Subjects: National Textiles, Aboriginal Olympics protest; GST; President
Wahid; illegal immigrants; CDMA; rural visit; BHP; interest rates; economy;
banks.
E&OE .............................................................................................
ZEMANEK:
We have in the studio, the Prime Minister of Australia, Mr John Howard.
And a very good morning to you.
PRIME MINISTER:
Well, very nice to be with you Stan, very nice indeed.
ZEMANEK:
Usually I am saying good evening to you.
PRIME MINISTER:
You are, and it will be an interesting experience for both of us. The
last time we conversed across the microphone was in the evening and .
. .
ZEMANEK:
Well, you are certainly going to have more announcers to talk to in the
morning now.
PRIME MINISTER:
Well, they seem to be very thick on the ground, particularly in Sydney.
ZEMANEK:
It is going to be very competitive.
PRIME MINISTER:
Oh well, that is my philosophy.
ZEMANEK:
Absolutely.
PRIME MINISTER:
Competition hurts nobody.
ZEMANEK:
Absolutely. Now I know that you're very busy this morning, so if
we can get right into it. Because a lot of things to talk about. Today's
Telegraph quotes you as saying the sacked workers from the National Textiles
in the Hunter Valley are victims of economic reality. I mean you can understand
that they're going to be a little bit angered by all this - the workers
out there.
PRIME MINISTER:
Well, let me say immediately that I feel very sorry for those workers
and their families - deeply sorry - and I feel very sorry for any worker
in Australia who loses his or her job. And we are doing everything we
can to ensure that the entitlements that they have are properly covered.
I am told by the receiver who has been appointed that these employees
will receive all of their unpaid wages, all of their superannuation, their
annual leave and their long service leave, their rostered days off, their
sick leave and at this stage it is estimated that there will be enough
money for 50 percent of the outstanding notice in lieu and redundancy
payments.
ZEMANEK:
Will the Government make up the rest?
PRIME MINISTER:
Well, Peter Reith's indicated that he'll be taking a scheme
to Cabinet in eight, or ten days time.
ZEMANEK:
Will you endorse it?
PRIME MINISTER:
I support it. Let me make it clear at the beginning. Now . . .
ZEMANEK:
But Mr Reith said last year thought it was going to be ready by January
1.
PRIME MINISTER:
Yes, but he also said this morning that the new scheme when endorsed
will have effect from the 1st of January this year. Therefore
it will cover the people who have been affected by the National Textiles
close down.
ZEMANEK:
Ok, so he is going to put the scheme up, you're going to endorse
it. If you endorse it we can say that it is a lay down misere, it'll
go through.
PRIME MINISTER:
I think it has a fair chance of going through. But it is a matter for
Cabinet. And it is the sort of thing that must be endorsed by a full Cabinet
meeting. And it's a scheme that will expect some support and contributions
from State Governments as well, it's a safety net scheme. It is not
possible in something of this kind, for every last dollar of somebody's
entitlements to be covered, but certainly . . .
ZEMANEK:
Workers have to be covered though, don't they?
PRIME MINISTER:
Well, workers should be covered by companies. And one of the other things
that Mr Reith has said in relation to National Textiles, and indeed to
other companies, is that if there is anything untoward in the behaviour
of directors - and I am not suggesting there is in this case, or there
has been in other cases - but if there is then those directors should
be pursued. We are in fact proposing to further strengthen the law to
make it even more obligatory on directors to ensure that adequate provision
is made for redundancy payments to their workers.
ZEMANEK:
Okay, but your brother is the non-executive chairman of the actual company.
Have you spoken to him? A lot of people are saying, well why wouldn't
you pick up the telephone and ask him, well what went wrong?
PRIME MINISTER:
Well, one of the reasons why I haven't spoken to him since the receiver
was appointed is that once the receiver was appointed that person has
legal control over the assets of the company and the directors cease to
have any control at all. And the other reason is that it is precisely
because he is my brother, so I think it is better for somebody else to
deal with the company because people might think that because your brother
is there you may not handle it in quite the arms-length, correct way that
you would if it was somebody who was unrelated to you. My brother has
a number of business interests and he has been a very successful person,
and he has always conducted himself with total integrity. But I've
always taken care, and he has, to ensure that we don't deal with
each other, other than is entirely necessary because, precisely because
we are related.
ZEMANEK:
Well, we can understand that. But this is a story of national importance.
And one would have thought that you would have picked up the phone, being
your brother or not, and said well listen, what has happened with this?
What's happened with the company? How did you get yourself into this?
PRIME MINISTER:
Well, look I, I, like any other textile company, it was obvious from
what I have been told by a number of people, and not only him, that it
was difficult - because textiles, the textile industry is a very difficult
industry. And the point I was trying to make yesterday was that companies
in that industry have to compete against very cheap imports and I know
there is a natural tendency for people to say well we should keep all
cheap imports out. The only trouble is that if we do that then other countries
will keep out our exports, and we will end up suffering a lot more damage
than we seek to prevent.
