Subjects: Salinity and water quality strategy; fuel policy; education funding
E&OE……………………………………………………………………………………
PRIME MINISTER:
Ladies and gentlemen the COAG meeting has concluded. It’s been a very successful meeting, I’m very pleased to announce that the Commonwealth and the States have reached agreement on the Commonwealth proposal in relation to salinity and water quality. We have asked our officials to commence work forthwith on drafting a framework agreement which we hope to have ready for signature in December. The Commonwealth will contribute $700 million of new money and the State’s will match that money on a dollar for dollar basis. As you already know we’ve identified about 20 catchment areas around the country that will receive attention. This is a truly historic agreement between the Commonwealth and the States to tackle one of the most serious, if not the most serious, environmental difficulties that Australia has and I am delighted to record my thanks to the States for the very constructive attitude that they have all readily taken in this very important issue. And it will be seen around Australia as an essential first step, it is only a first step but a very essential one in tackling this problem. The communique will outline in more detail what was discussed and what was agreed.
I am also happy to say that we reached agreement in relation to the continuing importance of the process of reconciliation, with a special emphasis on achieving progress on practical measures to improve the employment and other opportunities, the business opportunities, for indigenous Australians. The council did have before it in the context of reconciliation some statistics which showed a rather more significant improvement in the opportunities for indigenous people in a number of areas than is commonly recognised, or remarked upon, in the community.
As you can see by the document we were signing, we reached agreement on a national system of standard of food regulation, which is a very important step forward. We have also agreed to examine the current plethora of ministerial councils to see if there couldn’t be a little more streamlining in that area. We reached broad agreement in relation to national competition policy which, albeit there are some differences of emphasis here and there, we generally regarded as very positive from the point of view of the country’s situation. I think that constitutes the bulk of the agenda items. We also agreed upon the need to continue cooperation and coordination at every stage between the Commonwealth and the States regarding compliance with quarantine obligations. I pointed out to my colleagues that in recent weeks we had some success on the World Trade Organisation front, both in relation to beef in Korea and also potentially lamb exports to the United States. And because of that we had a particular onus to ensure that we observed our obligations internationally in relation to quarantine. I recognise the importance in particular parts of Australia, including Tasmania, of the impact of some of these measures and I think that there will be continuing very close cooperation between the Tasmanian Government and the Commonwealth Government on that.
The issue of petrol pricing was raised under other matters and all of us are unhappy about the high price of fuel caused by the doubling of world oil prices by the oil producing countries. The States have asked that the indexation adjustment, or at least the GST spike thereof, be deferred in February against the background of potential increases in revenue collections from the resource rent tax. I pointed out that the Commonwealth, as well as acknowledging as I have that we would be collecting some extra revenue from that source, we will be outlaying more resources in other areas, private health insurance rebate as well as the Aged Persons Saving Bonus and that we didn’t see our way clear to acceding to that request. I readily agreed to a suggestion that the next COAG meeting consider a paper on energy policy which I believe is something that should be discussed extensively between the Commonwealth and the States. There is already a lot of discussion between us but I don’t think we can do other than benefit from further discussion. I did indicate that the Commonwealth in the months ahead had to address a number of issues that could involve additional spending - defence, there’ll be a defence white paper in December. There’s obvious advocacy in favour of additional spending in the area of technology and science. There’s continuing requests for additional expenditure in relation to roads and of course there is the overriding importance not to run down the budget surplus and so exert further upward pressure on interest rates.
I also indicated that one part of the Commonwealth budget continued to be under some kind of threat from the commitment of the Australian Labor Party and the Democrats to reject one of the indexation measures contained in the last budget. An issue that perhaps has slipped from the memory of some people but it still remains there as a, if it’s implemented and it would be very foolish if it were, a potential threat to one aspect of the Commonwealth budget.
I think I can say on fuel prices that nobody’s happy about the present levels. It is due to what has happened to the world price, we would wish it to be otherwise but we don’t see ourselves able to accede to the proposition that’s been put for the reasons that I’ve outlined.
JOURNALIST:
… a special summit on the issue?
PRIME MINISTER:
No I haven’t agreed to a special summit. I’ve agreed that the next COAG meeting, which I anticipate will be in the first half of next year, should have before it a paper to be generated by the officials on energy policy matters.
