we have no control at all, but oil is denominated in the United States dollar, the world price of oil when you see it every morning at 32, 33, 35, 36 cents - that’s $US a barrel, so if you got a strong American dollar that has an adverse affect on the price in Australia, it pushes it up.
FAINE:
No panicking on your part?
PRIME MINISTER:
No I don’t panic at all. You’ve got to take a long view about the currency, having a flexible exchange rate, having a dollar that was able to depreciate against the American dollar a couple of years ago, is one of the major reasons why we survived the Asia economic downturn. Because by taking the adjustment on our exchange rate we were able to divert exports away from disappearing Asian markets into the markets in North American and Europe, so the flexible dollar was a God send two years ago, we therefore should take the longer view.
FAINE:
Alright the, yesterday on radio in, I think, Brisbane you said that you concede that there needed to be changes to the BAS, the Business Activity Statement, that is the central plank of the administration …
PRIME MINISTER:
Well what I said was if there was a need for simplification we’d be willing to do so.
FAINE:
But you’ve been told now for months there’s a need for simplification…
PRIME MINISTER:
Well people have been arguing that and we’re prepared to talk to people, and if there is a way in which I can be simplified which doesn’t rob it of the information needed to effectively run the new system, then of course we’ll make those simplifications. We were always going to do that. You can’t with something as huge as this tax change, you can’t assert that every single form, which is but a tiny part of the new tax system, is right the first time. Of course we’d be willing to finetune it and if there are ways in which it can be made more simple, we’re going to talk to small business about it, of course we don’t want to have any unnecessary complexity. On the other hand it is a new system, and no matter how simple the form may or may not be it was always going to be difficult the first time because it’s a completely new system.
FAINE:
But people have been filling them in now, not just quarterly but monthly, since the middle of August
PRIME MINISTER:
The great bulk of them have…
FAINE:
No
PRIME MINISTER:
…are coming at the present time…
FAINE:
You have been getting feedback since the middle of August.
PRIME MINISTER:
But Jon, you don’t change something one the basis of the first complaint, because the second complaint may be different, the third one different again. You allow a reasonable amount of time so that you can assess whether the complaints about the structure of the form are reasonable, and if you conclude they are then you make the change, that’s what I’ve said we’re going to do. Now that is a sensible practical way of approaching it and that’s exactly what we always intended to do.
FAINE:
30% of business people surveyed recently said the new tax system was seriously upsetting their cash flow, and 70% said it’s taking them more than 10 hours a month to fill in the form and keep up with the new paperwork and it’s costing them dearly.
PRIME MINISTER:
90% of them said they didn’t want it rolled back.
FAINE:
The new tax system …
PRIME MINISTER:
Well the new tax system, they don’t want it rolled back…
FAINE:
They don’t more changes, they’re just getting used it to.
PRIME MINISTER:
Of course they’re, Jon, there was always going to be an adjustment to the system and we knew that when you bring in a new system there is extra work involved in getting used to it, over time, when you do get used to it, that extra work diminishes, and what I’m saying to all people in business I understand that, we are ready, if we can be satisfied that the form to be made simpler, consistent with it being a useful tool to run the system, then we’ll make those changes.
FAINE:
So this is a Government that’s prepared to listen, why then on road funding and petrol excise are you saying I don’t care what the message is, because the message clearly from everybody is that you should change the excise arrangements with petrol. Why are you saying there that you don’t care and even if people tell you that they’ll vote against you, you still think you’re right and you’ll stick to your guns on petrol?
PRIME MINISTER:
Jon, I’m not saying I don’t care what people are saying, I never say that. What I’m saying is that I’ve thought about it a lot and I have formed the opinion, and the Government has formed the opinion, that it is a better long term investment to put extra money into roads than to have what could easily prove a transitory and tiny fall in price of petrol through an indexation freeze. Now that is a judgment, it’s not an arrogant reaction, it’s not being dismissive, it is a judgement that we make. Now we may be wrong in that judgement as far as the public is concerned, but Governments make judgements every week of their lives, and it’s my job to listen to people and then make a judgement. We are criticised if we are poll driven, yet when we are not poll driven we are criticised for not being poll driven, now our critics can not have it both ways. We have conscientiously looked at the issue, conscientiously, and I really believe it’s a better long term investment in Australia’s future to put a lot more money into our roads system than it is to have a small freeze in the level of petrol excise. Now that is my honest conscientious judgement, and when I said yesterday that like every other judgment I make I have to accept the consequences if I’m wrong…
FAINE:
Yes.