ZEMANEK:
Are we going to see more problems with textile industries?
PRIME MINISTER:
Well . . . .
ZEMANEK:
With more companies going bust because labour is too expensive in this
country?
PRIME MINISTER:
Well, labour is not too expensive compared with countries that have the
same living standards as us. In fact our labour costs now are more competitive
than they have been for some time. But you cannot compete against countries
that are paying their workers a pittance every hour, that is very hard
unless you have very high tariff levels. And the problem with that Stan
is that if we make our tariff levels very high than other countries will
retaliate and keep our products out. I mean, it happens enough now, look
at the problem with President Clinton and our lamb exports. But a small
country like Australia finds it very hard to do that. Now, as I say I
am very sorry for what has happened to these workers, and we are doing
all that we can to ensure that they get their entitlements. The receiver
is in charge of all of that.
ZEMANEK:
Can you actually guarantee them that they are going to get all their
entitlements?
PRIME MINISTER:
No, what I can do is repeat what the Government has been told by the
receiver. We don't control the company when it goes into receivership.
Let's understand that.
ZEMANEK:
Where is it there then?
PRIME MINISTER:
What the receiver has told us is that they will get all of their entitlements,
their holiday pay, their sick leave, their long service leave, their superannuation.
The area where, at this stage, there are only resources for up to 50%
is redundancy and payment in lieu. And it is that other 50%, or a portion
of that other 50% that we will be addressing when we discuss the matter
in Cabinet in about eight or ten days time.
ZEMANEK:
Okay, on another subject. Australian of the Year, Sir Gustav Nossal,
says he thinks it is okay if Aborigines protest during the Olympics. Do
you agree with that sort of thinking? Do you...
PRIME MINISTER:
Well, I wouldn't encourage anybody in the aboriginal community to
protest, no. Anybody has a right to protest at any time in this country,
providing the process is carried out in accordance to the law. And people
have a democratic right to peacefully protest at any time in Australia.
But, it would be counterproductive to the cause of the aboriginal community
for protests to take place during the Olympic Games. I don't think
that will increase the level of concern and understanding in the Australian
community about the position of aboriginal Australians. Indeed I think
it could have the opposite effect.
ZEMANEK:
So, you don't think it will achieve anything by the aboriginal people
protesting at the Olympics?
PRIME MINISTER:
I think if a protest occurs and it creates an adverse impression, not
only domestically but around the world, that will reduce the concern in
the Australian community for the aborigines, rather than improve it. And
I would, whilst I acknowledge the right of any Australian to engage in
a lawful, democratic protest about anything, because that is part of our
inheritance, I would discourage aborigines from joining the protest against
the Olympic Games and I would counsel those who would encourage them to
do so in the name of increasing awareness of aborigines' problems,
I would counsel those people against encouraging them.
ZEMANEK:
Okay, while you were on holidays, there was all sorts of confusion about
whether businesses will be able to round up prices when they add on the
GST. Will they, or won't they be able to round up? And if something
comes to, say for argument's sake when you round it up to 97 cents,
what do people do then?
PRIME MINISTER:
Well, there are two issues here. There is the normal rounding up that
occurs at the checkout now. Where, if you buy a basket of goods and it
comes out at something that is not denominated in 5 cents, then you either
round down or up to the nearest 5 cents. Now that has been going on now
since we abolished 1 and 2 cent coins, it's got nothing to do with
the GST. That will continue, and that is totally unaffected. But that
. . .
ZEMANEK:
But you said with the rounding up as long as there is in the 10% rate.
PRIME MINISTER:
That is a separate issue which is raised by the GST, is that companies
have what they have price points. In other words, they typically price
some of their goods at something 99 cents or 49 cents. And what they want
is a capacity to keep those price points for marketing purposes and to
either go up in some cases or to go down in others. Now, what we have
said...
ZEMANEK:
Do you really believe though everybody's going to go down?
PRIME MINISTER:
Hang on. What we have said is number one, you can't in any way profiteer
out of this. Number two, in no circumstances should anything go over 10
per cent, as far as an increase is concerned because that was a commitment
we made in the last election. And number three, there'll be very,
very tight controls on the parameters within which, and the circumstances
in which this kind of rounding up or rounding down can occur. And the
ACCC is still working on those guidelines and they'll be made available
very soon.
ZEMANEK:
Small businesses are going to, as I understand, are going to get a $200
voucher, is that correct, to help them cover the cost of implementing
the GST. But an independent report by Ernst and Young released last week
estimates that businesses in New South Wales will have to spend up to
$20,000 each to comply with the GST. It makes the $200 look pretty sick.
