Subjects: Federal Budget 1999: Senator Harradine, GST, Telstra, surplus,
education, health, unemployment figure, newborn Kosovar
E&OE....................................................................................................
MITCHELL:
Mr Howard, good morning.
PRIME MINISTER:
Good morning, Neil.
MITCHELL:
What does Brian think of it?
PRIME MINISTER:
Well, you should ask him.
MITCHELL:
I will, have you?
PRIME MINISTER:
No, I haven't spoken to him in the last 24 hours.
MITCHELL:
Did he have advanced knowledge of what was in the budget?
PRIME MINISTER:
Oh look, all the proprieties were observed with budget.
MITCHELL:
What does that mean?
PRIME MINISTER:
Well, it means that all the proprieties are observed.
MITCHELL:
So he might have had some knowledge of what was in it?
PRIME MINISTER:
Every single propriety was observed.
MITCHELL:
I'm sorry, I don't understand what that means. Is it proper
that Brian Harradine be told some of what was in the budget?
PRIME MINISTER:
It has often been the case in the past that people work out because
of all sorts of things, not the result of direct briefing, that this
or that's going to be in a budget. But sensitive financial information
is always kept under wraps.
MITCHELL:
Oh sure, but was there a direct briefing for Brian Harradine?
PRIME MINISTER:
No, there wasn't a direct briefing about the contents of the
budget, no.
MITCHELL:
Have any of the...
PRIME MINISTER:
Oh look, I'm not going to go into the nuances and details of
every single thing. I mean, I, for example, quite properly briefed
some interest groups about decisions relating to things like education,
things that are non-market sensitive. It's always been the case
that something that's non-market sensitive, there's never
been anything wrong with people having a broad idea of what might
be coming around the corner. What you should never do is disclose
market sensitive information.
MITCHELL:
When will you speak to Senator Harradine about it?
PRIME MINISTER:
Well, I talk to Senator Harradine on a regular basis about a variety
of things. That has continued over recent weeks and it will continue.
But I'm not going to start talking about when I'm seeing
him about this or that subject because I'll be driven mad and
he'll be driven mad by you and your colleagues fair enough.
MITCHELL:
Okay, well, would you respond to this? This was his reaction in part.
Senator Harradine: "...too little, too late and improperly
dependent upon my vote for the GST..."
What's your reaction to that?
PRIME MINISTER:
Well, I'm not going to react.
MITCHELL:
Why not?
PRIME MINISTER:
Because I choose not to. I chose to conduct my dialogue with him personally.
I don't think it ever helps to conduct a public dialogue through
the airwaves on issues like this.
MITCHELL:
Do you agree there are certain things in the budget which are designed
to get the support of Senator Harradine for the GST to be passed?
PRIME MINISTER:
Everything in the budget is there on its merits and I am happy to
defend each and every measure on its merit. It does happen, you know,
that there are a lot of policy issues where the Government and Senator
Harradine and, indeed, other Senators actually agree because they
have independently arrived at the same conclusion. There seems to
be a fetish on the part of some to see every decision the Government
takes through the prism of Senator Harradine or somebody else's
reaction.
MITCHELL:
I don't...of course I accept that you believe in it otherwise
it wouldn't be there but is some of it aimed at getting support
from Senate Harradine?
PRIME MINISTER:
Look, the main aim of the budget is to deliver a strong Australian
economy. I mean, of course we want to get the tax package through
the Senate but we're not ever going to propose anything that
we don't believe in. And if it so happens that things in the
budget please Senators, well, all the better, but they're there
primarily because we believe in them. We've never put something
in that we don't believe in.
MITCHELL:
Is there room within this budget for more concessions on the GST?
PRIME MINISTER:
Neil, I'm not going to speculate about the GST except to repeat
my time honoured formula and that is we're not going to put and
take essentials but we are willing to look at some fine-tuning.
MITCHELL:
Okay, there's room in the budget for that fine-tuning obviously.
PRIME MINISTER:
Well, we're willing to look at some fine-tuning. I'm sorry
to be difficult but it's the sort of thing where for me to start
going any further only creates further avenues of questioning with
no productive outcome for the Government.
MITCHELL:
Yeah, but it might be productive for the people because there's
a perception that this budget is based, obviously, on the full sale
of Telstra and the GST legislation getting through.
PRIME MINISTER:
Oh, look, I'm happy to talk about that.
MITCHELL:
And a big part of that is getting Senator Harradine's support.
