E&OE....................................................................................................
MITCHELL:
Mr Howard, good morning.
PRIME MINISTER:
Good morning, Neil.
MITCHELL:
The loss of those fire-fighters really shook you up a bit, didn't
it?
PRIME MINISTER:
Yes, I have always felt that when a violent, untimely death...it's
always sad, but when it happens to people who have put their lives
on the line voluntarily for others there's a special heart-breaking
factor, there's a special poignancy about it and I think all
Australians feel that. And as I said yesterday, things associated
with bushfires and the terror that they invoke is very deeply embedded
in the Australian psyche and it has a particular sadness for me.
MITCHELL:
Yes it does. Is there anything the Federal Government can do? I
see talk of a memorial to volunteers in Canberra or help for the
families. What sort of things are you pursuing?
PRIME MINISTER:
We're obviously willing, as a Federal Government, to do whatever
we reasonably can in relation to the families affected by this tragedy.
The question of having some kind of memorial for people who have
lost their lives in this kind of voluntary service has been made.
It was, in fact, made yesterday by Mr Beazley. I'm having a
look at that. Clearly it's a nice idea. Of course, the most
important thing is to ensure that every practical measure is taken
to minimise the possibility of this kind of tragedy occurring in
the future. Now, I'm not being critical in saying that, I'm
just making an obvious comment and investigations are going on and
I'm not going to pass any comment about what happened. It's
a terribly dangerous business. And that, of course, is the point
I made yesterday, that when people risk their lives in a purely
voluntary capacity it's a big thing they do and it's the
ultimate thing anybody can do for his or her community and that's
why I thought it was a particularly sad event.
MITCHELL:
Yeah, as I say, they really need to get the message too. On the
edge of the summer this is going to really kick them in the guts.
On the edge of a big summer the people are with them.
PRIME MINISTER:
Well, they are and I just say as best I can to them, we owe you
an enormous debt of gratitude. It is very risky. It's only
the beginning of summer and it is just such a heart-rending event.
MITCHELL:
Also very disturbing, these letter bombs, particularly as they're
targeting, well, they're targeting people who work for you,
work for us, tax officials.
PRIME MINISTER:
Yes. It's a reminder that that kind of urban terrorism, I
suppose, is a modern day reality in every society. We've been
refreshingly or relatively freer of it than most other societies
and I hope that continues to be the case but unhinged human nature
can become a very lethal weapon if it's, you know, is triggered
off by particular events.
MITCHELL:
I suppose it means we're stuck with higher levels of security
really, doesn't it?
PRIME MINISTER:
I'm afraid we are. It can be a nuisance but it's a price
everybody should feel is worth paying because it can minimise the
impact of this kind of behaviour. It can save lives, it can prevent
serious injury and we have been remarkably free of this kind of
thing. We've had our huge tragedies and mass murders we're
all very conscious of but we have been fairly free of this kind
of thing and I only hope it continues.
MITCHELL:
Mr Howard, the banks, now they're delaying, most of them,
well, they all are at this stage, not passing on that cut in official
interest rates until next year. Some of them, it's reported,
can make $250 million out of that. What's your reaction
they should do it?
PRIME MINISTER:
Well, I don't, I'm not sure that those figures would
be completely accurate but it does indicate a point that I made
last week and that is that we still need more competition in the
banking system. I made that in the context of responding to questions
about possible mergers of the four big banks. We have got more competition
now than we had a few years ago, particularly in home lending and
small business lending, and that's due to the entry of new
players like Aussie Home Loans. We need still more competition,
particularly in the small business area. But the good news about
interest rates is that they are lower now than they've been
for 30 years.
MITCHELL:
I can't understand. I talked to Aussie Home Loans, well, ten
minutes after the announcement they'd decided their interest
rates was coming down and was coming down from the next day. Now,
I don't want to talk up Aussie Home Loans but why can they
do it and the banks can't?
PRIME MINISTER:
Well, I can't really answer that question except to make the
point that if people are unhappy with that and I can understand
why they might be then that's all the more reason why
we should push hard to have more competition.
