NEIL MITCHELL:
Prime Minister, Mr Turnbull. Good morning.
PRIME MINISTER:
Good morning, great to be with you.
NEIL MITCHELL:
Thank you. Prime Minister arguably we’re headed for a housing catastrophe. Tens of thousands of people could lose their houses if this happens. People are struggling to pay mortgages. The Reserve Bank has indicated interest rates could more than double to 3.5 per cent over a period of time. People could be forced out of their houses. I mean the banks estimate that one third of mortgage holders have got no buffer for increased repayments, they’re in trouble. Do you agree there’s a potential disaster?
PRIME MINISTER:
Neil, I think that’s a bit strong. What the Reserve Bank has indicated is that in the future rates are more likely to go up than down. Obviously, the cash rate is currently one and a half per cent-
NEIL MITCHELL:
But they did put three and a half per cent on it.
PRIME MINISTER:
Let me just explain - the variable mortgage rates around you know 5.3, 5.5 per cent. So they historically are low rates. Interest rates at the moment are being set by the Reserve Bank, or the cash rate is you know in what they describe as accommodative, in other words to encourage, they’re trying to stimulate the economy. Inflation is at the lower end of what they target for it - it’s a bit over two per cent.
So what they’re saying is that in the long term if you assume inflation at 2.5 per cent, then the neutral real cash rate would be about one per cent. That is neutral, neither stimulating nor slowing the economy. So it’s a theoretical concept, and that’s how you get to 3.5 per cent cash rate.
But they’re not saying that they’re going to go to that tomorrow but I think they’re sending a signal which is probably prudent, which is to say: ‘Ladies and gentlemen just be aware rates are more likely to go up than go down’, and you’re seeing that trend in other markets.
So borrowers should be aware of that. So in other words, don’t get over committed.
NEIL MITCHELL:
Okay, but what does that say to the average - if I’m sitting there with a mortgage now that I’m struggling to pay and I hear the Reserve Bank say interest rates are going up, now of course it worries me.
PRIME MINISTER:
Well of course it would worry you and that’s why-
NEIL MITCHELL:
So what do you do? What do you say to these people?
PRIME MINISTER:
What everyone should do is be careful not to get overcommitted.
NEIL MITCHELL:
Too late. A lot are committed and overcommitted.
PRIME MINISTER:
Well Neil as we all know, it’s not rocket science, you’ve got to be careful about not getting overcommitted and don’t assume that asset prices are always going to go in one direction. So prudence in managing your financial affairs is always important.
NEIL MITCHELL:
Would you agree though that we could be heading for a significant problem where people can’t afford to keep their houses?
PRIME MINISTER:
Well if interest rates were to go up dramatically that would obviously put a lot of pressure on people who are heavily committed in terms of their borrowings, that’s true. But we don’t want to be creating a sense of excessive anxiety. I just think it is always prudent to be aware that interest rates are low at the moment. They’re more likely in the future to go up than down, much more likely to go up than down. That’s the global trend. And that’s why it’s better if you’re buying your own home, not to buy it with an interest only mortgage but make sure you’re paying off principle and that’s the sort of common sense financial advice your grandmother would’ve given you so – it isn’t new.
NEIL MITCHELL:
So it’s not time for anxiety? It’s time for caution?
PRIME MINISTER:
It is time to be prudent in terms of managing your financial affairs and make sure you do everything you can to live within your means.
NEIL MITCHELL:
Do you think the banks will show compassion if people have got problems?
PRIME MINISTER:
Well we always expect them to. We always expect them to. Ultimately, their business is based on the goodwill of their customers.
NEIL MITCHELL:
Okay the economy you say is doing well and this is part of the interest rate factor of course. How is the average person going to benefit from that?
PRIME MINISTER:
Well obviously as the economy grows you’ll see more jobs. And we’re seeing good strong growth in jobs - well over 200,000 created in the last year.
But what we’re yet to see is stronger growth in wages. And so as the economy gets stronger there is more competition for labour, and you’ll see wages improve.
But I think we all want to see more jobs, more growth, stronger economy. Everything I’m doing and everything my ministers are doing is focused on that.
That’s why when I was at the G20 just a little while ago we were talking about more trade, opening up more trade opportunities with the Europeans, with the Indonesians, with the Brits and so forth.
NEIL MITCHELL:
And you think there’s a good case for pay rises in the near future?
PRIME MINISTER:
Well Neil it obviously depends on the circumstances.
NEIL MITCHELL:
But you’ve said all these other things are improving and wages aren’t?
PRIME MINISTER:
Well wage growth in real terms has been low - there is no doubt about that. And that is one of the things that is putting pressure on Australians.
NEIL MITCHELL:
So when does the average person catchup? When do wages go up?
PRIME MINISTER:
When businesses are able to, when the economy is growing fast enough and strongly enough so that businesses are able to afford to pay more for labour, and you know obviously stay in business and continue to do well.