PRIME MINISTER:
…I was merely stating the obvious and that is what public accountability is about, you listen to people, you make a conscientious judgement, you explain why you’re doing it, and then you accept the verdict of the people. Now…
FAINE:
But you’re being squeezed on every front, your backbenchers are…
PRIME MINISTER:
I don’t feel (inaudible) about it…
FAINE:
Rob Borbidge in Queensland is saying to you don’t be a dead hero on this issue, Prime Minister, Rob Borbidge.
PRIME MINISTER:
Well alright, I mean I get a lot of advice from a lot of people every day of the week, I listen to it but in the end I do what I believe is right. Now I can’t do more than that, and all I’m saying is if at the end of the day the Australian people form an adverse judgement of my Government, then I have to accept that verdict. Now I hope they don’t, I don’t believe they will, but the next election will be tough. But you can’t live in fear of the next election every day of your political life otherwise you will deliver very ad-hoc, very bad Government. We’ve had too much of that over the years, we’ve had too much ad-hocery over the years. And what I’ve tried to do in this and a lot of other issues, this is the attitude I took on the GST. I did interviews with you in the lead up to the GST and you would quote things back at me, you would quote even people on our side of politics, but certain people on the Labor side of politics saying the world will come to an end on the first of July if you don’t abandon the GST. Now we said we’d made our decision and we’d been re-elected and we were going to go ahead with it. Now I’m going through, in a sense, the same process at the moment. The petrol thing is difficult, Jon. Nobody likes expensive petrol but it is driven by the world price, overwhelmingly. And the idea that a tiny tweaking of the excise would deliver the same long-term benefit to the Australian community as hundreds of millions of dollars extra going into our roads system is wrong in our view. Now that’s our judgement.
FAINE:
Alright. A couple more questions from me and then we’ll take calls if that’s alright with you Prime Minister. Overnight the retiring Australian Ambassador in Jakarta, John McCarthy was roughed up by a small mob, but still a potentially violent mob. A couple of his escorts/bodyguards and guests were punched, kicked, shoved, sworn at by a rowdy group. Police in Indonesia and military officials apparently doing nothing to stop it. Is this an attack on an individual or an attack on your Government’s policies towards Indonesia.
PRIME MINISTER:
Well it’s hard to precisely categorise. I’m sure it’s not personally directed at Mr McCarthy or any of the people around him. Clearly there remains tension between elements in Indonesia and Australia because of what happened in East Timor. We all know that. It’s a very regrettable incident. I’m pleased to note that the Indonesian Government is apologising for the incident. I welcome that. Mr McCarthy has done a very good job as our Ambassador in Jakarta. He did not deserve that treatment. It is not acceptable to the Australian Government and it is noteworthy that the Indonesian Government has apologised. We will continue to have a difficulty in our relationship for a while. There’s nothing surprising about that. No two countries can go through what our two countries went through a little over a year ago over East Timor without there being some residual impact. But it is manageable. I had a very positive discussion with President Wahid in Brunei last week and it’s the third of the discussions I’ve had with him since he became President. The relationship at an official diplomatic level is slowly improving. At the grassroots level its not really been as disturbed as it has been at the diplomatic level. Business links are getting better, investment flows are improving …
FAINE:
Tourism’s unchanged?
PRIME MINISTER:
It’s quite strong. Some glitches, but by and large pretty good. So given everything that has happened the relationship is as good as you might have expected it to have been.
FAINE:
Alright, last question from me before we go to calls Prime Minister. Heroin addiction rates in our community have doubled in ten years. You’ve been in office for half of that. A machete attack in broad daylight in the centre of Melbourne the other day associated with a heroin deal. Police say they’ve tried everything. Yesterday my producer just went for a walk with a tape recorder down Bourke Street in the middle of the city in the middle of the day. This is just a minute and a half of what she saw, just listen to this.
