Subjects: Centenary of Federation celebrations; Fosters Brewing; Arnotts; Bradmill; HIH Insurance; BAS; GST; standards of living; Aston by-election.
FAINE:
Good morning to you Mr Howard.
PRIME MINISTER:
Good morning Jon.
FAINE:
Happy to take a few calls this morning?
PRIME MINISTER:
Yeah sure.
FAINE:
First of all Prime Minister, yesterday';s celebration of the Centenary of Federation here in Melbourne at the Royal Exhibition Building. I thought a very fitting and appropriate low key celebration. Were you happy with the way it went?
PRIME MINISTER:
Yes. With something as big as that every individual will have a slightly different way of doing it. You might have had different painters or different artists on it. But overall I thought it was a great occasion. It included a lot of people. It was conducted in a very good spirit. The refurbished Exhibition Building is quite magnificent. It';s about the only one of those types of buildings left in captivity anywhere in the world. And because that was the building in which the original ceremony took place and as so many Australians have imprinted on their minds that marvellous Tom Roberts painting of the first parliamentary occasion one hundred years ago there was without any sense of corniness a feeling of occasion and a feeling of history about walking into that building and being part of that vast concourse of people.
FAINE:
Were you in any way embarrassed by the spontaneous applause at the mention of a republic, at the mention of reconciliation, at the support for Lowitja O';Donoghue, that the crowd insisted on expressing despite being asked not to clap during the proceedings?
PRIME MINISTER:
No because some people feel an urge to express a partisan point of view at something like that no matter what the occasion is. There are people who support a republic but as I pointed out in my speech the Australian people are free to change the Constitution if they wish. It';s not easy to change the Constitution and neither it should be. It was deliberately made so and wisely so because once you make change you can';t undo those changes. But it';s open to people to make these changes. I don';t happen to take the view that the future of Australia stands or falls on whether it becomes a republic. Some people in the community think that unless you believe in a republic you have no vision about Australia';s future. I think that';s a superficial and shallow view. We have succeeded with our present constitutional framework very well. The question of whether we change it in the future is as always in the hands of the Australian people and the quality of our democracy and our civilisation is not going to be in my view effected by the method of choosing..the method of having a head of state.
FAINE:
7,000 guests from all walks of life, from all political persuasion, dignitaries as well, people representing all political parties and people with no political affiliation. But the underlying feeling was that they wanted to send a signal on the republic, on reconciliation, on those particular issues where people say you are out of step.
PRIME MINISTER:
Well that';s your interpretation of it and...
FAINE:
Well I';m putting it to you as several columnists in...
PRIME MINISTER:
Well yes but they';re the columnists like Louise Dodson and others in the Melbourne Age, and I see you smiling because you';ve read the same column, they are amongst journalists in Australia, and journalists disproportionately present this point of view that whether you have a vision about Australia';s future is whether you want a republic; have the Paul Keating view of Australia';s relations with Asia, in other words we have relations with Asia almost to the exclusion of relations with any other part of the world; and a particular approach, not in so much in relation to reconciliation but more in relation to the giving of a formal apology. And unless you embrace those things you don';t have a vision. And every time these things come up they say the same things about me to the same extent and in the same tone and I find it completely unsurprising. In the end these are things that the Australian people will decide. I mean unlike the columnists and others who find it hard it accept the verdict of the Australian people, we did have a vote remember on the republic only, what, 16 months ago. And if I remember rightly a majority of Australians voted against it. Now that';s what I take account of and there will always be people who will advocate a republic and that';s their right in a democracy and there were a lot of them there yesterday. But there were a lot of people watching and listening whose view of Australia is that there are more important things about our future and that maybe we';ll become a republic maybe we won';t but there are more important things.
FAINE:
Breaking news this morning that Fosters, the brewing group, now a diversified wine company as well and with overseas interests extensively as well as locally, being looked at by the brewing giant from Holland, Heineken. Australian assets, corporate assets are cheap at the moment because of the Australian dollar. What does the Australian government do about another icon of Australian business being under threat?