NEIL MITCHELL:
So what’s the outlook on that do you think? Are the pay rises ahead in the next year?
PRIME MINISTER:
Neil, I can’t give you a forecast there but the one thing that is clear is that everybody benefits from a stronger economy. There is no question about that.
NEIL MITCHELL:
Are the changes to interest rates crucial to this? Sorry, penalty rates - are the changes to penalty rates crucial to this?
PRIME MINISTER:
Well the evidence before the Fair Work Commission was that if you brought Sunday penalty rates closer to Saturday rates, which is essentially what the decision was about, in those sectors - in retail and hospitality and fast food - you would see more jobs created. And you had a lot of evidence. I mean we’ve talked about this decision before. I’ve actually read it. There are dozens and dozens of witnesses who gave evidence and said: ‘If the penalty rates for Sundays and public holidays were not as high as they are, they were closer to Saturday then we would be able to put more people on.’
NEIL MITCHELL:
It’s obviously becoming politically difficult for you, the penalty rates decision. Are you still unequivocally supportive?
PRIME MINISTER:
Well we support the decision of the independent umpire, as indeed did our old mate Bill Shorten here, on your program in April last year. He actually said, sitting right here where I am, he said: ‘I support the independent umpire’ and you pressed him and said: ‘Even if they recommend a reduction in penalty rates?’ And Bill said: ‘Yes’, he did. And so he’s changed his mind.
NEIL MITCHELL:
Well let me press you - despite the political pain you unequivocally support the decision?
PRIME MINISTER:
I support the decision of the independent umpire.
NEIL MITCHELL:
Even though it is going to hurt some people?
PRIME MINISTER:
Well Neil the reality is that you either have an independent umpire that sets these wages and conditions or you don’t.
Now the union movement - of course this is one of their great arguments, they campaigned for this a century ago, for independent tribunals to do this, to give fairness and protection to working men and women. They’ve got the independent tribunal. It’s made a carefully considered decision. And of course what Shorten is now saying for completely political reasons and contrary to what the pledge he gave to your listeners, he’s backed away from it.
NEIL MITCHELL:
Prime Minister this report today about less tax for AFL footballers and it does apply other sportsmen as well, and its not a long bow to say it could apply to me if my image is used to promote AW, it could apply to you because you’re promoting the Liberal Party-
PRIME MINISTER:
I think that is a long bow but anyway.
(LAUGHTER)
NEIL MITCHELL:
Have you had a look at it?
PRIME MINISTER:
Look, I’ve read the report in the paper and I’ve made some enquiries about it this morning. It’s a draft ruling as I understand it. I’m not a tax expert by a very long shot and I think there will need to be more examination of this.
But I can just say as a matter of principle at a high level it is vitally important that everybody pays their fair share of tax.
NEIL MITCHELL:
It’s not a good look is it? I mean you’re getting $800,000 to play footy and you get a tax break.
PRIME MINISTER:
Well, again, I don’t know enough about the details. Certainly the way its presented in the press, and look I give credit to the Herald Sun for raising the public awareness about it, but I think what we now need is for the ATO to set out its ruling as it’s going to do.
NEIL MITCHELL:
Yeah I’ve read it, it is on their website. The Herald Sun report is right - it could mean $40,000 for some players. Good luck to them.
PRIME MINISTER:
Well again, that’s going to have to be considered but I can assure you from my point of view I believe that the objective should be for lower taxes, but everyone has to pay their fair share of tax. We don’t believe in a self-help approach to tax reform.
NEIL MITCHELL:
You’re amalgamation of various things into the Home Affairs Ministry under Peter Dutton, Tony Abbott – you remember Tony Abbott?
PRIME MINISTER:
I do indeed, yes.
NEIL MITCHELL:
Well I noticed your avoiding his name.
PRIME MINISTER:
No, Tony Abbott, don’t worry-
NEIL MITCHELL:
Oh, you’re going to use his name?
(Laughter)
PRIME MINISTER:
He’s a member of the Party Room yes, former Prime Minister, Member for Warringah - all those things.
NEIL MITCHELL:
He says that when he was Prime Minister his advice was not to do this, it was too bureaucratic. Did you get different advice?
PRIME MINISTER:
I can assure you that what we’re doing is absolutely consistent with the advice I received from my department over a year ago. It’s been worked on for, they’ve been working on it for at least a year. For over a year in fact. It is a recommendation to create a Home Office along the lines of the UK with Immigration, Border Protection, Australian Federal Police and ASIO.
NEIL MITCHELL:
Sure and the security agencies were happy with it?
PRIME MINISTER:
Let me just finish. It is absolutely, it is a proposal that has been around for a very long time. It is something that is very familiar. It is logical.