TAPE:
My name is Louise. I’m working on Bourke Street. The area in general is a scary area to work in. What we witness, the drugs deals let alone the combat, the fights, everything that’s involved. It’s a bad environment to be working in. I’ve witnessed people roll up on scooters when they were crazed and he actually had a cracked mouth above his teeth. Above his teeth it was all fat and quite swollen. He had a guy come up to him, he nodded, he pulled out a cap from his mouth which was all in little tiny rubber bands knotted up, in broad daylight gave it to the guy, gave him money, the guy ripped it off and then he walked away. That was right in front of me. Just here. My name’s Liz. I’m a student and I catch a tram along Bourke Street all the time so I’m always going past here. Basically drug deals are happening all the time and it’s really obvious. Just now there’s a group of about five people standing all together and they don’t look very steady on their feet and they’re handing stuff to each other out of their mouths and the other one has put it in his(inaudible). Took about one second. If you looked away you wouldn’t see it. But whatever direction you look basically you’re going to see it so it doesn’t really matter.
FAINE:
The middle of the day, the middle of the city, drug deals going on right there on the footpath in front of anyone who cares to see it. It’s surely clear now that your drug policy, your strategy is not working.
PRIME MINISTER:
Well, Jon, that was a very distressing excerpt but I think it’s a bit rich to in effect load onto the shoulders of the Prime Minister responsibility for a law enforcement matter. The question of whether there are drug deals or not taking place in broad daylight in the middle of the day in the middle of Melbourne is primarily a responsibility of the Victorian Police and of the Victorian Government. Now I don’t say that critically of the police or indeed critically of the Victorian Government. But there’s got to be some connection between political accountability and errant human behaviour. And the question of whether drug deals are allowed to go on in the middle of a city in broad daylight is first and foremost something that is the responsibility of the police.
FAINE:
(inaudible)
PRIME MINISTER:
Come on. I listed to that very carefully and I’m prepared to accept full responsibility in relation to those things for which I am directly accountable for. Now the question of drug policy and heroin trials, I accept responsibility for my attitude on that but you’re talking here about drug deals being allowed to take place in broad daylight in the middle of the city.
FAINE:
(inaudible).. it’s the flip side of…
PRIME MINISTER:
No, no. I’m sorry that’s just walking away from the point I’m making. If people are offended by that, then that is the responsibility of the Victorian Government and the Victorian Police. Now on the broader issue of things like heroin trials, I mean what is the difference between the approach of the current Victorian Government and the approach of the Federal Government on drugs? The relatively minor area of difference is whether you have heroin injecting rooms or you have heroin trials. On everything else Mr Bracks and I, as Mr Kennett and I were, at one. We have a joint diversion initiative. Mr Bracks and I opened it. I work very closely with State Governments on education, rehabilitation and law enforcement where we have a role and I’m very, very happy to do that. But don’t imagine that if you had heroin trials you would eliminate what you have just heard in that excerpt because that really is in effect what you are implying.
FAINE:
I could go on forever about the heroin issue but the nub of it is, you despite those figures released on the weekend that the rate of usage has doubled, you see no need to change your policy.
PRIME MINISTER:
In relation to heroin trials?
FAINE:
In relation to heroin trials.
PRIME MINISTER:
No, I don’t.
FAINE:
Let’s go to callers. 9414 1774. Steve’s mobile. Morning Steve.
CALLER:
Good morning Jon. Yeh Mr Prime Minister I’d like to know when was the last time you or any member of Government had to fill up and pay for petrol in a car?
PRIME MINISTER:
Well I can’t speak for, and I’ve been asked this question about half a dozen times so it must be a stock Labor Party question …
CALLER:
No it’s not a stock question.
PRIME MINISTER:
I think it must be. I get asked this everytime I go on talkback radio and this has got the same sort of tone to it. But the answer is I can’t speak for the rest of my colleagues.
CALLER:
You wouldn’t know what it’s like.
PRIME MINISTER:
I do, I do in fact.
CALLER:
… fill up your car to get to work every day (inaudible) …
PRIME MINISTER:
I do understand. I’ve been asked the question before and of course I get driven around in a car, as does Mr Beazley and Simon Crean the Deputy Leader of the Opposition.
CALLER:
(inaudible)
FAINE:
Hang on Steve.
PRIME MINISTER:
There is nothing unusual about that. I do know the price of petrol. I have members of my family who buy petrol every day. I have three adult children all of whom have cars, all of whom who buy petrol and all of whom talk to me about the price of things so don’t tell me Steve that I don’t understand what it’s all about.
FAINE:
Steve, quick response?
CALLER:
I can’t believe that you. You would not know what it’s like to spend $80 a week just to get to and from work. $80 a week.
FAINE:
$80 out of your income a week?
PRIME MINISTER:
Well I don’t know the circumstances of Steve’s own circumstances. I’m not going to comment. I do know this, that petrol is expensive. I do know that people don’t like it. I also know that it’s expensive because the world price of oil has trebled over the last 18 months.