MITCHELL:
When you say more competition, you'd like to see more banks.
PRIME MINISTER:
Well, I'm not saying whether or not a group of people should
form a bank except to state the obvious and that is that if people
want to get together and form a bank, providing they comply with
the law and the prudential requirements and they safeguard the assets
of their depositors, then good on them, we believe in that. I don't
think we're going to see all that many more major banks. I
don't think that's likely to happen. But what we've
seen over the last few years is a dissolving of the divisions between
banks and non-bank financial institutions. And we now have, really,
the emergence of a generic group of organisations that provide a
variety of financial services, some of them traditional banking
services, others, all sorts of other non-traditional but nonetheless
important financial services.
MITCHELL:
So you think these community banks are a good idea, if you win
the war?
PRIME MINISTER:
Well, if they work...I mean, look, I'm for competition
and I don't think it's the role of the Prime Minister
to say who should or should not start a business in this country
or who should or should not stay in business. And no government,
no Prime Minister, can guarantee that everybody in business is going
to remain there and make a profit and I can't ordain who ought
to go into business. Our job is to establish a proper regulatory
and prudential framework so that if people do establish the business
of banking, those who deposit their funds with those institutions
are well looked after. But it is obviously an expensive business
and I do understand that maintaining an extensive branch network
throughout a very vast country such as Australia is a very, very
big undertaking. And many people go into the financial...offering
financial services do want to pick the eyes out of those financial
services to have the high volume, low concentration, as far as assets
are concerned, activities but not undertake the economic responsibility
of having an extensive branch network in a big country.
MITCHELL:
There is an argument, though, is there, the banks have been a bit
greedy? I mean, the profits are high and good on them, they're
entitled to have high profits, but at the same time the fees are
bordering on the unreasonable now.
PRIME MINISTER:
Well, there's a lot of anger about many of the fees and this
is really why, I say again, the more competition we can have the
better. And there's no doubt that home loan interest rates,
in particular, are lower now because of competition. They would
not be as low as they are now had it not been for the competition
of entrants like Aussie Home Loans.
MITCHELL:
So how do we get other banking fees down?
PRIME MINISTER:
Well you continue to maintain the line in favour of more and more
competition and that's one of the reasons why the Government
is not budging on its attitude towards bank mergers.
MITCHELL:
You've firmed up on that, if anything, haven't you?
PRIME MINISTER:
Well, we were never going soft on it. People, for reasons I don't
quite understand, chose to misread some remarks I made a little
over a week ago when I spoke to the National Farmers' Federation.
Our position has been, all along, that we would only agree to bank
mergers if we were satisfied that there was a much higher level
of competition than was obtaining about 18 months ago. Now, there
has been some improvement over that period but there's still
a long way to go.
MITCHELL:
Do you think the banks are greedy?
PRIME MINISTER:
Well, I think they're very profitable and they're very
successful and that is a good thing. Successful banks mean that
you've got a stable banking system. And one of the things that
has to be said about what's happened in the Asian Pacific region
over the last two or three years is that bank failure or the failure
of the prudential and regulatory systems of those countries is one
of the reasons why they've been plunged into economic chaos.
And one of the reasons why Australia has done a lot better than
other countries is that we have a stable, well regulated, well run
secure banking system. Now, that doesn't mean to say that I
am happy with everything the banks have done and I can understand
the anger of a lot of people about bank charges.
MITCHELL:
Okay. We'll take a call, Christine, go ahead please.
CALLER:
Hello, Prime Minister Howard.
PRIME MINISTER:
How are you?
CALLER:
Fine thank you, how are you.
PRIME MINISTER:
I am very well thank you.
CALLER:
That's good. I just wanted to say to you that everyone at
the moment seems to be very unhappy with the banking system. My
father has recently given up his job and he is a professional to
go into small business and they got three months behind on their
mortgage and when they asked for an extension the bank said: oh
no, because you didn't fall into the hard case criteria. I
was wondering if you could, you know, give me any comments on that.
