Subjects: Centenary of Federation celebrations; small business; economy; government spending; Shane Stone memo.
O';BRIEN:
John Howard, in your centenary speech yesterday you highlighted the accumulated values of the past century of parliamentary democracy. You didn';t say that much about the future. What is your vision for the future, the short version?
PRIME MINISTER:
Well the short version is to make certain that the values we hold dear such as egalitarianism, encouraging self reliance, encouraging shared endeavour to tackle common problems, the challenge is to make certain that those values are retained and that they are applied to the problems and the challenges that we are going to encounter in the years ahead.
O';BRIEN:
And how will that translate into your third term agenda?
PRIME MINISTER:
Well it means for example that in areas like welfare reform we have to put a focus on helping people back into the workforce, asking them to do something in return where they can, but always providing a safety net. In other words as well as being caring and compassionate we have to build a self reliant society. It means ensuring that the age old Australian desire to provide a safety net for the vulnerable is applied in an increasingly borderless or globalised world. It will mean that we need to have a balance achieved in cooperation between governments and business and individuals in tackling big environmental problems. I mean one of the things I';m very proud of in our second term is that we';re the first government in Australia';s history to tackle the problem of salinity which is probably from an ongoing point of view one of the biggest environmental challenges that this nation has.
O';BRIEN:
In the lead up to the '96 election you told 4 Corners your vision for Australia in the year 2000, that';s last year, was for a nation that feels relaxed and comfortable about its history, about the present, and about the future. Have you achieved that?
PRIME MINISTER:
Well it depends who you talk to Kerry. There are a lot of Australians who do think this nation is both more relaxed and more comfortable, certainly more secure and more respected now than before I became Prime Minister. There are others who don';t. That remark famously attributed to me, quite correctly, of course was not the be all and end all of my vision for Australia. But it expressed a confident view that I';ve always held that in the balance sheet of history Australia is seen to have made an heroic contribution and a very positive one, not that we haven';t made mistakes and not that we haven';t done things that we should be ashamed of. But overall the balance sheet has been one of great and positive achievement.
O';BRIEN:
You particularly singled out small business for mention within that particular vision statement. How relaxed and comfortable do you think small business is today about the way the GST has been implemented and the economic hardship that it';s created?
PRIME MINISTER:
Well some of them are not happy. Many I talk to are. Many tend to be a little dismissive of some of the criticism that is made. They of course are very grateful that interest rates now are not 17% as they were under Mr Keating. They are very grateful that company tax will be 30 cents in the dollar instead of the 36 cents in the dollar that they had when we were elected to office. And they';re very grateful that if they';re sole traders and not incorporated they will get the benefit of a halving of capital gains tax. And they';re also very grateful that we';ve had very strong economic growth over the last few years. So you don';t just measure the temper and mood of small business in relation to the Business Activity Statement. And I know there';s been problems with that. I say to small business I know that, I';m sorry about that and I';m trying to do something about it and we have made changes and we stand ready for further fine tuning to make certain that it is as comfortable a document as can reasonably be provided in the circumstances.
O';BRIEN:
You';ve once again highlighted Labor';s worst aspects of its economic record. You';ve spent much of the past five years attacking Labor';s economic credentials. But your own economic credibility is now somewhat tarnished isn';t it?
PRIME MINISTER:
Well I don';t think so. I mean we have repaid $50 billion of the $96 billion debt we inherited from Mr Beazley despite his best efforts to stop us paying it. We';ve got our interest rates down to their lowest levels in more than a generation and we';ve added about 750,000 jobs to the total in work. And in addition to that we';ve got a much lower level of unemployment. Now sure we had a negative quarter in December. There were some one off factors and explanations for that and we';ll wait and see what happens in relation to the March quarter. And we';re obviously living in a world of more subdued growth and Australia can';t entirely escape it. But we have cleaned up Labor';s economic mess and if the people re-elect Labor, interest rates will go up again, they';ll go into deficit again and the same old chronic problems of economic mismanagement will return under a Beazley government.
O';BRIEN:
I would think many people would point out that the reason interest rates have dropped this time is to try to kick-start the economy again. You mentioned the half year economic review in November. Well that major half year review in November forecast that growth would be boosted to 4%. It was described as a robust 4% for the year and in fact at the very time that you were making that forecast of growth the economy had gone backwards into negative growth. Now how credible is that economically?
