Subjects: Mobile spectrum sale; budget; Australian dollar; International Monetary Fund; pension payments; public housing; drug diversion programme; sale of 2UE; Ryan by-election; cricket.
E&OE................................
MITCHELL:
Mr Howard, good morning.
PRIME MINISTER:
Hello Neil, how are you?
MITCHELL:
Well thank you. The sale of the mobile spectrum, the sale of thin air as people call it, has brought in, well, at least $1 billion less than expected. That has to blow a hole in your budget strategy, does it not?
PRIME MINISTER:
Well, it means we're going to get a bit more than a billion less than we estimated in May of last year. But if you're saying will that itself put the budget into deficit, no.
MITCHELL:
So you'll maintain a surplus.
PRIME MINISTER:
All the advice we have is that we will have a surplus this financial year.
MITCHELL:
It will be much smaller than expected, won't it?
PRIME MINISTER:
Well, it depends on the point of time at which you make that comparison. The original estimate, I think, was for about 2.8 in May of last year, then it was revised upwards. I think it will be less than the mid-year provision but it will still be, on my latest advice, a surplus, a comfortable surplus.
MITCHELL:
Would you put a figure on it?
PRIME MINISTER:
No, because there are a lot of other returns to come in. To use the electoral parlance, all the votes haven't been counted yet.
MITCHELL:
I think the 4.3 billion was the revised figure, of course, you'll be nowhere near that, will you?
PRIME MINISTER:
It will be lower than that but I'm not prepared to say how much lower. I think it will be lower than that but you don't really know until you get all the revenue returns in.
MITCHELL:
But one would assume, on this, it will be lower than your original estimate.
PRIME MINISTER:
Well, I'm not prepared to concede that.
MITCHELL:
You're still aiming for it.
PRIME MINISTER:
No, I'm just not willing to speculate about the final outcome because there are too many imponderables.
MITCHELL:
Can you tell us what your aim is, what your hope is?
PRIME MINISTER:
Well, our hope is to have a comfortable surplus.
MITCHELL:
And no figure on it.
PRIME MINISTER:
No.
MITCHELL:
Okay. Well, there are other factors as well. There's been.
PRIME MINISTER:
And can we also just keep in mind though, Neil, that when you've paid off as much debt as we have paid off, we've paid off 50 of the $85 billion debt we inherited, you do have the country's debt position, Government debt position, in a very strong state. I mean, our Government debt to GDP is only 6.4%. Japan's is 130, America's is about 40%, the OECD average is about four times what ours is. So, when you're talking about the need for a surplus, and we will continue to deliver surpluses, you have to keep in perspective the fact that they don't have to be huge surpluses.
MITCHELL:
But there have been other factors, haven't there? I mean, there's been the petrol change which cost money, there's been other things which have cost money. Does all this mean that we're heading for a tighter budget than you would have originally planned?
PRIME MINISTER:
What will make the budget tighter is the fact that economic growth next year will be less than what we were told it would be as recently as three months ago.
MITCHELL:
Well, does that mean there'll be very little spending, new spending in the budget?
PRIME MINISTER:
I don't want to speculate about the detail of the budget, Neil. I'm just not going to do that.
MITCHELL:
Well, the markets aren't going to like this, are they? They're not going to like the prospect of a smaller surplus.
PRIME MINISTER:
I think the markets would be alarmed if they thought we were going to go into deficit but we're not going to go into deficit. We're still going to have a strong surplus.
MITCHELL:
Can you be sure, at this stage, you won't go into deficit? As you say, you don't know what the surplus will be.
PRIME MINISTER:
On all the advice available to me and the Treasurer, we will finish the current financial year in surplus.
MITCHELL:
The dollar was very low again overnight, a new low, is this as a result of this news?
PRIME MINISTER:
No, I don't think it's got anything to do with it. It's got everything to do with the turbulence on world financial markets. We've been through the discussion about this ad nauseam and I will just say again that the dollar's level is largely a reflection of the way in which people buy American dollars when there's international financial turbulence because the American economy is rightly seen as the most powerful economy in the world. And last night the Australian dollar suffered some collateral damage because of the weakness of the Euro.
MITCHELL:
So you still think it's unfair on the dollar, the Australian dollar?
PRIME MINISTER:
The current level of the dollar is not an accurate reflection of the basic strength of the Australian economy. And if you look at the IMF report that was released yesterday it points very much to the fundamental strengths of the Australian economy. It talks about our low debt position, our low interest rates, our low inflation, our record of economic reform. But we do live in turbulent international financial times and our dollar is suffering as a result. But you have to take a medium to longer-term view and you have to recognise that when you have a floating exchange rate these things can happen.
MITCHELL:
Do we have to also recognise that with the surplus issue now, with the downturn, with the dollar, with other spending decisions, that the people of Australia are heading into a tight time?