It will enable our great agencies to do an even better job of keeping Australians safe. In the 21st century Neil, it’s all about agencies being better connected, better coordinated, collaborating more closely, policy being aligned with the various agencies working together. So this is a long overdue reform.
The arguments that have been made against it in the past have been pretty much in the line of: ‘Oh, it’s a bit hard. It’s too much trouble. Is it worth it?’
NEIL MITCHELL:
Where did they come from?
PRIME MINISTER:
Well you know –
NEIL MITCHELL:
Is it the agencies, security agencies?
PRIME MINISTER:
Neil, various people over the years, I’m not going to identify –
NEIL MITCHELL:
You seem to be avoiding the point, not now, but over a period of time - are some of the a security agencies opposing to this?
PRIME MINISTER:
I have discussed this matter over a long period of time with our security agencies and indeed with other countries who have similar arrangements, particularly the Brits. I’ve discussed it with two Prime Ministers, I’ve discussed it with their Home Secretary. The British model is one that has been much admired and many people have said over a long period of time: ‘Wouldn’t it be great if we had this here?’
I think this is an opportunity for a long overdue reform. It is focused solely and wholly on keeping Australians safe.
NEIL MITCHELL:
But are some of our agencies objecting to it? Are some of our agencies recommending against it?
PRIME MINISTER:
No, the answer is I have not received objections from our agencies.
Again Neil, the bottom line is that I’m the Prime Minister, I make these decisions.
NEIL MITCHELL:
Fair enough.
PRIME MINISTER:
This is essentially a question of getting the national security architecture in the best shape to keep Australians safe.
We do not design these arrangements for bureaucratic convenience. We design them in order, we make changes always to optimise them so that our agencies can do a better job to keep Australians safe. That’s the objective.
NEIL MITCHELL:
A local council here in Victoria, Casey Council wants to ring back national service for 18 year olds, two years compulsory. What’s your view of national service?
PRIME MINISTER:
Well -
NEIL MITCHELL:
They want to clean up the streets.
PRIME MINISTER:
I understand the arguments in favour of it but I think it’s something that you’d need to look at very carefully.
Again, I won’t give you an off-the-cuff answer to that. I think it’s probably an idea that sounds better in theory than it would in practice.
National service is part of our history. I don’t think there’s any move for or momentum for or interest in starting it up again.
NEIL MITCHELL:
Did you register for the draft?
PRIME MINISTER:
No, I was too young. I was too young.
NEIL MITCHELL:
Were you? When did it finish? ‘72? Gough got rid of it didn’t he?
PRIME MINISTER:
Yeah that’s right. Yeah.
NEIL MITCHELL:
How old were you in ‘72?
PRIME MINISTER:
Well I was born in ‘54 so I turned 18 in ‘72.
NEIL MITCHELL:
Fortunate. Have you got anything further on Sophie Dowsley? Australian woman missing in Canada for 12 days? There are reports today the body of her partner has been found but her family is desperate for the search to continue. Anything you can do there?
PRIME MINISTER:
We are certainly working, our Consulate services, consular services staying in close touch with the Canadian authorities.
I just want to express our sympathy to the family. Obviously they’re so anxious about their daughter and her partner and their situation.
I can’t provide any further information officially. I’ve seen reports in the media about it but we’re providing every support we can to the family from a consular point of view and obviously any support that the Canadian authorities seek from us, we’ll provide.
But they are obviously doing – they’re very familiar as you can imagine, with searching for people lost in forests – they are doing everything they can to find the young lady and her partner.
NEIL MITCHELL:
And you’re doing the same in Minneapolis obviously?
PRIME MINISTER:
We are yeah. That is a terrible story. I spoke to Justine’s dad yesterday about it and gave him our love and sympathy. I mean, what a terrible tragedy.
The whole incident with the shooting of Justine is completely and utterly inexplicable. It doesn’t make any sense that a 40-year-old woman going out to speak to police officers in her pyjamas how she could been seen as a threat. It is inexplicable but obviously, there is going to be an explanation and the Mayor of Minneapolis has said she’s going to have a full enquiry and deliver that and we expect that to be done. So Australians and in particular the Ruszczyk family are entitled to answers.
NEIL MITCHELL:
Victoria and Queensland seem to be in competition for the $20 billion contract to build Army combat vehicles. Do you support Victoria?
PRIME MINISTER:
I support the process of the tender process. It’ll all be evaluated very objectively and in the national interest and with a very high degree of probity.
NEIL MITCHELL:
Now, are you sure all your Members of Parliament are not dual citizens? Everybody is clean?
PRIME MINISTER:
I’m satisfied that they are. But I’ve got to say, this story with the Greens, losing two out of nine.
NEIL MITCHELL:
Is it time to change the Constitution? Is it out of date that clause?