PRIME MINISTER:
Well what we do is if there is an application, under our foreign investment policy that will be dealt with by the Foreign Investment Review Board. And then in accordance with the law the Treasurer will make a decision. I feel I have to say that the fact that there is a report of this possible takeover bid gives the lie to those people who said that if we rejected the Shell bid we would frighten foreign investment away from Australia. Remember a few weeks ago people were running around saying well you';ve got to say yes to the Shell bid because if you don';t forever and a day foreign investment will be frightened away from this country. It doesn';t look as though it';s been frightened away. I mean what this news indicates if it is true is that people feel quite free and desirous of investing in Australia. Now I';m not going to offer a view on whether it';s a good or bad bid. I don';t know precisely of whether it';s going to happen and I won';t be giving a commentary on its quality. It will be dealt with in a proper way in accordance with the law. This country welcomes foreign investment. We have a very liberal foreign investment policy, and so we should.
FAINE:
Unless it';s Shell trying to buy Woodside.
PRIME MINISTER:
No. Unless it is against the national interest to allow a takeover to go ahead and on that occasion the Treasurer judged quite correctly that it was against the national interest because Shell had assets all around the world of which the Australian asset was only one. It was easy to see that if push came to shove the Shell worldwide national interest would be given priority to the proper exploitation of the Australian asset. That';s why it was rejected.
FAINE:
And it';s too easy a joke to say that what could be a greater liquid asset than beer, and particularly Fosters. Is that in the national interest to keep Fosters Australian?
PRIME MINISTER:
Well I';m not going to answer that question because I don';t know the details of the bid, I don';t know for certain it';s happening. In any event it';s not my personal decision to take. Under the law the Treasurer';s got to take the decision. The law will be allowed to take its course and the bid if it is forthcoming will be properly analysed by the government and ultimately a decision taken by the Treasurer and that decision will be against the national interest criteria.
FAINE:
Coming hot off the heels of the closure by Arnotts of their Burwood factory in Melbourne with 600 people losing their jobs, sensitivities over foreign control of Australian businesses are particularly acute.
PRIME MINISTER:
There are always sensitivities about everything. At least my government is prepared to have a view. I still don';t know whether the Labor Party supported or opposed our decision on Shell. They don';t have the guts to state a view on something like that. They';re hoping to get some kind of political benefit from the inevitable reaction that occurs against any decision a government takes in a difficult area. I regret the Arnotts decision. It';s not a decision which is being conditioned by federal government policy and the federal government is very sorry that that decision was taken. I never like to see jobs go out of Australia. The question of whether jobs go from one part of Australia to another part of Australia is not something that I take sides on. I mean companies do move jobs around according to economic conditions in different parts of the country and I don';t get into that. I';m for Australian jobs. I';m not for or against Victorian jobs as distinct from jobs in New South Wales or Western Australia. They';re all the same to me. But the reality is that economic conditions, conditions for investment in this country are very good at the present time. I mean you';ve just said in effect that we should be concerned that an overseas company wants to put more money into Australia. Now that';s a sign that Australia is an attractive place.
FAINE:
Steven';s on the line. He';s a Bradmill's worker. You I understand will be facing a protest, a demonstration outside the Victorian Parliament where Commonwealth Parliament will be sitting this morning Prime Minister. Steven is a Bradmill's worker. Good morning Steven.
CALLER:
Good morning Jon, how are you?
FAINE:
I understand you';re on your way to protest outside state Parliament.
CALLER:
Yes. We';re just leaving Bradmill Textiles now.
FAINE:
And what is the protest about?
CALLER:
We';re coming into protest today because we';ve been trying to get John Howard to come down and speak to the workers of Bradmill Textiles about our jobs.
FAINE:
And why are you losing your jobs?
CALLER:
Well we went into receivership on the 28th of February of this year through losses from the company.
FAINE:
Now there';s a fund of some kind Prime Minister for people who aren';t getting their entitlements.
PRIME MINISTER:
That';s right there is...