PRIME MINISTER:
Well, the budget is not dependent upon those things. It is true that
if we are able to sell all of Telstra as we promised in the last election
campaign, by the year 2003 we'll be free of Commonwealth debt.
And that's a terrific goal and a terrific aspiration to work
towards and it would be a terrific thing for the Australian public
if we're able to enter the next century free of debt at a Commonwealth
level.
MITCHELL:
But what are the implications if you are unable to sell all of Telstra
and unable to get a GST through, what does that mean to this budget?
PRIME MINISTER:
Well, it doesn't fundamentally alter the budget because this
budget is about next year, the GST doesn't come into operation
until the 1st of July in the year 2000. What are the implications
of tax reform not occurring? Very bad for the Australian economy.
We have a strong economic position now because we took the necessary
measures of reform a few years ago. If we take further reform measures
now we'll have an even stronger economy in a few years time.
And that includes taxation reform. It includes further industrial
relations reform. All of those things.
MITCHELL:
I spoke to you on Friday and you said you weren't over confident
on the GST, hopeful but not over-confident of getting through. Does
the budget change the degree of confidence you have on having success
getting the GST through?
PRIME MINISTER:
I wouldn't alter my wording on that. I'm never, how shall
I put it, I'm never smug about these things. I regard each challenge
as being fairly difficult. We faced a difficult challenge winning
the last election. We won it. We believe we have a right to see the
GST implemented because that is what we promised the Australian people.
Politicians are constantly criticised for breaking their promises.
Last night we delivered on every single promise we made in October
of last year. The two that are outstanding for implementation through
the Parliament are Telstra and the GST. The GST is far more important
than Telstra, although Telstra's important too. And what we're
asking the Senate to do is to allow us to keep our promises with the
Australian people. I can understand it if we'd gone to the last
election with a vague promise about tax reform but we actually spelt
it out in detail and if mandates, the system, means anything we are
entitled to say to the Australian Senate, please pass it.
MITCHELL:
Mr Howard, it's pretty healthy, a good surplus and well received.
Isn't it a reality there's room for tax cuts here even without
a GST?
PRIME MINISTER:
Fixing the Australian tax system is not just about tax cuts. It's
also about running a system that is more likely to produce a competitive
business sector. And the advantage of a GST is that it will reduce
the cost of exports by $4.5 billion. Our tax package reduces our fuel
bills by $3.5 billion, our general business costs by $10.5 billion.
Now, those things are of enormous long-term benefit to the Australian
community. Anybody can deliver a lazy personal tax cut which just
is taken off the surplus. But not everybody can deliver long-term
structural reform and this is an integrated package. I mean, you can't
chop it in half because many of the elements of the personal tax changes
are a product of fundamental reform set up by the re-alignment of
indirect taxes. And the nugget of gold in this, Neil, is that 80 per
cent of Australian taxpayers will be paying no more than 30 cents
in the dollar. Now, you can't get that without our reform.
MITCHELL:
Okay, understood, but I look at that surplus, I see the amount of
money that's come in...
PRIME MINISTER:
But it doesn't sit in the bank. It's used to repay debt.
People have this idea that that $5 billion is a mouldering in the
Reserve Bank, accumulating dust. It's not. It's used to
repay debt that was run up by previous governments in earlier years.
MITCHELL:
Yeah, understood, but I look at the money coming in and I look at
the, all right, now you say sensible financial management plus an
increase in income for the Commonwealth leads to a surplus, obviously,
it's a combination of the two. And I look at all that money coming
in and I think about, what about tax indexation, would you ever consider
indexation of tax rates?
PRIME MINISTER:
Well if you have 80% on the top marginal rate of 30% and you have
low inflation, there's not much need of indexation. Indexation
is a great idea when you have high inflation because people keep getting
pushed into higher taxation brackets. But if you dissolve all those
intermediate steps so that somebody can go from about $20,000 a year
to $50,000 a year without passing into a higher tax bracket, and if
you have low inflation, you virtually, to find the way, the need to
have indexation, even if you could afford, and thought it was a good
idea. You're talking of in another world of high inflation.
MITCHELL:
Well I think we could return to that one day. I'd like to see
indexation enshrined.
PRIME MINISTER:
Well we aren't there at the moment. I'd rather see enshrined
an incentive-driven personal tax system that says to 80% of the community:
you can work as hard as you like, as long as you like without going
into a higher tax bracket.