PRIME MINISTER:
Well, the representation of that report by the New South Wales Government
was wrong. I've had a look at that report and one of the interesting
things that comes out of that report is that the businesses surveyed said
that they would not be involved in nearly the expense they expected in
implementing the GST. The other point I want to make is that the taxation
office at the moment is working on an arrangement whereby those businesses
particularly with relatively small turnovers that have a mixture of goods
that are subject to the GST and goods that are not subject to the GST
they're working on a simple apportionment formula that will enable
those firms to cope with that particular problem. I saw an article in
one of the papers yesterday that had this bloke, I think it was in a Queensland
country town, saying look, I'm going to have a problem because some
things are subject to the GST and some aren't. Well, what I am saying
to that man and others like him is that if your business is below a particular
turnover, and the tax office will be announcing details of this fairly
soon, then you are going to be allowed to apportion the goods in relation
to whether they are subject to GST or no GST. And you won't have
to, sort of, do a separate calculation for each individual item. And that
is going to save those small businesses an enormous amount of effort and
it's really going to be quite a boon to those particular businesses.
ZEMANEK:
You must be concerned though because a lot of people are still concerned
about the GST, they still don't understand it. Now, a lot of people
are saying well, okay, when is all of this publicity going to come out,
when are we going to find out the nuts and bolts on how it all works.
PRIME MINISTER:
Well, Stan, I think everybody knows that on the 1st of July
we'll have a $12 billion tax cut that when the GST, the new tax system
comes into operation we'll have cheaper exports, lower business costs
and cheaper fuel in the bush. What we have got to remember is that the
GST is only one component of a total overhaul of the Australian taxation
system that will leave the Australian economy in a much stronger state.
ZEMANEK:
Well, there's no argument from a lot of people out there...
PRIME MINISTER:
But the important thing for people to remember that you never lose sight
of the big picture, the main game, the thing that really matters and that
is that we are doing this because it will leave the Australian economy
in a stronger, healthier state.
ZEMANEK:
But why are so many people confused though? Everybody is confused. I
get calls from everybody right around the country, they are confused about
the GST. When will your Government put out all the details, the nitty-gritty
of exactly how it's going to work so everybody understands?
PRIME MINISTER:
Stan, you have got to remember that one side of politics in Australia
is deliberately creating confusion. Now, I have had two examples in the
last week of members of the New South Wales Labor Government distorting
the position on the GST. Faye Lo Po, one of the Ministers in the New South
Wales Government, falsely claimed that tampons in Canada were free of
GST. That was wrong but she still made the allegation. It was completely
wrong, it was demonstrated to be wrong and we still haven't had a
serious retraction from her. You've had the Premier of New South
Wales in relation to that Ernst and Young report misquoting it and not
acknowledging the fact that the report produced an analysis that didn't
support the argument he may have wanted. When you have got one side of
politics entirely devoted towards creating difficulty of course people
are going to get the impression that there are questions to be answered.
And look, I acknowledge that although there are huge benefits involved
in this new taxation system there is an implementation challenge and people
do need advice and do need assistance and that is being provided. And
you say, what about the information? People in small business are being
bombarded with information from the Australian Taxation Office.
ZEMANEK:
All right.
PRIME MINISTER:
I mean, I met somebody yesterday who is an importer. I met her at an
Australia Day function in my electorate and she said: this is a fantastic
reform. She said: I have a much better cash flow position, it's a
much better system for me as a small business proprietor to run it. She
said: it can't come quickly enough.
ZEMANEK:
Well, just getting to a sporting goods manager, he estimates he would
have to spend about $10,000 re-negotiating contracts with suppliers, sub-contractors,
customers and sponsors, about $2,000 on pricing and cash flow management
as well. $6,000 on staff training, nearly $1,000 on technology implementation,
about $600 on compliance and other issues and about 530 man hours between
now and July 1. The total cost, according to him, is around $20,000. Now,
when you hear that all broken down I mean you can understand that the
$200 you are putting forward and the information that you are trying to,
sort of, get across to people just isn't...
PRIME MINISTER:
Stan, I can't...
ZEMANEK:
Your version and their version...
PRIME MINISTER:
Stan, with so many of these things, with most respect to that example
and whoever provided it, I am just not prepared to accept on face value
that it's a fair analysis. And I would have to talk to the person,
I would have to go through all the propositions he's put before I
could be satisfied that what he is saying is correct.
ZEMANEK:
Can I put him in contact with your Department?
PRIME MINISTER:
Well, of course, he can get in contact with my office. He can ring my
office any time and we'll go through it with him. Or better still,
I'll send him over to the tax implementation unit. But we are very
keen, the Government in total, is very keen to assist people because together
we want to work with small business in particular so that the implementation
is as smooth as possible. Because when it does come in there will be an
enormous benefit. I mean, every business in Australia will enjoy a reduction
in the operating costs. Our exporters will sell more competitively on
world markets and in the bush our fuel will be a lot cheaper and on top
of that, we'll all participate in a $12 billion cut in personal income
tax. And 80 per cent of Australian taxpayers will be on a top marginal
rate of no more than 30 cents in the dollar. Now, they are the big picture
benefits of this huge change, this hugely beneficial change to our taxation
system.