FAINE:
[inaudible] company goes broke.
PRIME MINISTER:
It';s a fund to which the federal government contributes but the Victorian Labor government, like Labor governments all around Australia have refused to contribute to.
FAINE:
They won';t?
PRIME MINISTER:
They won';t. Well I don';t know, I mean I wonder whether...Steven can I say first of all I understand that the Employment Minister Tony Abbot met...
CALLER:
[inaudible]
PRIME MINISTER:
C';mon, I mean I';ve listened. Fair go. I';m very sorry about what';s happened in relation to Bradmill. Tony Abbott did go and see your workforce. I think he visited the premises didn';t he?
CALLER:
Yes he did.
PRIME MINISTER:
And I think he fronted up and he listened and he pointed out that we did have a safety net scheme in relation to entitlements which is not supported by the Victorian Labor government. I mean are you demonstrating against Steve Bracks?
CALLER: We are demonstrating against Steve Bracks?
PRIME MINISTER:
And are you going to demand that he match the federal government';s contribution to the fund?
CALLER:
Yes we are.
PRIME MINISTER:
Is he going to, like a good Labor Premier that he';s meant to be, is he going to help you?
CALLER:
Well I hope so and I hope you as a Prime Minister you will help us as well.
PRIME MINISTER:
Well we at least have a fund. I mean we are the first federal government in this country to have a fund that picks up the obligations of a company. Now I don';t know all the ins and outs of who is going to get what in relation to the receivership. But I can assure you and your colleagues that the full resources of that fund will be available and we';ll consider all of the circumstances of it.
CALLER:
Well I do understand that fund';s available. Now we';ve got close, very close to 900 workers at Bradmill, Ararat, and workers at [inaudible]. Now we';ve got workers who';re owed six to seven weeks of pay and with the federal government';s safety net all we';re going to receive is two weeks which is nowhere near enough.
PRIME MINISTER:
Well you would receive four weeks if it were matched by the state government. You would receive double and we have been waiting..
CALLER:
That';s less than 10%.
PRIME MINISTER:
I know but there';s got to be a sharing of these responsibilities. I mean state laws, state workers'; compensation laws, state requirements and so forth, they all impact on the operating profitability of companies in Australia as do federal laws. And in those circumstances if there is to be a safety net then that safety net has got to be jointly supported by the state government as well as the federal government.
CALLER:
Now I';m hoping you will actually save our jobs.
PRIME MINISTER:
Well I was just going to go on and say I think there is a possibility of that.
CALLER:
Well I hope there is a possibility.
PRIME MINISTER:
But in the end no government can act as a banker of last resort for a company. I mean I have to be honest.
CALLER:
Well why not? I mean [inaudible] national textiles...
PRIME MINISTER:
Well we didn';t bail out that company and you know that';s an untrue statement to make.
CALLER:
They received all their entitlements.
PRIME MINISTER:
Well I';ll tell you one of the reasons they got better treatment was because the New South Wales government on that occasion matched what the federal government did. If you';re dragging that up as an analogy I invite you to go to Mr Bracks and say why don';t you offer in relation to Victorian companies to do what Mr Carr did in relation to that particular company. That';s one of the main reasons why the workers in that company, not the directors, the workers in that company did better.
FAINE:
All right Steven. You';ve had a good run. Thanks very much for that. Talking of bailing people out when they';re in trouble Prime Minister, HIH, yesterday the Victorian and New South Wales state governments called for a judicial inquiry into the problems caused by HIH';s collapse. Why won';t you agree to one?
PRIME MINISTER:
Well we are waiting to get the full report of the liquidator, or receiver, which will be available next week. And we are analysing a number of propositions that have been put to us. We certainly intend to resource the Australian Securities and Investment Commission to the extent necessary to throw the book at the directors of this company. There won';t be any reluctance on the part of the Regulator to pursue the company directors if there';s been any improper conduct, I';m not saying there has been, I don';t know and I';ve got to be very careful and so have you and so has everybody about what they say in relation to the directors because you can';t make allegations of criminal behaviour willy nilly.