FAINE:
And you don’t want to make it easier for Steve even though you can?
PRIME MINISTER:
Well, Steve, if you take a cent a litre off your figure and then you get another movement in the world price, you’re no better off.
FAINE:
So Steve the Prime Minister would make it $79 a week for you instead of $80. Would that help you?
PRIME MINISTER:
What happens if the world price goes up. I mean you’re not blaming me for the $79 – I mean, come on. I know this is a line that is being run by our political opponents but the proposition …
CALLER:
I vote National Party.
PRIME MINISTER:
Yeh well that’s also a stock expression …
FAINE:
Alright we’ll move on. Brian in Ballarat. Good morning Brian.
CALLER:
Good morning Jon. Prime Minister, I’m absolutely surprised at you. I’m one of the people that you and the National Party call Judas’s because we turned on Jeff but he had the same attitude as you. You just said to that fellow before, he’s a Labor Party. Up until two elections ago I voted Liberal and after hearing that statement for forty years I’ve paid tax, I am now on the dole, sorry I’m not allowed to call it the dole, and do you realise that the cost of fuel going up and you keeping those few measly cents, it is now costing me $65 a fortnight to go and look for ten jobs out of the $300. But now that’s not what I wanted to speak about. What the hell’s the use, geez I’m upset over that statement you made.
FAINE:
Have you got a question for the Prime Minister at all Brian?
CALLER:
These new roads you’re going to upgrade.
Do you realise 90% of the people that should be using them won’t be? Talk to tourism people around Ballarat, how it’s fallen. And also why in the hell can’t we get research back? We’ve got Australian scientists trying to get flu things out and you won’t even open the purse strings and give them a bit of money.
FAINE:
All right, look there’s a whole lot of things there Prime Minister, but the most important is the connection between your attitude and Jeff Kennett’s.
PRIME MINISTER:
Well can I just say Brian I have never called you or anybody else a Judas. I don’t know what gave you the idea that I have used that expression, I never have. Never. And the suggestion that I regard people who change their political allegiance akin to the behaviour of Judas is quite wrong. I can’t . . .
FAINE:
What is your reaction Prime Minister to having your attitude likened to that of the former Premier of Victoria?
PRIME MINISTER:
Well I have my attitude like, to the attitude of a lot of people I mean in the end I will be judged as Mr Kennett was, as Mr Keating was, as Mr Beazley will be at the next election. I mean I’m, I’ve been in this game a long time, people agree with me sometimes, they disagree with me other times. The petrol issue is hard. Brian asked about roads, road funding. I think road, increases in road funding will be very welcome. When I travelled around the bush at the beginning of this year, the two things that people kept talking to me about on a regular basis were not the price of petrol at that time, they talked to me about the availability of health services in rural Australia and they talked to me about the state of the roads. They were the two things that people talked about most frequently. They also talked about a whole lot of other things. Now we responded in the Budget . . .
FAINE:
But if you thought . . .
PRIME MINISTER:
On health services . . .
FAINE:
But if you thought people would stop whinging about petrol because you were spending money on roads, that has not happened.
PRIME MINISTER:
Yes but that is not the basis of the decision. I didn’t expect people to stop talking about the price of petrol because we foreshadowed a roads announcement. We foreshadowed a roads announcement and we’ll make a roads announcement because we think that is a better longterm investment in the future of Australia.
FAINE:
All right. Geoff in Mulgrave, morning Geoff.
CALLER:
Morning. Yes not a problem there. Now my comments on the BAS statements. I find the BAS statements actually a profit and loss return and that is probably where some of the confusion comes from. I’ve dealt with tax for a long time when it was sales tax when I handled sales tax to work out sales tax to send the return in. Now with the BAS statement everyone is still working I believe in the concept of tax where so many people have actually been sort of scared off with bad advertising.
FAINE:
Do you want the form changed now Geoff?
CALLER:
Well I will let you comment on this – a quick comment here on like the Government’s profit and loss statement it’s a duplication in some of the boxes, like you have invoices made . . .
PRIME MINISTER:
Yes I understand the point you’re making.
CALLER:
Okay, good. I feel if that was made a bit easier, it wasn’t actually a profit and loss return, I mean you possibly have your reasons for doing it that way. Businesses trading between each other, now I [inaudible] small, very small business.
PRIME MINISTER:
What sort of business Geoff?