JOURNALIST:
And what would you expect those energy policy matters to deal with?
PRIME MINISTER:
Well I think it’s too early to speculate. I have a completely open mind if people have fresh ideas and proposals. I don’t regard Canberra as having a monopoly on wisdom in these matters. I’m very open to ideas and suggestions and we can only but profit from exchanging ideas.
JOURNALIST:
But not a freeze on excise?
PRIME MINISTER:
No, it has nothing to do with a freeze.
JOURNALIST:
…press for the freeze despite rejection today?
COURT:
We’ve put the case forward today to forego the GST spike and I am disappointed that it hasn’t been accepted but we appreciate in relation to developing a national fuel strategy. I believe this country has to take a different tack. We have an abundance of some forms of energy, particularly gas, and I believe that we can better utilise that to lessen our dependency upon the international oil scene and the effect that that has on petrol prices. Look we all know there is a lot of pain out there at present, as a result of these high prices and we are just looking for ways in which some relief can be found.
JOURNALIST:
So do you accept defeat?
COURT:
No I don’t accept defeat, the Prime Minister knows my position and I will continue to put that case.
JOURNALIST:
How important is it to have a summit?
COURT:
I am not aware of anyone talking of a summit. The Prime Minister has outlined that the States and the Federal Government will address this question of a fuel, national fuel strategies. And in the first half of next year we will be able to present some initial papers on that. I see that as a positive step forward because I have been quite outspoken that in relation to the direction we’re going on fuel we are not taking advantage of our strengths and similarly there are some issues to do with fuel efficiency, environmental issues, where as a nation we’ve got to be heading down a different path.
JOURNALIST:
…Federal Government is hoarding a windfall to spend at the next election?
BRACKS:
I think that the figures show that the revenue the Commonwealth will collect will be somewhere in excess of $600 million over and above that anticipated, from the original estimates and that’s to do, as the Prime Minister said, that’s to do with the increased price of petrol, US $32 a barrel plus, and that means the tax and the excise and the GST is collected at a higher rate.
PRIME MINISTER:
The excise is not at a higher rate.
BRACKS:
The simple proposition put was that the GST spike should be given back in a one cent reduction in excise next February.
JOURNALIST:
Can you possibly have a COAG meeting discussing a national fuel strategy without looking at the question of fuel taxes?
CARR:
My view is that we can. I want to see it devote time to an improvement in the fuel efficiency of vehicles, looking at alternative fuels, and alternative vehicles, and how we can encourage their entry into the market. I want to see it come up with policies to attempt to tackle the rapid growth in vehicle use in our cities. We’ve now got a trend away from fuel efficient vehicles to vehicles that are voracious in their use of fuel. These are the sort of matters a COAG meeting, call it a summit if you want, could devote itself to next year and I see it devoting its time to that rather than an argument over petrol prices which by that time would be somewhat stale.
JOURNALIST:
[inaudible]
PRIME MINISTER:
No I see it as an ordinary meeting. I mean let’s not, c’mon fellas, I mean let’s do better than that. Let’s not get hung up about the word. It is an ordinary meeting of COAG at which the issue of energy policy will be discussed. I welcome that. I guess in the end a lot of people will still say well we need more tax incentives for this that or the other. I mean that tends to come out. But look, I have an open mind and if there are different ideas that can be contributed I think that’s excellent and we can only benefit from that. But I believe in the COAG process and it does involve cooperation between the Commonwealth and the States.
JOURNALIST:
[inaudible] not possible to get a short term benefit for Australian motorists.
CARR:
No we argued, the Premiers argued very very strongly for it. The Premiers put up a heroic case and in this federation the Prime Minister’s got the purse strings and the ultimate power over Commonwealth taxation as you know.