PRIME MINISTER:
Well, unfortunately I get a lot of those stories. Now, I don't
know all of the circumstances in relation to your father and in
fairness to the bank I am not going to sit in judgement without
knowing all of those circumstances on what happened. But I do have
to say as a Member of Parliament over the years I did receive, particularly
during the recession of a few years ago, I did hear a lot of stories
of how small business people somehow or other didn't seem to
get the same treatment that larger customers got in relation to
indulgence and extensions and so on. Now, this is an area where
I have said often in discussion with senior banking people in this
country, there's still work to be done whether it be in relation
to changing practices or their whole public presentation of their
treatment of small business. There still remains a view amongst
a large number of men and women in the small business community
in Australia that banks don't treat them as well as they might.
Now, in some cases that is an unfair judgement. I know lots of people
who have been kept alive by banks. On the other hand, I hear a lot
of complaints. Now, as I say, I don't know enough about your
dad's particular circumstances to sit in judgement but I am
not surprised because the story you tell me is one that I do hear
from time to time.
MITCHELL:
Thank you Christine. We'll take a quick break and come back
with more from the Prime Minister.
[Commercial Break]
Paul, would you go ahead please.
CALLER:
Yes. Good morning Mr Howard and Neil.
PRIME MINISTER:
Good morning Paul.
CALLER:
Yeah, I'd just like to ask you, you were saying that you would
like to help the CFA volunteers. Why doesn't the Government
purchase these fire bombers and have, say the insurance companies
sponsor it because it'd save them a lot of payouts on home
losses and such?
MITCHELL:
Are you talking about the aircraft Paul?
CALLER:
Yes.
PRIME MINISTER:
Well, I don't know enough about the science, if I can put
it that way, and it is a science of fire-fighting to say off-hand
whether they would be suitable for the sort of fires we have in
Australia. Let me simply take that on board and reflect on it.
MITCHELL:
We've certainly used them here a couple of times.
CALLER:
Kevin, go ahead please.
CALLER:
Oh good morning Neil. Thank you Mr Howard for the opportunity.
In relation to the fire-fighters, I have been fire-fighting for
20 years as a volunteer and I use the term loosely because we are
professionally trained in what we do. On the thing of a memorial,
the thing that strikes me after all the Ash Wednesday fires and
everything else is that the biggest problem we seem to have is the
cost of fire-fighting turn out gear and what have you. And I am
just wondering whether federally it could be subsidised to bring
the cost down so that our equipment and gear can be purchased at
a realistic and cheaper price. It's getting to the stage where
it becomes prohibitive to try and keep the gear in a relative cost
free environment.
MITCHELL:
I wonder, Kevin, do you know if....do you pay tax on that gear?
CALLER:
No, it's not, it's tax free, it's just it's
still....the cost of keeping gear up-to-date and the high tech
materials that are used these days are just, you know, almost off
the planet. And for the CFA and other organisations, I mean, it's
just so very expensive to give people proper protection and it's
got to be budgeted for of course. Budgets are there and that's
realistic and it's got to be realistically money that's
spent.
MITCHELL:
Okay, well what do you think?
PRIME MINISTER:
Well, I guess that is something that I could discuss with the Victorian
Government. I mean, I am not trying to evade the question but you'll
appreciate that there are certain divisions of responsibility between
federal and State government and naturally at a time like this people
are anxious to help and be positive. On the other hand, there are
some things that Federal Government should do and other things that
State governments should do. And perhaps the best way I can, against
that background, respond to Kevin, is it, is to have a talk with
Mr Kennett.
MITCHELL:
Okay. Thanks Kevin, thank you for calling. Mr Howard, the GST,
speaking of Mr Kennett he said he was going to write you a letter
about concerns he had. Has he done that yet?
