E&OE............
SUBJECTS: Sydney a Centre for Global Financial Services, capital gains
tax, corporate tax rate, Australian economy, Ralph report, new Prime
Minister in Papua New Guinea, John Laws, aid workers, APEC, interest
rates, East Timor, taxation reform, Taiwan.
PRIME MINISTER:
Well, ladies and gentleman, everybody ready to start the news conference?
Before inviting questions from you on anything you like, could I again
say how very pleased I am at the way in which this conference has
been organised. I'd like to particularly thank Peter Charlton and
Maurice Newman who really have been the two driving forces behind
this. They're not easy things to organise, fairly late notice in a
number of areas through the inevitable circumstances of arranging
visits to Washington and they really have done a sterling job. I want
to thank my two Ministerial colleagues, particularly Joe Hockey who
has specific responsibility for this and Senator Minchin and also
Ted Evans the Treasury Secretary who made a major and very well received
contribution to the conference this morning. It's a very important
collaborative effort. There has been good cooperation with the office
of the Premier of NSW and I was very pleased to have both Mr Carr
and Michael Egan the NSW Treasurer present because it is important
from our point of view, from Australia's point of view that we present
on things like this we present a united front. We are Australians
together overseas working in the long term national interest of our
country. Now, any questions?
JOURNALIST:
Prime Minister in terms of the capital gains tax and neutralising
the advantage the US has, when you say neutralised does that mean
we need to bring our capital gains tax down to the same level that
operates here in the United States?
PRIME MINISTER:
Well I was talking generically. I don't want at this stage to say
what is going to be our response to a report we haven't received but
what I was clearly indicating is that if you want capital to come
our country and it's more attractive for that capital to go somewhere
else, well you've got to ask yourself whether you ought not do something
about that and quite obviously aspects of our capital tax at the moment
don't represent an incentive for people to invest in Australia and
we do need to look as between specifically Australia in the United
States because the great bulk of the worlds capital is generated in
the United States. You've got to try and achieve as far as possible
a degree of neutrality. Now, that I'm not going to get into whether
that translates into this or that rate in relation to this or that
tax. But I'm stating the general principle and as you would have heard
from my speech we have an enormous number of the generics going for
us but there are some impediments as far as tax is concerned and we
just have to find out how far we can go in fixing them. And then I
think you have really a tremendous package.
JOURNALIST:
Prime Minister, in signalling that you're looking at making the capital
gains tax resume more attractive for American investors in Australia,
is there a danger that Australian companies could find themselves
in a less competitive situation, discriminated against, or will you
ensure in whatever you do with Ralph that Australian companies get
the same advantages that foreign pension funds do in investing in
Australia.
PRIME MINISTER:
Well we won't be discriminating against Australian companies. If the
capital gains tax is reformed well that reform will flow to the benefit
of everybody. There's no way we'll discriminate against Australian
companies.
JOURNALIST:
Prime Minister you mentioned capital gains tax in your speech, you
didn't mention the corporate tax rate. Does that mean you put greater
emphasis on reducing capital gains tax as an investment incentive
rather than the corporate tax rate.
PRIME MINISTER:
No not necessarily, Glenn. The purpose of my speech was to talk against
the background of knowing that other speakers had gone into a great
amount of detail regarding the micro and macro economic cast of the
Australian economy at the moment. The purpose of my speech was to
talk in more general terms. Look, the question of a lower corporate
tax rate is obviously a very key element and the debate's well known
and the arguments, some of the arguments for and against have been
quite well rehearsed already. I am just conscious that in relation
to the capital markets the operation of aspects of the capital gains
tax is probably more specifically and more narrowly relevant. It's
not that generally speaking it's more relevant than the corporate
tax rate.
JOURNALIST:
Prime Minister, are you looking at removing the need for US pension
funds to use limited partnerships to get capital gains tax exemptions?
PRIME MINISTER:
Oh I'd be amazed if that weren't one of the things that came up in
the consideration in the wake of Ralph. I mean I'm not.