JOURNALIST:
[inaudible]
BEATTIE:
Can I say that one of the most significant breakthroughs as far as Queensland is concerned took place today. The Prime Minister indicated to COAG that he was prepared, outside the $700 million from the Commonwealth, outside that to look in terms of broad principles, the compensation issue. Now Queensland has maintained this position for some time and that to us was a significant breakthrough. That is to us the possibility of solving the tree clearing issue in Queensland. Now you’ll be aware that the National Farmers Federation and Queensland Farmers Federation have been supportive of the package. There are some differences in Queensland between Agforce and the Queensland Farmers Federation. But that as far as I’m concerned, as far as Queensland is concerned is a significant development, a significant development because while Queensland doesn’t have the salinity problem that other states do because we didn’t clear our land like other states have and I’m not being critical. That’s just an historical fact. What we needed to do and this is what I said before, we needed to have preventative strategies in place to avoid salinity developing in the first place. So what the Prime Minister did today was significant to Queensland’s position which is why we have signed off. We are very supportive of this package. It is not only in the national interest but in the interests of Queensland, and subject to these principles being worked through in terms of compensation, will go a long way if not the full way in resolving the tree clearing issue in Queensland.
JOURNALIST:
You’ve made no bones though about the fact that petrol was the main issue you were coming down for, what’s your reaction?
BEATTIE:
Well I’m disappointed with the outcome as Bob Carr indicated. The Premiers advocated very strongly for a particular position which you’re aware of. The Prime Minister explained his position in relation to the case. I have to say that while it’s not what we wanted, and I intend to continue to agitate for this as I’m sure Richard will, I do think it significant that the next COAG meeting will sit down and talk about the whole fuel strategy. Now that’s something that I supported at the meeting as did other Premiers. The reason for that is there are many ways that we can actually save on the use of fuel to begin with. I mean we are one of the most urbanised nations in the world and reducing fuel consumption, petrol consumption is not only environmental important but it saves dollars as well. As you know in terms of our energy strategy in a broader sense we’ve moved to a 15% generation from gas, or we are. We’re prepared to look at other opportunities like Richard’s talked about, to have a greater use of gas to reduce the pollution issues generally. Now that’s not where we set out in this. As I said I’m disappointed. We’re going to continue to agitate but at least there has been some progress made in dealing with the broader issue of a fuel strategy.
JOURNALIST:
Prime Minister could you explain how the windfall that you said there would be, a little bit of a windfall from the Resource Rent Tax on petrol, how not being able to give that back would hurt the dollar? As you suggested this morning?
PRIME MINISTER:
Well I haven’t used the description windfall.
JOURNALIST:
Okay, well whatever word you used.
PRIME MINISTER:
Look I have acknowledged for some time that as a result of the higher world price of crude oil there would be some increase in collections of Resource Rent Tax and that could be in the order of $500/600 million, some hundreds of millions I am not quite sure exactly how much.
JOURNALIST:
Above what?
PRIME MINISTER:
Above what we provided for in the Budget, assumed in the Budget. Now what I am saying is against that you’ve got to put the fact that we’re going to have to find another $500 million to fund the tax rebate on Private Health Insurance because of the fantastic popularity of that policy which is now endorsed wholeheartedly and warmly even heroically by the Australian Labor Party. And also the additional collections, the additional cost of the Aged Persons’ Savings rebate under the tax plan. So you’ve got $1.1 billion there. Now we will have a mid-year economic and financial overview in a few weeks’ time. I don’t know the final details of that there may be some other areas where you’d get some additional revenue, I haven’t been advised, I am not in a position to know that. But it’s very important that we don’t run down the surplus at the present time, very important indeed. That would have negative impacts on interest rate expectations and for a whole lot of other reasons, it’s important that Australia be seen as running a tight fiscal ship at the present time.
JOURNALIST:
What would it mean for the dollar?
PRIME MINISTER:
Well look you know I don’t talk about the dollar.
JOURNALIST:
You did suggest this morning that . . .
PRIME MINISTER:
I don’t talk specifically about the dollar, you know that.
JOURNALIST:
You did suggest this morning that if the Premiers got their way . . .
PRIME MINISTER:
Did I suggest it?
JOURNALIST:
…get their way, the dollar could, I think you said . . .
PRIME MINISTER:
No well I never, I will go back and see what I actually did say this morning I may have, I don’t think I actually used the expression dollar.
JOURNALIST:
You said currency.
PRIME MINISTER:
Well look can I put it another way in a, I know you want to be helpful, can I just say that it’s enormously important at the present time that the perception of Australia is that we are being fiscally very responsible. In the short term we’re taking a lot of political heat on petrol and it’s easy for anybody to attack us at the moment on the price of petrol whether you’re a Liberal premier, a Labor premier, a motoring organisation or anybody else. And I have to accept that, I have to wear it. But it’s a short term political difficulty for me and I understand that. But there are some longer term considerations. There’s the interest rate outlook, there are those other issues that I talked about and there’s also the other obligations that we have as the national government in areas like defence and roads and science and all of those other things. Now that’s the view I’ve got to take. Now I come back to what I said at the beginning and that is that and I said it at the meeting, that issue would not even have been raised under other matters if the world price of oil had not doubled over the last eighteen months.