PRIME MINISTER:
No, but there are really no big rounds for concern because in a
letter I wrote to Mr Kennett I anticipated the very thing that he
was going to raise, that he raised. I indicated that because the
final details of the agreement were still being...the formal
details of the agreement in principle between the Federal Government
and the States were still being settled, we couldn't go further
than make the reference we did to that lock-in device in the first
batch of legislation but there be specific reference to it in the
second batch of legislation which is going to be introduced next
year.
MITCHELL:
Will that specific reference include a naming of the rate? Will
it be set at 10% in the legislation?
PRIME MINISTER:
Oh yes.
MITCHELL:
Yeah. At the moment...
PRIME MINISTER:
Look it's going to be set. We're not going to muck around
on this.
MITCHELL:
No, but I wasn't sure whether it would be named actually at
10%....
PRIME MINISTER:
Well of course.
MITCHELL:
.....[inaudible] legislation or whether it's a matter of
[inaudible].
PRIME MINISTER:
Oh no no. You name it. You have to, otherwise you can't lawfully
impose it.
MITCHELL:
And that isn't done yet?
PRIME MINISTER:
The lock in device, I mean the rate's been set but the lock
in device has been referred to in a preamble of the legislation
and then the next batch of legislation will actually describe you
the 10% can't be increased without the consent of the States.
MITCHELL:
Okay. Well business seems to be reacting to it as well, claiming
that compliance costs will be higher than expected. Have they got
a case?
PRIME MINISTER:
Well we don't believe so Neil. It's inevitable that there'll
be some news coverage of reaction to the detail of such a big package.
We've had estimates done of compliance costs and we obviously
hear what people have got to put to us, and any fine tuning that's
needed to avoid unnecessary compliance costs we're obviously
receptive to. I mean I want to make it very clear that our determination
to get this package through intact does not mean that if somebody
comes along with a sensible suggestion in relation to administration
or compliance which doesn't alter the thrust of the legislation
but is going to result in the thing working more efficiently and
more effectively in a less costlier way we'd obviously agree
to that.
MITCHELL:
What are your estimates of the compliance costs?
PRIME MINISTER:
Well I don't have a figure in my head overall but there's
obviously some compliance costs but there's also a lot of savings
involved in the process. A lot of businesses, for example, they
may have to, for the first time, remit indirect tax collected but
they also get enormous cash flow benefits because if they collect
the tax and they're on a three monthly remittance arrangement,
which every business under $20 million a year turnover will be entitled
to be, then they get the use of that money interest free for an
average of 66 days. And that is an enormous cash flow benefit to
businesses.
MITCHELL:
You're talking about what degree of change there'd be
in the legislation. Is there any change possible or likely out of
the Senate inquiry or does it basically just go through a process
and nothing changes?
PRIME MINISTER:
Well the problem with the Senate inquiry is that the Labor Party
has said no matter what comes out of the inquiry it's going
to vote our legislation down. It's now into this business of
saying: well it might vote for some things but not vote for others.
The problem with that, that opportunistic approach, is that it's
an integrated package and the idea that you can put and take is
ridiculous. I mean you can't have many of the benefits on the
income tax and family benefits side unless you have the goods and
services tax. You can't have the cash flow benefits I mentioned
a moment ago, for business, without having a goods and services
tax. So this idea that the Labor Party now appears to be groping
with to sort of give the impression that it's not just an automatically
negative opposition that some how or rather you can put and take.
That's not on. This is not something you can really put and
take on. It's an integrated package.
MITCHELL:
Is it possible that you could become sufficiently frustrated by
this approach that we could have a double dissolution around this?
PRIME MINISTER:
Neil, I've just been through an election. Give us a break.
MITCHELL:
I know [inaudible].
PRIME MINISTER:
You don't want another election let me say.
MITCHELL:
No we don't. You know, I think if we're still going around
in circles in the middle of next year you might be tempted.
PRIME MINISTER:
Well Neil, that really is in the hands of the Labor Party and the
Democrats in the Senate. I mean I have to say again, we had an election.
I mean you and I, and Mr Beazley spent hour after hour almost it
seems over a long period of time debating the merits of this thing.
Then every Australian cast a vote and here we are exactly two months