CALLER:
I do bookwork, bookkeeping.
Okay, now I invoice my customers, I am fully registered, charge them GST. My customer gets my invoice and he claims my GST. Now at the end of the day for all this work that we do, there is a zero result. I pay my $200 for example on the invoice, they claim $200 in the invoice.
FAINE:
So the issue for the Prime Minister Geoff?
CALLER:
Well I believe businesses trading between each other if they’ve got fully, full registration should be able to be technically GST-exempt so they don’t have to have all this money going in and out.
FAINE:
All right, a rollback, a partial rollback Prime Minister?
PRIME MINISTER:
I am not . . .
CALLER:
See what’s happening . . .
FAINE:
Hang on Geoff I do want to hear from the Prime Minister on this.
CALLER:
Okay.
PRIME MINISTER:
Well I will take that on board as one of the many observations on the form. It goes beyond that though and I would like to think before I give a definitive response on what is in effect a proposal to change the system as distinct from the form, I can analyse it and consider it. I can’t promise that I am going to respond to it because it may have implications beyond what you imply.
FAINE:
Thanks Geoff, thanks for that indeed. Peter’s mobile, morning Peter?
CALLER:
Good morning John. Good morning Prime Minister.
PRIME MINISTER:
Hello Peter.
CALLER:
Yes, my comment is about the BAS statement. I have just recently filled one in, I am on a quarterly return here.
PRIME MINISTER:
Yes.
CALLER:
And I have found that the terminology used throughout the form was vastly different than normal accounting and bookkeeping terminology and therefore it added to an already confusion that existed because it was a very new form.
FAINE:
A whole new jargon that you had to learn?
CALLER:
It is.
PRIME MINISTER:
Yes, I have had that observation from a number of people. It’s one of those things that we do need to take into account. As I was saying earlier to Jon if it’s possible to simplify the form without robbing its value and taking away its value as a tool of running the new system then we will do so because we’ve no desire to burden people with unnecessary complexity. But inevitably when you bring in a new system you have to give the first version of the form a fair trail, you can’t react to the first criticism because that may not be validated by subsequent reaction.
FAINE:
But it sounds as if reading between the lines Prime Minister you’re conceding that a simpler version needs to be worked out.
PRIME MINISTER:
Well I am conceding what I said yesterday and I said if I could be persuaded it could be made simpler and still remain useful to the system well I would make it simpler.
FAINE:
Another Peter who is also mobile, good morning to you.
CALLER:
Good morning. Prime Minister you use the reason of the world oil prices as justifying petrol increases.
PRIME MINISTER:
As causing them yes.
CALLER:
Yes now you would agree I think that Australia is self-sufficient in liquefied petroleum gas?
FAINE:
LPG yes.
PRIME MINISTER:
LPG.
CALLER:
Okay, then how do you justify the fact that I as a pensioner find that the cost of LPG can fluctuate by as much as 11 cents a litre between Thursday night and Friday evening.
FAINE:
And the price overall has gone through the roof along with petrol.
PRIME MINISTER:
Yes well the price . . .
CALLER:
Is that because of the oil parity prices?
PRIME MINISTER:
That’s because we also price LPG at the world level and there’s no excise on LPG.
CALLER:
But why do you continue to do that?
PRIME MINISTER:
I beg your pardon?
CALLER:
Why do you continue to do that?
PRIME MINISTER:
Because you . . .
CALLER:
When you’re exporting millions of litres of . . .
PRIME MINISTER:
Can I just finish . . .
FAINE:
Hang on a sec Peter, we’ve only got a moment for the answer before the news.
PRIME MINISTER:
The reason you price at world parity whether it’s oil or LPG is that by fixing it at the world level you provide the right incentive for investment in exploration. The reason we are self-sufficient is because we have priced at the world level now for more than twenty years. If we hadn’t priced at the world level people would not have invested as much money and we would not be as self-sufficient. That is the reason why we have world parity pricing. And incidentally of course LPG has no excise so nobody can, I mean in a sense the LPG thing demonstrates conclusively that the principal driver of high fuel prices now is the world price and not local taxes.
FAINE:
Prime Minister thank you for taking our listeners calls. Thank you to all of our callers. Are you optimistic, very briefly Prime Minister, for the Australian cricket team in the test against the Windies.
PRIME MINISTER:
Well on form to date, yes, but then forty years ago on form before the test …!
FAINE:
Thanks Prime Minister we have to go.
[ends]