JOURNALIST:
Peter Beattie, you’ve been continually warning of an electoral backlash over fuel and continued high prices, are voters simply going to be happy with the premiers getting together again in a few months time and having another talkfest on fuel?
BEATTIE:
No they’re not. This is going to be an ongoing problem. There is a lot of anger out there in the community. This is impacting not, doesn’t matter what the reasons are, this is impacting directly on family budgets, on small business people, on regional communities and rural communities, there’s no doubt about that which is why this issue was raised and supported by the premiers today. Now obviously it’s a matter of communicating those issues over a period of time but as I’ve said I’m disappointed and indeed I will continue to agitate.
JOURNALIST:
Premier Olsen ….Are you happy with the outcome for salinity and what would you like to see in the dotting of the ‘i’s’ as it were and the crossing of the ‘t’s’?
OLSEN:
I think the outcome of today is what I would consider an outstanding achievement, this stage of the salinity strategy with water quality as stage one. We have referred to the Natural Resource Ministerial Council the option to pick up subsequent stages, to commission studies, to look at where we go post the seven years because the rehabilitation of the Murray-Darling Basin System and the river system will not occur as a result of this first step. This is one step of many over many decades that it will take to rehabilitate the whole river system. But the way in which all Premiers and Chief Ministers and the Prime Minister have endorsed the plan today is a historic first step to rehabilitate that river system. And the fact that the Prime Minister was prepared to, as Premier Beattie indicated, separate out the clearance component to it and that the Snowy Corporatisation Scheme is not part of this. This is new money, a new deal, with matching funding from the states to which South Australia of course is more than willing to do so as are the other states and territories.
PRIME MINISTER:
Can I just add one thing so there’s no misunderstanding about this. It was always part of the Commonwealth proposal as circulated to the states that we would make a contribution in the area of compensation and I welcome the positive comments that Peter Beattie made about that. But that was always our intention, perhaps the ambience of the meeting enabled that to be better understood.
JOURNALIST:
Is there any firm commitment on compensation, or is that to be worked out?
PRIME MINISTER:
What I have said in relation to that is that although compensation for landowners, for the loss of rights is constitutionally the responsibility of the states and according to those lines of responsibility they would be expected to meet the full cost, the Commonwealth from the beginning recognised that because of the potential magnitude it would only be reasonable for us to make a contribution. That contribution will be more than nominal. The exact size of it you can’t talk about now, you won’t be able to know for probably two or three years until we’ve worked out the details of the various catchment plans. But the point I emphasise is that that was in our original proposal and I am very pleased at the support that all of the states have given. I think this is a truly historic achievement because, it’s a very important first step. This is for the longterm, this is for future generations. We often talk rather glibly about future generations, but doing something about salinity and water quality is an enormous investment in the future of this country and I am very proud to have been Chairman of a meeting of political leaders in Australia that had the vision to grasp the importance of that and in a very even-handed way. Dollar for dollar everybody making his contribution and playing his part. Now that’s quite encouraging.
JOURNALIST:
Given the strength of feeling about petrol, were any of you tempted to take-up, or are you tempted to take-up the Prime Minister’s suggestion of the other day that you should use some of the money you get back through excise to subsidise at a state level the petrol price?
COURT:
Well perhaps I can comment there. We have already started to provide financial incentives for people to convert to gas. The issue was raised – what tax incentives might be offered. Well we’ve got the best possible tax incentive now. There is no fuel excise on LPG. So people that are running vehicles on LPG are some 40 cents a litre better off. That’s why we’ve offered in Western Australia a package, some $500, if people are converting or if they buy a dedicated gas car. One of the manufacturers has provided additional support, and I’ll name the manufacturer. In Perth you can buy a Falcon, gas or petrol, at the same price but one is significantly cheaper to run. So that’s how we have been using some of our royalty revenues to encourage people to use alternative forms of fuel. But the tax incentive is there. There is no Federal fuel excise on LPG and to me that is a very, very significant tax advantage.