FAINE:
Not doing so but if it';s one billion, two billion some people are talking in excess of $3 billion.
PRIME MINISTER:
It is a huge collapse.
FAINE:
It could be your pyramid.
PRIME MINISTER:
Well we don';t have a Treasurer who behaves in the way the Victorian Treasurer did at that time so there will never be a pyramid for this Government because we don';t behave in such a financially irresponsible fashion.
FAINE:
If it comes to a point where the losses are massive will you agree to an inquiry?
PRIME MINISTER:
We will respond when all of the detail is in. We are following it very closely, I';m not going to give a piecemeal response. We';ve had a number of propositions put to us. We';ve had some preliminary discussions and we';ll have more later on.
FAINE:
It';s your prudential regulator, it';s a federal regulator that';s supposed to have been keeping an eye on HIH and companies like that.
PRIME MINISTER:
Well certainly it is a federal regulator operating under a law that has really been supported by both sides of the parliament for a very long time.
FAINE:
I';m keen to get to more calls in just a moment but I must ask you about the decision taken yesterday and announced by Communications Minister Richard Alston to abandon the auction of further broadcasting spectrums. This puts a multi million dollar hole in the budget projections for the next few years. You were hoping to get more than $2 billion from the sale of this spectrum and the critics of the process you chose are saying 'well we were right all along';. You';ve put such restrictions on the use of this spectrum it was never going to be worth anything. What';s your response?
PRIME MINISTER:
Well I would expect them to say that. As to whether it';s put a hole in the budget or not, I think it';s getting so close to the delivery of the next budget there';s not much point in my trying to respond to that view. Everybody will know on the 22nd of May the budget position. Our budget position is still sound and we will be delivering a balance. We need a balanced budget. I don';t agree with the views of some economists that we should go into the red. As to the reasons, well a lot has changed in relation to the whole spectrum scene including a changed market view about the value of investments in this area. These things come and go, I mean the bottom line is whether we have a strong bottom line and we still will have one.
FAINE:
Eric in St Andrews, good morning to you. Prime Minister you just need to pop the headphones back on there. Good morning Eric.
CALLER:
Yeah good morning Jon. I just wanted to make some remarks about the introduction of not just GST but the BAS. I';m very angry, the breathtaking, the arrogance that was shown for probably the first eight months of it by the Treasurer and the Prime Minister. It was just breathtaking the way they continually told us that this was a good system for small business and how it was helping me. It was just so out of touch it was a joke. I thank my lucky stars I was providing services to my clients, I';ve got a small client base, I do marketing and consulting and PR work.
FAINE:
What';s your question Eric?
CALLER:
Um, it';s not really a question Jon, so much as, well I suppose it';s brought a question to see what changes he';s going to make to make the BAS system easier on me in the future. The recent changes that allow you to just do an averaging or a projection for your quarterly submission is so out of touch as well because the first two quarters I actually made payments, I had to pay. The third quarter, I';ve got to get a refund. So if I had have just gone with the so-called simplified system I';d be further in the red. Um, so I';ve had to go through another reconciliation. It';s not just an issue of counting up 10% in and 10% out paying the difference it';s the total reconciliation that you have to do.
FAINE:
What';s it costing you Eric?
CALLER:
Oh, I probably spend about 23 hours on this BAS which when you';re totally self employed you work out the hourly rate on that.
FAINE:
Ok Prime Minister.
PRIME MINISTER:
Well we have made a lot of changes. I don';t accept that we';ve behaved arrogantly. Eric you are aware of course that on the first of July your company tax rate. Do you operate as a company?
CALLER:
Yes I do but also I';m aware that you are allowed a compulsory $200.