PRIME MINISTER:
Well no I don’t think it is Neil. Look I don’t think it is unreasonable for the Constitution to require that if you want to be a Member or a Senator in the Australian Parliament, you should be a citizen of only one country and that’s Australia.
Lots of Australians have dual citizenship. These two Senators knew exactly what the rules are. When you nominate for Parliament, you’ve got to fill in a form and there’s actually a question about section 44. So your attention is drawn to it.
Now why somebody who knew they were born in New Zealand or in Canada would not have said: ‘Gosh, I better make sure I’m not still a citizen,’ why they wouldn’t have turned their mind to it and dealt with it, is beyond me.
NEIL MITCHELL:
He who shall not be mentioned, Tony Abbott – well, you told me when you were here last time, it was sort of the media getting overheated.
PRIME MINISTER:
Yeah well that’s right.
NEIL MITCHELL:
Since then you’ve had your party president, you’ve had all your ministers lining up saying we’ve got to sort this out. Nick Greiner said: ‘Why don’t you sit down and talk like adults?’ Isn’t it impossible to, you know -
PRIME MINISTER:
Well I look forward to having a chat with him when I catch up with him next. There’s no, I’ve got no problems. You know, I’ve known Tony Abbott for, cripes, I’ve known Tony Abbott for 40 odd years. So -
NEIL MITCHELL:
So you’re happy to sit down with him but is this destructive or not? Your ministers seem to think so. Your party president thinks so.
PRIME MINISTER:
Well I would rather that all of our members, without singling anyone out, I would rather all of our members focus on the extraordinary achievements of the government. We’ve been in government, in office since the election, for a bit over a year - look at what we’ve done. Look at all the things that we’ve talked about over the year here Neil in your studio, but you know, I think that you thought and probably I feared, that we would struggle to get through the Senate, and we’ve got through the Senate.
NEIL MITCHELL:
So what’s wrong with picking up the phone and saying: ‘Tony, green tea, my office, lets talk about it’? And putting that to him? I mean, you’re both adults, you’re both presumably have the interest of the country and the party at heart.
PRIME MINISTER:
I look forward to catching up with him again soon when Parliament gets back if not before. I’ve known him-
NEIL MITCHELL:
You reckon you can fix it?
PRIME MINISTER:
I was going to say I’ve known him for a million years – it may feel like a million years – it’s about 40 years.
NEIL MITCHELL:
Do you think you can fix it?
PRIME MINISTER:
The important thing is politics is a team business and we’ve got a great story to tell and we should be focused on the great achievements that the government and the good things we are doing.
NEIL MITCHELL:
He’s nominally part of the team. Is he playing like a team member?
PRIME MINISTER:
I’ll leave the commentary to others but Tony is a former prime minister, he is a guy I’ve known for a very long time and I look forward to him playing a constructive role and talking about the considerable achievements of the government both in the previous parliament when he was PM and I was PM and now since the election.
NEIL MITCHELL:
But is he playing a constructive role now? Is he being constructive?
PRIME MINISTER:
Well, again, Neil, I’ll leave you to do the commentary.
NEIL MITCHELL:
Leave the commentary to others, okay. Will you ever retire?
PRIME MINISTER:
Will I retire? Will I stop working? I assume so.
NEIL MITCHELL:
Well, look, the UK has brought the retirement age up to 68, I noticed and we’re going the same way.
PRIME MINISTER:
Yeah, right, okay.
NEIL MITCHELL:
Now I don’t mean as Prime Minister.
PRIME MINISTER:
Yeah sure.
NEIL MITCHELL:
Obviously you’ll leave that one day.
PRIME MINISTER:
Yeah sure.
NEIL MITCHELL:
Tony Abbott will make sure of that.
PRIME MINISTER:
All good things come to an end I suppose.
NEIL MITCHELL:
(Laughter)
So, will you retire or not? Will you keep working?
PRIME MINISTER:
I think I will always, subject to my health of course, I think I’ll always be working. In fact a great friend of mine is a guy – have you ever had him on the show? Ian Hickie – the psychiatrist?
NEIL MITCHELL:
Yes.
PRIME MINISTER:
He and Pat McGorry are sort of Bobbsey Twins in that kind of top flanking area of psychiatry. Anyway, Ian has made the point to me, one of the big challenges for older men, middle aged and older men is that they work very, very hard, in particular and they’re not very good at coping with stopping work. So one of the things that he says, what people should actually not retire. Obviously a particular job comes to an end but the important thing is to keep active and engaged and involved and you know, that’s where things like men’s sheds are very important – I think it is important to stay involved and engaged.
NEIL MITCHELL:
Thanks very much for your time.
PRIME MINISTER:
Good on you, great to be with you.
NEIL MITCHELL:
We might take nominations – a job for Malcolm Turnbull when he retires.
(Laughter)
PRIME MINISTER:
Okay, good – a long time off, many years to come.
[ENDS]