JOURNALIST:
Is it a good idea?
PRIME MINISTER:
I'm not pre-empting anything. Let me make it clear, I quite deliberately
avoided today making any specific announcements because I think it
derails a rational handling of the Ralph process for me to do that.
But I clearly indicated areas that I as Prime Minister think need
attention. And I'd be very surprised if that issue didn't come up.
JOURNALIST:
Prime Minister, I've got actually three quick questions, but the first
one is about the capital gains tax business. It would have been handy
if you'd been able to make your announcement on this visit. How much
have American CEO's mentioned this to you in your private discussions.
Is it an issue that is raised like it was this morning?
PRIME MINISTER:
Well a number of them have mentioned it but the question of whether
or not Sydney becomes a world financial centre is not going to be
governed by whether I make a specific announcement on this visit.
Rhetoric doesn't govern these things. People pay on outcomes. The
sort of people that I'm meeting here are quintessentially pay on outcomes
they don't pay on rhetoric. They're the last mob in the world that
pay on rhetoric.
JOURNALIST:
But so are they holding back before you do this?
PRIME MINISTER:
No they just want to know what our policy changes are. They're not
particularly keen, I mean I could make all sorts of flowery remarks,
but in the end they pay on results which is good and fair enough by
me. We've delivered results and we'll deliver some results out of
Ralph too.
JOURNALIST:
And the two other quick questions, one is we now have a new Prime
Minister in Papua New Guinea, can you say what you think of this development
and the final question is, a more domestic one, there's a huge controversy
raging about the idea of...
PRIME MINISTER:
Well can we just sort - deal with Papua New Guinea a moment and then
we'll move onto whatever other question you want to ask me. I would
like to congratulate Sir Mekere Morauta on his appointment as
the new Prime Minister of Papua New Guinea. I particularly welcome
it. I think he's a person who brings a great deal of strength to the
position. He's a very straight forward man. His priority is to put
his country's economy on a sound footing and we would like on a proper
basis to help him in that respect but it has to be on the basis that
ongoing economic reform is essential. Cooperation with the International
Monetary Fund, to implement agreed programs of reform, that is essential.
Papua New Guinea does have a special relationship with Australia.
We want to give him all the help we can to carry out his reform program
and I hope that his election will bring a period of stability and
getting on with the job to his country because in recent times there
have been grounds for concern about the lack of predicability and
stability and the constant debate and speculation about the future
government of the country and I particularly welcome his election.
I would want to record that under Bill Skate's leadership the country
did make considerable progress in dealing with the difficult problem
of Bougainville. And I would not want his retiring as Prime Minister
to go unremarked in relation to that issues but to Sir Mekere Morauta
I wish him well, I congratulate him and I hope to be in touch with
him next week. I intend to speak to him next week when I return to
Australia and I look forward to a very close and productive relationship
with him.
JOURNALIST:
With your indulgence the quick final question was, there is a huge
controversy in Australia at the moment about talk show host John Laws
being paid over a million dollars to go easy on the banks so to speak.
Do you think that kind of transaction is acceptable?
PRIME MINISTER:
Well I've heard about this and I've been briefed on it. I don't know
all of the details and I understand the station is conducting an inquiry.
I also understand that other authorities are talking about an inquiry,
I don't want to make a judgement at this stage on the detail of it
until I have more information. I must say I was surprised to hear
about it and disappointed. I don't know whether all the claims made
are correct. In fairness to the people involved they should be given
an opportunity to respond on that but I was surprised. Speaking generally,
speaking generically I had always understood it was a fundamental
of our system of public debate on issues in our country that people
expressed, the views that people expressed were their views on the
merits of individual issues and nothing else. And there's clearly
a difference between somebody who specifically endorses a product
in a commercial sense and somebody expressing a view as a consequence
of a commercial understanding of which the public is unaware, entered
into between that person and an organisation about which that view
or a group of organisations abut which is expressed. I mean that raises
a whole range of other considerations. Now as I say, I don't know
all of the detail of it but it will be plain from what I've said what
my view is.