PRIME MINISTER:
I listen courteously, if I can have a go now. On the first of July your company tax rate will fall to 30 cents in the dollar. It was 36 cents in the dollar when we introduced this system. I believe that after some of the transitional difficulties and I acknowledge there have been transitional difficulties and we have tried to respond as quickly as possible to those difficulties. I believe that when those transitional difficulties have passed this will be seen as a superior system, not only for small business but for the community generally. When you';re looking at tax reform you can';t just take one isolated bit. You';ve got to look at the whole impact of tax reform on the community. The $12 billion reduction in personal income tax, the fact that states are going to get a growing source of revenue through the GST to fund police and education and health and road services. And the fact that we will have at 30 cents in the dollar, one of the lowest company tax rates in our region and a much lower company tax rate than the United States or nations in Europe. And also on the 1st of July the Financial Institutions Duty is going to be abolished and also Stamp Duty on share transfers. Now all of these things have been made possible through tax reform and through the introduction of the new tax system. So yes you can point to transitional difficulties, yes I acknowledge they exist, yes we';ve tried to do something about it but you';ve really got to look at the whole spectrum.
FAINE:
.in order to get the whole picture. Eric, are you satisfied with any of that?
CALLER:
No, not really because he didn';t address the core issue which is the quarterly reconciliation period. It';s not just an issue of 10% in and 10% out. It';s actually doing all the books every quarter that';s the thing that';s so distracting.
PRIME MINISTER:
Eric I';ve got to say the difficulty I have, I talk to a lot of people who are self-employed. I talk to a lot of people who run service businesses like you apparently do. I talk to a vast range of people and I get very differing reactions. Many people say it';s complicated, as you have said, a lot of other people say it';s not and they have found after the initial challenge of a new system they have got used to it and they find that it gives them a discipline in running their businesses and therefore it';s of value and something that over a longer term they welcome.
FAINE:
It';s clearly still going to be an issue though when the federal election comes along, whenever that is.
PRIME MINISTER:
Of course. Jon, I didn';t expect tax reform to go away and of course the question of whether we reform our tax system will be an issue but the Australian public will want to know what Mr Beazley is going to do. I mean Mr Beazley supported tax reform when Paul Keating advocated it. Mr Beazley hates the GST so much that he';s going to keep it. I mean he has run the ultimate opportunistic game on this issue. I mean he stood back and allowed a government that';s had the courage to try and change things for the better to have a go and he';s feeding off the discontent that';s always involved in change. Now that is the politics of, I think, insipid leadership. It';s the politics of opportunism. It';s negative. It';s not in the long-term interest of Australia. Now whether the Australian people support it or not we';ll both know at the election but I would rather be seen by the Australian people as somebody who';s prepared to have a go for the benefit of the country than somebody who stands on the side lines hoping that through the discontent inevitably involved in change he';ll be able to pick up a few votes.
FAINE:
Daryl';s mobile, good morning Daryl.
CALLER:
Yeah, good morning. Hi John and Jon. Thanks very much for the opportunity. Firstly John thanks for the guts of your government and yourself. I think you';ve been very pro-active. I';m (inaudible) on East Timor and the gun reforms are things you';ve done very good. My concern I suppose is directed at GST and the cost of living for my parents and my point of view. I';m sure a lot of people share it. I don';t feel the tax concession on our income taxes have gone anywhere to equal the increase in the cost of living. Now I say that from a very personal point of view, I don';t have children and I am single and I know that we can decide to curb our spending where we are. But I don';t know whether or not it';s a government taxation here on businesses or if people are still double dipping 10% and then 10% on top of that in their prices. I just want you to be conscious of that I suppose when you are looking at the budget or I don';t know. I know there';s no quick fix, I welcome tax reform and I am supporter of the GST but I just feel the cost of living has increased and the income savings haven';t equalled that out.
FAINE:
So you think you';ve gone backward in your standard of living or disposal income Daryl?
CALLER:
Yeah I think I have.
FAINE:
Okay, well lets put that to the Prime Minister.
PRIME MINISTER:
Well Daryl, thanks for the call. It';s hard of course to give definitive answer because I don';t know all the details of your position and I don';t seek them over this line. But I can only look at it generically and the cost of living increase as a result of the GST, the one-off increases, those increases have not been as great we predicted at the time we brought tax reform in. in fact the CPI has gone up as a result of tax reform less than we predicted. And all of the calculations we made at the time were to the effect that prices increases as a result of the GST would be more than covered, not only by income tax cuts but in the case of people on the pension, many of whom don';t pay tax, the increases in the pension would be much greater than the increases in the cost of living.
FAINE:
Daryl';s telling you it doesn';t go far enough.
PRIME MINISTER:
You know, as I';m saying I can';t make an objective judgement on Daryl';s position Jon without knowing all his figures. Neither can you.
FAINE:
But he';s saying he';s pro-GST.
PRIME MINISTER:
Look I can only deal in facts and the fact is that in the absence of having Daryl';s figures, I can';t say whether Daryl is better off or worse off any more than you can.
FAINE:
He says he';s worse off.
PRIME MINISTER:
I';ve got to make a judgement on facts. Might feel that but perhaps when all of the facts are pointed out he might have a different view.
FAINE:
But the point Prime Minister is he';s a supporter.
PRIME MINISTER:
I understand that.
FAINE:
He';s not ringing up hostile to you, he';s ringing up friendly to you still saying I';m worse off.
PRIME MINISTER:
But Jon I';m saying to you that I can';t be pressured into agreeing with what he';s saying, and I';m not going to be, without having all the facts in front of me.
FAINE:
Alright. Three minutes to nine. We';ll squeeze in one more quick call. Graeme';s mobile, morning Graeme.
CALLER:
Yeah thanks very much. Good morning Prime Minister, good morning Jon. My call is to firstly say that I fully support your attitude and your policies on the reconciliation and on the constitutional issue. I am a flexible voter so I';m certainly not one of the party faithful. But I think your steadfastness has been very very good and I think you should stick to it. There';s a lot of us out there that are behind you. I might add also that my family';s been here since 1823 so I';ve got a fair interest in what happens in my country and in spite of the sarcastic and mindless comments of Keating and the tired old rhetoric of Whitlam and Hawke, I think you should keep the way you';re going John.
PRIME MINISTER:
Well thanks Graeme.
FAINE:
Not much more to say to that is there?
PRIME MINISTER:
No, but he speaks for many people. I mean you say there was a solid message coming through from the 7000 people yesterday at that gathering. I tell you there are many millions of Australians who are fed up with the denigration of our history and there are many millions of Australians who are fed up with this notion that unless you support a republic, unless you believe in a formal apology, unless you re-embrace the Keating agenda for relations with our region to the exclusion of relations with Europe and North America, that in some way you don';t have any vision for the future of this country. There are millions of Australians who reject that view and Graeme you';ve just heard from has been but one of them.
FAINE:
We will be chasing the Premier Steve Bracks to find out why the State Government don';t make the contribution to the bail out fund that the Bradmill workers were calling for.
PRIME MINISTER:
I mean I';m talking here about our general scheme and I hope it';s not needed in Bradmill.
FAINE:
No. But why aren';t they making a contribution.
PRIME MINISTER:
And we have had this problem, I mean people may say it';s not enough.
FAINE:
Yes.
PRIME MINISTER:
But it';s more than nothing and nothing is what Mr Bracks is offering at the present time.
FAINE:
Are you tempted to go to a general election instead of a by-election for the seat of Aston after the death of Peter Nugent?
PRIME MINISTER:
Oh, no no no. Look we will do the right thing in Aston. We will have a by-election and there won';t be any undue delay and we';re not going to try and push it off into the distance in the hope that people might say oh well leave it to the general election. I';m not planning to have a general election until it';s due. And that';s towards the end of the year. And in those circumstances, clearly after consultation with the Speaker who sets the date, there will be a by-election without any undue delay in Aston. The people in Aston are entitled to have a representative. It';s going to be very tough for us to hold the seat because of the margin, it was a sad death, and we';ll be out there fighting with a good candidate I';m sure.
FAINE:
Prime Minister thank you for your time.
[ends]