JOURNALIST:
…your loss today in not getting a cut in fuel excise, does that damage you electorally (inaudible)
COURT:
Oh look, all politicians are being knocked around with high fuel prices. We’ve got to do what we can to address the situation both short-term and long-term.
JOURNALIST:
Did the States put any complaints to you about the new school funding system and if so, was there any concessions made or any agreements reached?
PRIME MINISTER:
My colleagues will correct me if I am less than accurate but we did discuss education. I don’t recall any Premier saying that they are unhappy with the new formula for independent schools. In fact, many of them said they supported the fair funding of independent schools. One or two Premiers said they were anxious that there not be too much Federal intervention in the running of State schools – too many conditions attached. I said that I’d be happy to converse with them about that. I do take the view, however, that they acknowledge that where there’s Federal money, the Federal Government has the right to see how it’s dispersed. I think they reacted fairly well, I hope they did, they can speak for themselves, to my assurances that we wanted to maintain strong support for Government schools and it is no part of our agenda to rundown support for Government schools. I thought it was quite a constructive discussion on education but my colleagues will no doubt want to add to that and I can see them anxiously wanting to do so.
BEATTIE:
As you’d appreciate, a number of us did raise the issue of education. I did express some concerns about the long-term funding of State schools to ensure that they are properly funded in the occasion because we want to maintain them providing the high level of education they currently do. The Prime Minister’s correct, I did raise as did some other Premiers, concerns about performance requirements by the Federal Minister for Education and what that could mean for funding for State schools in that that money could well be withdrawn. And other Premiers raised that issue as well. The Prime Minister has agreed for us to make on-going submissions to him on that. I thank him for that. But the issue was raised in relation to funding of State schools. The Prime Minister explained his position and how the formula would work. I did indicate that I felt there needed to be a greater deal of exchange of information between my education department and the federal one. The Prime Minister has indicated he’d be happy to help facilitate that. So yes, those issues were raised. The Premiers of Victoria and New South Wales also raised some issues in relation to it. There will be on-going contact directly with the Prime Minister on it.
CARR:
I don’t think it’s unfair if I say that the Labor Premiers intend to meet to look at some modelling material that’s been produced in Queensland about the long-term effect on State schools of trends in Federal funding. We want to look at how that work would apply in our own States. We’ve used that work to feed material back to the Prime Minister – taking up his invitation – because we are, that is the Labor Premiers, we are concerned about the impact on the State school sector of various aspects of Dr Kemp’s approach. We certainly did raise the impact on our federal structure of powers given in the current Federal legislation to the Federal Minister for Education to intervene in State school systems. They would appear to stand on its head any reasonable notion of the balance of powers in the federal system.
PRIME MINISTER:
I don’t think it would be, to adopt the Premiers phrase, unfair of me to say also that nobody criticised the new funding formula for independent schools – nobody criticised the new funding formula, not for independent schools.
BEATTIE:
The Prime Minister is quite right. In fact, I made the point that we didn’t want to see one cent go out of any private schools. What we wanted to do was see the State schools funded adequately and fairly. So the Prime Minister is quite correct.
PRIME MINISTER:
And it’s also fair to say that I assured the Queensland Premier that it is our intention to do that and that we have an equal commitment within the historic responsibilities of the Federal and State Governments, an equal commitment to State schools. I reminded the meeting of the debt that I owe the State school system in New South Wales.
JOURNALIST:
Mr Beattie, your agreement today on the salinity package, is that at all conditional on the details of compensation?
BEATTIE:
No and this is why I said it was significant what the Prime Minister put on the table. I wasn’t aware until today’s meeting that in fact the compensation issue and the principles that the Prime Minister talked about are separate from the $700 million. That is significant in that the $700 million deals directly with salinity. And while we have less problems than other mainland States, the key issue for us is not just dealing with salinity, it’s also dealing with tree clearing to prevent salinity happening. So when the Prime Minister indicated the principles of compensation were on the table, that was significant in terms of our support for the package. We now have an opportunity to resolve these issues and I would appeal to farmers across Queensland to work with both the State Government and the Federal Government to resolve these land use issues, to avoid some of the problems that have occurred elsewhere in Australia.
[Ends]