JOURNALIST:
There's impediments. There's a story that you tell of Australia, the
true story, and in the United States which I can speak there is the
myth of Australia which often is very, at least in my experiences
is very false, the myth being a CEO who asks me isn't Australia where
the crocodile, isn't Australia the place where the crocodile guy is
and the home of Crocodile Dundee. So in America even among top business
executives there's a methodology about Australia the last frontier
as they used to say. What kind of marketing is the Government doing
to send the true story of Australia and its economic might to the
rest of the world?
PRIME MINISTER:
Well I always find those sorts of questions very hard to answer in
that I don't mind some of that mythology because it's part of the
romance and the, you know use that awful clich the rich tapestry,
and it's not something that you really want to destroy or disabuse
people of, I'm quite certain that a lot of Americans have that mythology.
I think increasing numbers of Americans recognise that that's just
part and its mythology a nice part of it, just as the wild west and
Dodge City and everything is part of the American rich tapestry. I
don't think that is as deeply held by younger Americans. I don't think
that because their access to methods and modes of communication are
so extensive now. We don't have any particular programme to play down
Crocodile Dundee and promote Maurice Newman's outfit, much in all
as it's a noble part of that rich tapestry. We don't but I think that
over time people get a good balance.
JOURNALIST:
Mr Howard I'm just wondering if there is anything to report from your
discussions with General Colin Powell and Ambassador designate Richard
Holbrooke, particularly on the question of Yugoslavia and the aid
workers?
PRIME MINISTER:
Well I have talked about our aid workers with everybody I've met of
any influence in this country and the reaction I've had has been genuine
and uniform. There's a desire where they can to help and nobody has
the magic answer. There isn't a magic answer. We have to persuade
the Yugoslav Government to let them go and so far we've not been successful.
That doesn't mean to say we won't be successful but we've got to keep
trying and we are continuing to try in all sorts of ways. I understand
this morning His Holiness has taken up the cause and I appreciate
that very much. And it's consistent with the very strong stance he's
taken on human rights issues effecting the citizens of other countries.
We'll continue at every opportunity to raise it. I raised it with
President Clinton. I raised it with Madeleine Albright. I in fact
spent some quarter of an hour talking to Madeleine Albright about
it at Andrew Peacock's marvellous function last Sunday night. And
we'll just continue to persevere on every front at every occasion.
JOURNALIST:
Mr Prime Minister, Lisa Dodson from Reuters Television. We understand
that Australia has endorsed China's membership to WTO coming alongside
a very contentious lamb ruling by the US. Are we seeing broader trade
tensions between the United States and Australia?
PRIME MINISTER:
A broader trade tension?
JOURNALIST:
A broader trade tensions and what are the implications of the lamb
ruling for APEC initiatives and I have a follow-up question?
PRIME MINISTER:
Well the American's support China's accession to the WTO. The President
told me on Tuesday that he wanted China in the WTO and he's working
very hard to achieve that and he's made that very plain to the Chinese
administration so there's no difference of opinion on that particular
issue. The lamb ruling what will it do to APEC? The worry I have is
that maybe other countries that are less committed to a more open
trading system will use it as an excuse to be recalcitrant. No perhaps
I'll think of another word. Be difficult. I withdraw it immediately.
JOURNALIST:
My follow-up question is that historically there has been a parallel
between US Fed moving on interest rates and the RBA. Do you see an
interest rate hike in Australia in the near term?
PRIME MINISTER:
I don't make comments about the level of interest rates either here,
in Australia or as the Australian Prime Minister here in the United
States.
JOURNALIST:
You agree with Ted Evans though Prime Minister that if the temporary
blip in inflation caused by the introduction of a GST gets out of
hand that monetary policy would be alive to that possibility.