ZEMANEK:
Okay. Now, a lot of people are worried about the banks, putting up fees
and charges to cover the costs of implementing the GST. Are the banks
well behaved in this? I mean, can they be better controlled by the Government,
is there any way that they can be better controlled? I mean, what are
you going to do to make sure that customers don't get slugged again?
PRIME MINISTER:
Well, like everybody else the banks will be subject to surveillance by
the ACCC, the Competition and Consumer watchdog, to see that there is,
you know, a correct handling of the GST implementation. And, I mean, Australian
banks are very strong, they are very profitable and we want to be absolutely
certain that in the process of implementing the GST there are no charges
passed on in the name of the GST which are not in any way attributable
to the GST.
ZEMANEK:
Another thing, one of my listeners, Mal from Erskine Park, wants to know
if stamp duty on things like cars and houses, that's going to be
abolished once the GST comes in?
PRIME MINISTER:
Over time it will be, yes.
ZEMANEK:
But not straight away?
PRIME MINISTER:
No, not straight away but it will be over time, yes.
ZEMANEK:
Why not straight away?
PRIME MINISTER:
Well, because there is not enough money in the kitty for it to occur
straight away.
ZEMANEK:
But see, once again here's the confusion.
PRIME MINISTER:
No, no, it's not confusion. This was made very clear right at the
beginning Stan. I mean, what we are abolishing straight away is the wholesale
sales tax. That will go in total, in its entirety on the 1st
of July and we have already begun some of the reductions in reducing things
on whitegoods down to the more basic rate of 22 per cent. But other things
will take a number of years to abolish as the GST builds up. See all of
the GST is going to the States, the States are going to in a few years
be hugely better off therefore they will be able to abolish those things.
The Financial Institutions Duty will go quite early in the piece. Wholesale
sales tax will go immediately and over time these other things are going
to be abolished.
ZEMANEK:
Okay. Now, look, I know that you are short on time...
PRIME MINISTER:
You can keep going.
ZEMANEK:
No, no, that's fine. But there's a lot of other stuff that
we want to discuss before you have to fly off to Canberra and I most appreciate
it because I know that you were leaving earlier to go to Canberra this
morning and you put that trip off for us. The Indonesian President, Wahid,
has agreed to possibly come here to Australia, that must be a big coup
for you as far as getting him out here?
PRIME MINISTER:
Well, I'd like to compliment Alexander Downer on handling this issue
very carefully and very professionally. He had a very good visit to Jakarta
and I am pleased that the Indonesian President has indicated a willingness
to come to Australia. He is very welcome to visit this country. It will,
in fact, be the first visit to Australia by an Indonesian President since
the mid 1970s so it will be quite an important event. Look, on both sides
there's a desire to rebuild the relationship, rebuild it on mutual
respect. We as a country believe that we have behaved correctly in relation
to Indonesia and Indonesia, of course, has certain sensitivities which
we understand but that is the past and what is important is the two countries
that lie next to each other share a common future and it is important
that we work on rebuilding the relationship and I welcome what the President
has said and I am certainly keen that he come and we are in the process
now of nailing down the details of the visit. But he'll be most welcome
and I think it's a very important step along the road to rebuilding
the relationship. But we have to be realistic, it will take time because
of the differences over East Timor and we have to be realistic about the
progress that can be made in a relatively short period of time. But Alexander
Downer's visit has brought the relationship a long way on the road
forward and I thank him and congratulate him for that.
ZEMANEK:
Okay. We've got 3,277 illegal immigrants in detention at the moment.
Indonesia has done nothing to stop that tide, they haven't done anything
to support us in stopping those people from coming to Australia. Have
you put any pressure onto the Indonesian Government, have you spoken to
them about this, is there any way that they can cooperate and try and
help us from stopping these people coming to this country?
PRIME MINISTER:
Well, once again, we are making some progress on that front. Our Immigration
Minister is apparently quite welcome to go to Indonesia and to have a
discussion about this, it was one of the subjects that Mr Downer discussed
with President Wahid. And the other thing that I think I might mention
is that although it only covers a three month period I should point out
to your listeners that the number of illegal arrivals in November was
1200, in December it was 740 and in January it was 280. Now, I am not
suggesting for a moment that those figures are, you know, necessarily
representative of a trend improvement but they are some indication that
maybe the measures that we have been taking are having an effect.
ZEMANEK:
But on Tuesday we had another 40 people, another boatload.
PRIME MINISTER:
Yes, I understand that but the point is that there has been