MITCHELL:
A couple of the basic issues, I'm sure a lot of reaction to health
care and, I suppose the incentives on private health insurance, it's
in fact more a penalty than an incentive in a sense. But if I can't
afford it now, why would I be able to afford it under this system?
I wouldn't would I?
PRIME MINISTER:
Well, decisions people make as to whether they can afford something
are governed by not only what something costs, but also what it might
cost if you feel you might need it more in the future.
MITCHELL:
Well true, but it wouldn't help pay the bill now would it?
PRIME MINISTER:
No, but it might alter your priority. You might say: well because
it will be more expensive when I'm 45 and I've got three
children, I'm now 28, single and no responsibilities, it might
make more sense to spend money on that now rather than include an
extra country in my trip overseas.
MITCHELL:
What if I'm forced to jump in and out. For example, I have insurance,
I'm going to lose my job for a year and I can't afford so
I've got to get out. And then I get back in again. Do I still
have the disincentives towards the penalty?
PRIME MINISTER:
Well generally speaking yes. I mean the point you make, it would be
nice to see if you could design a sort of a safety net mechanism.
I don't know that that's possible because people sometimes
invent reasons for hitting and running when it comes to private health
insurance. I mean I take your point, but I don't want to raise
the expectation that that could be accommodated. I don't think
it can in a practical way.
MITCHELL:
If there was to be a safety net that would be up to the funds wouldn't
it?
PRIME MINISTER:
Well more up to the funds, yes. I don't think it would be possible
for us to impose that kind of condition.
MITCHELL:
Education, can you answer this....it didn't seem to me to
encapsulate the person I saw quoted in one of the papers here. A young
mum and she said: why give money to rich private schools when there
are 35 preppies in my child's class of a State school?
PRIME MINISTER:
Well we're not giving money to rich private schools beyond a
fairly basic amount.
MITCHELL:
But you're giving more aren't you?
PRIME MINISTER:
We're giving more but most of the more, if I can put it that
way, is going to quite poor Catholic schools, and some low income
non-Catholic independent schools. There are a lot of Parish schools
around Australia that have over-crowding and difficult class-room
situations similar to government schools. The other point I'd
make Neil is that the great bulk of financial support for government
schools in this country comes from the State government. I mean they
are State government schools and we have a funding understanding in
Australia that the Federal government by-and-large funds private schools
to the extent the government support private schools, and when it
comes to State schools the great bulk of their funding comes from
the State governments, and we topped that up. I mean we're putting
I think $300 million more into government schools this year then in
the last year of the former Labor government by way of additional
direct Commonwealth funding.
MITCHELL:
Now, I know you need to get away Mr Howard so I'll be quick.
Unemployment 7.5%, it seems excessive that it can't go any lower.
PRIME MINISTER:
Well it can.
MITCHELL:
[inaudible]
PRIME MINISTER:
It can go lower if we can get further structural reform. If we could
get our unfair dismissal laws through, and our youth wage things through,
and also further reforms to the labour market that Mr Reith has foreshadowed,
then we can have a lower rate of unemployment. We have set up the
general conditions for lower unemployment by getting a strong economic
growth rate.
MITCHELL:
So we don't have to accept 7.5% [inaudible] full employment?
PRIME MINISTER:
No we don't. No I do not accept that it's full employment.
We can go further.
MITCHELL:
What is?
PRIME MINISTER:
Well I hesitate to put a figure on it but it's much lower than
7.5%.
MITCHELL:
Yes, fair enough.
PRIME MINISTER:
You always have to keep driving lower when it comes to unemployment.
If you accept a particular figure that's the mistake.
MITCHELL:
Okay. So 7.5% is not accepted despite [inaudible]?
PRIME MINISTER:
I don't accept 7.5% but I wish the Senate would accept our unfair
dismissal changes, our youth wage changes, and can I enter a plea
in advance that they accept further reforms to the labour market.
I mean there is a point beyond which you can't go further with
general economic growth. I mean we have very strong economic conditions,
very strong growth. We've got the lowest unemployment rate for
ten years. We can go further but to go further you've got to
have some changes in the system, some further freeing up and liberalisation
of the labour market.
MITCHELL:
Prime Minister, thanks for you time. If I could just....this is
maybe unfair and I understand if you don't know the answer to
it, it's totally off the budget. I noticed one of the Kosovar
couples had a baby, healthy baby girl.
PRIME MINISTER:
That's lovely.
MITCHELL: