Subjects: Ansett and CASA; first home owners grant; HIH insurance, deeming rates.
E&OE................................
JONES:
Prime Minister, good morning.
PRIME MINISTER:
Good morning Alan.
JONES:
Prime Minister you would know that in the last couple of days that all this business about Ansett, I have said that the Civil Aviation Safety Authority doesn't appear to know a great deal about safety. Because when Ansett failed under the previous administration of Ansett to do anything about two directors from Boeing that highlighted potential structural defects in those 767's, the Civil Aviation Authority didn't pick up that failure to act. I'm just wondering why John Anderson was so quick yesterday to reject this report where the auditor Brian Castle has said the industry's level of compliance with safety legislation is no longer being actively measured.
PRIME MINISTER:
Well the important rejection of the report came from the head of CASA. I haven't seen the report and I haven't had a direct briefing on it. I've merely been briefed on the news reports of it. But my understanding is that this was a document that contained, according to what I've been told, contained some personal views of an individual in the organisation and in the judgment of the CASA board.
JONES:
He's supposed to be an internal auditor.
PRIME MINISTER:
Well the board, so I am told, this is a body that doesn't talk to me each day.
JONES:
Right.
PRIME MINISTER:
This body, this board met independently, .the board met and considered this report and rejected it.
JONES:
Look can I just make this point to you.
PRIME MINISTER:
Can I just make the point that CASA is an independent statutory authority.
JONES:
Yes.
PRIME MINISTER:
As such it does not report on a daily basis to the Government.
JONES:
All right.
PRIME MINISTER:
And I simply cannot answer detailed questions about how CASA operates.
JONES:
I'm not asking you to do that.
PRIME MINISTER:
It's just not reasonable to expect me to do that, it's a waste of time in a way, going into that. It's not a waste of time talking about the role of CASA and the fact that what it is doing is tackling a safety issue. And I'm very pleased that Mr Toomey and Mr Toller are now talking to each other. I think that's very important.
JONES:
Well let me just ask you a question on that could I? Can I ask you this question differently just as Prime Minister because we are talking about safety and that is a very worrying thing to the travelling public. And Ansett failed under its previous administration, we all know, to do anything about directives from the manufactures of Boeing. And Boeing said if the manufactured listened, there could be structural defects, here are two notices, do something about it, they did nothing. One was three years ago, one was in March last year. They did nothing. Do if you have as Prime Minister, or I have as citizen, as Civil Aviation Safety Authority charged with the responsibility for safety, wouldn't you expect that safety authority to pick up the fact that Ansett had failed to act upon those directives?
PRIME MINISTER:
Well providing there were proper reasons why and proper notification to them, you would expect that, yes as a general principle. Can I say that what you are witnessing at the moment, no matter what may or may not have occurred in the past, what you are witnessing at the moment as I understand it is a determination by CASA to make sure that no stone is left unturned in relation to safety. Now there may have been, I don't know all the details, I'll have to go back and check it and seek information, but there may have been some failures in the past, I'm not saying there were, but dealing with the present situation, nobody can deny that CASA is doing its job. It may be aggravating to Ansett, but it is doing its job and it is insisting that.
JONES:
And you are aware, aren't you? You are aware that the defects that caused those planes to be grounded were brought to CASA's attention by Ansett, not the other way round. Surely the public are entitled to know that when there are structural defects or metal fatigue, the safety authority finds that out, not the aviation operator.
PRIME MINISTER:
I don't think the airline company is absolved from the primary..
JONES:
No it's not.
PRIME MINISTER:
Hang on, I mean they're the ones that are flying the aircrafts.
JONES:
Sure.
PRIME MINISTER:
So let's not, I mean let's not.
JONES:
We're not, we're not absolving it.
PRIME MINISTER:
Let's keep a sense of proportion. Look, Ansett has acknowledged that it did not respond to a notification sent by Boeing, they are Ansett planes.
JONES:
Correct.
PRIME MINISTER:
It is the primary responsibility of Ansett to make sure that its planes are safe. And no amount of comment about what CASA should have done or shouldn't have done can alter the fact that they were given notifications to do things, they failed to do so, they have admitted they failed to do so and that is the approximate cause of what is now happening.
JONES:
And CASA failed to pick up their failure. CASA failed to pick up their failure.
PRIME MINISTER:
Alan, I'm not suggesting that CASA is a perfect organisation. But let us preserve a sense of proportion about this. The prime responsibility rests with the airline and the question of whether things should have been picked up by CASA at a particular time I would simply have to take.
JONES:
On board.
PRIME MINISTER:
. some of those claims on notice and get advice about that because I do not run CASA. It operates independently of the Government under legislation established by the former Government.
JONES:
I'm not expecting the last say on this but I would just make this to you. You said it's not a perfect organisation, I think.
PRIME MINISTER:
Well, no organisation is perfect. Please don't take that as some criticism of CASA.
JONES:
No, no. I just want to.
PRIME MINISTER:
. but I'm simply using the language of common sense.
JONES:
But it's not a perfect organisation when the boss of CASA, three days after he grounds Ansett's 767s himself breaks aviation rules flying his own plane into Moura and that is the third time in a matter of months the man responsible for safety in aviation has himself broken aviation rules. I think there's got a be a problem somewhere.
PRIME MINISTER:
Well I've heard a different story in relation to that. But once again I haven't got specific advice from.
JONES:
Okay.
PRIME MINISTER:
I'm heard that denied but look I don't have the time to check every single activity of every single person in a Government organisation.
JONES:
Okay. Can we come to the $14,000 first home owners grant and clarify a couple of points. Some of the stumbling blocks apparently relate to the fact that application forms were not available in New South Wales and are yet to be printed. I think that has been overcome has it not?
PRIME MINISTER:
I'm told that's been overcome. Yes.
JONES:
Right.
PRIME MINISTER:
And there's no reason at all why the states shouldn't be processing applications. They've been guaranteed the money by the Commonwealth.
JONES:
Now when you say, just to interrupt you. We should make it clear to those people out there who think they qualify, the states do administer the scheme, you provide the money.
PRIME MINISTER:
The states administer the scheme, we provide the money, it's our decision, but they administer the scheme on our behalf.
JONES:
Right.
PRIME MINISTER:
And there's no reason on earth why there should be any delays. And I am told on the basis of information I obtained yesterday that it is working effectively. I'm told that one building company in New South Wales has actually signed 675 new home contracts between the 9th and the 31st of March. That a small Bendigo builder who hadn't written something for six months wrote six in March alone. And that another builder in New South Wales on the weekend following the March 9th announcement signed 15 contracts that very weekend.
JONES:
Right.
PRIME MINISTER:
Now I mention these without naming the companies as anecdotal examples that there was an immediate response.
JONES:
Right.
PRIME MINISTER:
Now that's doesn't surprise me.
JONES:
No.
PRIME MINISTER:
You may have a lag in the reported figures because it takes a while for these statistics to filter through to the sort of people who do all the stats in Canberra, but on the ground things started moving immediately I made that announcement. And that is exactly what
JONES:
That's correct. Let me just take .
PRIME MINISTER:
It's exactly what I wanted to occur .
JONES:
Sure.
PRIME MINISTER:
And that is very encouraging for the home building industry.
JONES:
Absolutely. What I wanted to discuss with you this morning though was a comment you made and you said what the general public would feel, how banks, I think your words were roughly were, how banks can discard the $14,000 as far as a deposit is concerned is beyond me. I am wondering if you are .
PRIME MINISTER:
Without .
JONES:
Sorry?
PRIME MINISTER:
Sorry. Go ahead.
JONES:
I am wondering if you're aware of the Australian Prudential Regulatory Authority laying down prudential standards and I have this notice in front of me and I'm happy to give it to you, which must be complied with when an approved deposit taking institutions like banks seek mortgage finance. And they have specifically said to the banks that genuine savings and I'm just paraphrasing, genuine savings are not or are not and in fact they say the following have been excluded from definition of genuine savings and it ends, "this situation may be further exacerbated with the introduction of the First Homeowner's Grant. In other words the mortgage insurer is now saying to the bank, we won't insure you for a loan where the deposit includes the $14,000 because we don't regard that $14,000 as genuine savings.
PRIME MINISTER:
Well I have had inquiries made of all the major banks and that is not the response that I have received. I will have a look at that notification that you're talking about. But one of the banks has informed my office that it's not aware of any instances where their mortgage insurer has failed to approve the terms of the lending and that they allow the First Homeowner's Scheme to form part of the deposit and they're currently processing about 100 loan applications which involve the grant.
JONES:
Well he listed here and I'm happy to give you this, this is PMI Mortgage Insurance and they and GE Mortgage Insurance are the two major mortgage insurance companies .
PRIME MINISTER:
Well I can only, I mean I am happy to look at that.
JONES:
And I think that's a stumbling block for some.
PRIME MINISTER:
Well Alan, I've been told by the bank, my office, a senior economist in my office made an inquiry of the banks and that was the response that one of them gave. And I'm told by another one and I think it involves one of the insurers you mentioned, that it is prepared to count the First Homeowners' Scheme as part of the deposit.
JONES:
Well this notice says "the above has been excluded for the recognition of genuine savings".
PRIME MINISTER:
Well I will have a look at that, but I can only say to you that the information that I have been given directly by the banks indicates that that is not occurring. I will further investigate what you have raised with me and I will have my office investigate that if you arrange for that to be sent to me and I will get my office to investigate it and come back to you to provide you with a further response.
JONES:
I will.
PRIME MINISTER:
But I know exactly the point you're getting at and it's a very legitimate point but I have many communication with the banks and it does not appear to me on the basis of what they've told me that this is in fact happening. Now it may be that they have put a different interpretation on that than you have. I'm not saying you're wrong, I'm not saying they're right. All I can tell you is that the information they provide me with indicates that there is not a stumbling block.
JONES:
And you'll take it on board anyway.
PRIME MINISTER:
I certainly will check that out, certainly.
JONES:
Just on the same outfit, the Australian Prudential Regulation Authority laying down prudential standards - what do you know, what can you tell my listeners about where they are in relation to HIH? The reason I'm asking you this is that there are very significant problems in the building industry because HIH's products have meant that hundreds of people have found themselves now, hundreds of Australians, in the unfortunate position of having an insolvent builder whose insurer is in provisional liquidation. There's no obvious answer, they either pay for the completion of the home themselves or wait nine months hoping that the liquidators can produce something.
PRIME MINISTER:
Well I don't have an immediate answer to that because you've had a commercial failure by an insurance company. The commercial failure is being fully investigated. A liquidator has been appointed, a very experienced person. It will take quite a while to work through and sift through the claims. The circumstances are being fully investigated not only by the prudential regulator but also by the Australian Securities Commission so that if there is any evidence of negligent or criminal conduct, I'm not saying there is any evidence at this stage of criminal conduct, but that will be fully investigated and prosecutions will be launched if they are justified. The causes of the collapse are complex. Some of the cause is due to significant losses the company experienced in its operations in the United Kingdom and the United States. Unfortunately over the last ten years there has been a pattern of insurance failures not only in this country but around the world. You will remember the fairly spectacular failure of Lloyds, you will be aware of some of the spectacular failures of other insurance companies around the world. It is not a phenomenon, regrettably, which is just found in Australia. The full extent of the collapse I can't tell you at this stage. It's still being established by the authorities.
JONES:
I suppose I am asking you whether the Australian Prudential Regulatory Authority should have taken action against HIH earlier, or are they more concerned with the company than the consumer?
PRIME MINISTER:
No, the advice that has been provided to the Government is that up until that time late last year, all of the requirements have been fully met and that on the information that the Government currently has there is no suggestion that the regulator was tardy in acting in response to information provided to it by the insurance company but that is a matter that still..
JONES:
Still to be determined?
PRIME MINISTER:
Under consideration.
JONES:
Just a quick one on the deeming rate. I know you've been looking at the deeming rate for self-funded retirees. I mean when the interest rate goes down, should the deeming rate go down automatically?
PRIME MINISTER:
There are winners and losers on that. There are a lot of people who hold deeming accounts and while ever they continue to receive the deeming rate there's not much to be gained by them for the deeming rate to be reduced so we are keeping it under regular review, [inaudible] where you get full amount of the deeming rate and the Government will reduce the deeming rate if it believes that is of benefit to the majority of people who are affected by it. But if it is not we're not going to do that.
JONES:
And of course have hard core assets? They have hard core assets which are not earning anything but deemed to be earning more than the interest rate would get for them it if it was normal?
PRIME MINISTER:
But there's quite a lot of people who have deeming accounts and you have to balance the two off and what we will do is produce a response which is of maximum benefit to the maximum number of people.
JONES:
And just a quick one before you go, you would have heard some things that we've had to say recently about the green prawn industry - if the green prawn industry in this country has, or if green prawns in Thailand, Japan, Philippines and Indonesia and elsewhere, have a disease and a virus, shouldn't our quarantine service be saying there will be no importing of green prawns?
PRIME MINISTER:
Well if there is a causal link or a potential causal link between the two yes. But those things have to be determined on a scientific basis and I am not a scientist.
JONES:
You've done well. Thank you for your time.
[ends]