PRIME MINISTER:
Glenn, I hope you won't be offended if I invoke my, the question time
convention and that is I never when somebody asks me a question at
question time which quotes somebody else as a matter of precaution
I never accepted that that other person has been correctly quoted
so in other words well I'll. If you want to ask me a question unadorned
by reference to what somebody else has said then I'll be very happy
to answer it. But I'm quite certain that what Mr Evans said this morning
was sound.
JOURNALIST:
(inaudible).
PRIME MINISTER:
What? You want to ask me an unadorned..
JOURNALIST:
Can I ask you an unadorned question?
PRIME MINISTER:
Absolutely.
JOURNALIST:
If there is an inflation blip as a result of the tax changes do you
think it would be appropriate and perhaps necessary at least in the
short term to use interest rates to (inaudible).
PRIME MINISTER:
Look Fran I don't talk about interest rates.
JOURNALIST:
Prime Minister you were high, full of praise for your Labor predecessors
both here and in Georgetown in terms of two issues.
PRIME MINISTER:
In relation to a couple of issues - two issues
JOURNALIST:
Financial deregulation and tariffs.
PRIME MINISTER:
Where they had strong support from the then Coalition Opposition.
JOURNALIST:
And secondly you were also full of praise for, or you were pleased
to have Bob Carr here today, are there circumstances or what circumstances
could there be under which in that spirit of bipartisanship you could
have Kim Beazley here to sell a bipartisan message?
PRIME MINISTER:
Well I guess the ball is in his court. But you've got to bear in mind
that Mr Beazley in relation to taxation reform, Mr Beazley has behaved
quite differently from how I behaved in relation to financial deregulation,
under the Hawke Government and tariff reform also under the Hawke
Government, although I wasn't Opposition Leader in 1991 when the tariff
reform statement was made but certainly the then opposition took a
very constructive approach under John Hewson's leadership and I was
part of the senior membership of the opposition that participated
in that and I was a very strong supporter I remember of the general
thrust of the tax reforms that Paul Keating was trying to put through
at the summit. Now I'm sure that Mr Beazley would like Australia to
become a world financial centre. Specifically Mr Carr was in New York,
I don't know whether he planned his visit around this or whether it
was a happy coincidence, but look I do hold very strongly to the believe
that as much as possible we should work together when we're abroad.
That doesn't mean to say we won't have our vigorous differences at
home but Mr Carr likes our tax reforms but I don't want to, don't
spoil a pleasant sort of, anything pleasant it's all gone very well
but Mr Beazley has chosen to be particularly negative at the moment
on our tax reforms. I hope he's constructive on capital gains tax
and corporate tax reform and he's got a great opportunity and let
me say Jim that if Mr Beazley wants to join us in the promotion of
Australia as a world financial centre, a way in which he can demonstrate
that commitment and join us is to be constructive and positive in
relation to business tax reform in contra distinction to his negativity
on general tax reform. So the ball is in his court. I mean he can
be part of the future on this or he can try and stop the future happening.
JOURNALIST:
Mr Howard are you disappointed that there are moves within the New
South Wales Liberal Party to undermine Kerry Chikarovski and have
her replaced?
PRIME MINISTER:
Oh look forget it Jim. I mean I'm not going to talk about a State
political issue. I generally don't talk about State political issues.
Certainly not here.
JOURNALIST:
Mr Howard you've talked about establishing a task force for your push
to establish Sydney as the financial centre. Who's going to head that
taskforce?
PRIME MINISTER:
Well there's a process being gone through. I mean the Ministerial
head of it will be Joe Hockey. I mean he's the public face of it but
we have advertised for somebody to head it up in an executive capacity
and we're going through the selection process.
JOURNALIST:
Mr Howard I was just wondering if you had any indications from CEOs
that you were talking to last night about whether they've got any
plans to locate in Australia?
PRIME MINISTER:
Look, look it doesn't operate like that.
JOURNALIST:
I know it's a bit early.
PRIME MINISTER:
You don't have dinner with some of these