PRIME MINISTER:
Well Kerry can I just go back on the interest rate thing. The drop you are talking about is a drop from a level that was dramatically lower than the level that interest rates were at when we came into office. So you are talking about a further reduction on a big reduction on interest rates under Labor. So I mean even without this recent reduction, interest rates for small business and home buyers were hundreds of dollars a month lower than what they were under Labor. In relation to growth I think everybody was surprised at the December quarter. The main contributor to that was the very sharp contraction in the housing industry. I recognised that and I did something about it. Within two days of getting the figures we doubled the home savings grant - a select economic stimulus for an industry that has wide ripple effects when it recovers throughout the economy. And I';m very confident already that we';re starting to see the benefit of that revival in the housing industry and that will have very good multiplier effects.
O';BRIEN:
Your November review, just six months ago, also said that unemployment would drop below 6% this year. But today it';s jumped to 6.8% and climbing.
PRIME MINISTER:
Well you have got figures that are higher today although bear in mind it was between 8.5% and 8.7%, I think it was 8.7% or 8.5% when we came to office. So it';s still much lower than it was under Mr Beazley who of course took it to almost 11% when he was Employment Minister. The unemployment outlook is still better than it would have been a few years ago. It';s a little softer now because the economy is softer. Now economic forecasts do get changed over periods of time. I';ve never promised that having made an economic forecast it will remain exactly the same no matter what the circumstances are. Clearly the economy is not growing quite as strongly now as it was a year or 18 months ago. The important thing is that the fundamentals are so strong that we have a better chance of resuming that much stronger economic growth than we would if we were in deficit and we had higher interest rates and we hadn';t reformed the tax system.
O';BRIEN:
Again in terms of your economic responsibility the Sydney Morning Herald calculated today that you';ve embarked on a spending spree as they put it in the past six months making new commitments worth $16 billion over the next four years. So who is the big spending party in this election year?
PRIME MINISTER:
Well Kerry I haven';t analysed all of that article but let me deal with the substance of it. We have spent some additional funds and in every area it';s justified and in the public good. Roads, salinity, defence, cutting the price of petrol. All of those things are valuable for the community and for the economy and the reason that we';ve been able to spend that money is that we';ve run a tight budget. You don';t run tight budgets just to pile up a bank balance in the Treasury vault. You run a tight budget so you can pay back debt and when you';ve paid back a certain amount of debt you then spend the surplus on either tax cuts or very good community spending and that';s exactly what we';ve done and I will defend every item of spending for which this government has been responsible and I';m proud of the fact that this government is spending more on defence, more on the environment. We';re putting money into encouraging people back into private health insurance, we';re putting more money into government schools than the previous government was. I mean I';m very proud of those things and I think they';ve all been made possible by the fact that we';ve run a tight budget.
O';BRIEN:
And none of it comes under the heading of government panic because you';re facing a loss at the next election, that you';ve had all that feedback from your colleagues including the now infamous Shane Stone memo? You';re not going to indulge in any pork barrelling in this next election?
PRIME MINISTER:
Well Kerry many of the things I';ve just itemised were of course expenditures committed before the end of last year. And even my fiercest critics and the most devout barrackers for the Labor Party in the community were not saying at the end of last year that our electoral situation was weak. Of course like any other Prime Minister I pay regard to public opinion and I do listen to what people say. I should because I';m answerable to the Australian community. But I just say again panic vote buying occurs when you irresponsibly run the budget into the red in order to buy political support and we';re not in the business of doing that.
O';BRIEN:
But you say that you pride yourself on how much you listen to people. The Shane Stone memo said the opposite as a direct message to you from your own colleagues. I imagine that you would have hoped after last week that the impact of that memo would now be declining with that sort of pungent internal criticism about being a mean and tricky government. But senior commentators this week are still writing about the damage to your government, about a damaged relationship with Peter Costello, and about the free kick it';s given Labor at the next election.
PRIME MINISTER:
Well all of that is as you rightly say commentary and being a player on the field rather than a writer for the sports pages I tend not to engage in commentary. I will say this that of course I';m sorry that incident occurred but my relationship with Peter Costello remains very strong and very close. Ultimately all of these things will be factored in by the Australian community when they make an electoral judgement and I guess you';re no better judge or I';m no better judge of that than anybody else.
O';BRIEN:
Nonetheless I guess those nagging questions remain and they';re still being asked this week repetitively - why didn';t you tell Peter Costello and John Anderson about that memo given the strength of its sentiment and why didn';t you destroy the memo?
PRIME MINISTER:
Well having already dealt with those questions last week Kerry you won';t be surprised if I say to you I don';t intend to deal with them again.
O';BRIEN:
Peter Costello...Freudian slip. John Howard, we';re out of time but thanks very much for joining us. Thank you.
PRIME MINISTER:
Thank you.
[Ends]