PRIME MINISTER:
Well, it depends what you classify as a tight time. I mean, all of these things are relative. Is our economic position, as far as growth is concerned, a little weaker than what it was last year? Yes, it is. And I haven't tried to hide that. Are our fundamentals better able to handle adversity now than they were 5 or 10 years ago? Yes.
MITCHELL:
Is the capacity of the Government to spend, tighter than it was?
PRIME MINISTER:
Obviously it is. And might I say, the Opposition. Because this is a, as always in a political dimension, it's a two horse race. The Opposition can't run around criticising every area it chooses and responding to every single criticism of an interest group in the Australian community that says we should spend more money without saying whether they would spend more money. I noticed earlier in the week, when we were being wrongly attacked about the so-called clawback of the pension rise, when Mr Beazley was asked, will you increase the pension by an additional 2% if you become Prime Minister, he said, oh no, you can't ask me to do that, don't expect me to promise that, I'm the Opposition Leader, I can't be put on the spot.
MITCHELL:
Do you now accept that it was wrong to put the projected income from the spectrum sale into the bottomline of the budget?
PRIME MINISTER:
No, I don't. We were advised by the Department of Finance that that was the correct way of doing it. I notice Mr Crean criticised us for that.
MITCHELL:
A fiddle, he said.
PRIME MINISTER:
Yeah, he said it was a fiddle. Well, if that was a fiddle, the decision by the Finance Minister in the former Government, who was Mr Beazley, to include the proceeds of the, the capital proceeds of the sale of part of the Commonwealth Bank in the budget bottomline was a monster fiddle.
MITCHELL:
The International Monetary Fund's also got some advice for you, abolish tariff protection, would you do that?
PRIME MINISTER:
Well, we've just about removed a lot of tariff protection, just about all tariff protection in this country.
MITCHELL:
Will the rest go?
PRIME MINISTER:
Well, no, not immediately. We retain tariffs for textiles, clothing and footwear, modest tariffs, very modest tariffs and very modest tariffs for motor cars and we don't have plans to remove them. We have plans to, we have phased them down but we've got a five-year freeze on further reductions in motor vehicle tariffs and we have a programme in relation to textiles and we're going to stick to that programme. And we have very low tariffs by world standards. I don't intend to abandon all of them overnight irrespective of what the International Monetary Fund might say.
MITCHELL:
It also says slash the top tax rate, will you do that?
PRIME MINISTER:
Well, we tried to moderate the top tax rate but we were knocked on the head by the Democrats and the Labor Party. We wanted the top tax rate to apply to a threshold of $75,000 a year. The Democrats and the Labor Party said that was too generous and they knocked it on the head.
MITCHELL:
Increase work tests on the unemployed, will you do that?
PRIME MINISTER:
We think we have the balance at the moment about right. We have some proposals in the context of welfare reform to slightly extend the Work for the Dole obligation. But we think we have the balance right. I think people who can give something back are being required to do so but we're not going to impose unfair burdens on disabled people or people who are in the older bracket of the population, that wouldn't be right.
MITCHELL:
The International Monetary Fund has also suggested, as I read, ending indexation of welfare and pensions to the average weekly earning, will you look at that?
PRIME MINISTER:
No, we're not going to. We're going to stick to indexation of pensions.
MITCHELL:
Reduce the award system to a safety net.
PRIME MINISTER:
We think we have the balance on that about right as well.
MITCHELL:
So, the IMF's got it wrong.
PRIME MINISTER:
Well, we listen to their advice. I mean, the IMF's not perfect. I mean, every country makes its own decisions. We shouldn't be mesmerised by international financial bodies whether they agree with us or disagree with us. You listen to their advice. You take it into account. It represents the aggregation of guidance and advice that governments get from all quarters but in the end you make your own decision. And can I say, to abolish indexation of pensions would be to greatly unsettle and unfairly punish elderly, vulnerable people in the Australian community. I want them to understand we have no intention of taking that piece of advice from the IMF. I don't think it is well based in social policy, as far as the Australian ethos is concerned.
MITCHELL:
Pensioners already feel unsettled and punished because it was obvious by the protest outside your office.
PRIME MINISTER:
Well, I think the large measure of the blame for that is the fear campaign run by the Labor Party. The Labor Party voted for the compensation legislation and then encouraged people to demonstrate against. I mean, one of the people demonstrating outside my office, I think, was a Federal Labor Member of Parliament. So I mean.
MITCHELL:
Yes, do you agree .
PRIME MINISTER:
I mean you know, it is hardly .
MITCHELL:
Oh there are genuine concerns amongst pensioners.
PRIME MINISTER:
Look I agree, many elderly people were concerned. I mean if you have people telling you that your pension is being cut when it's not. If you have people telling you that there's a clawback when there's not. Of course you're going to feel unsettled.
MITCHELL:
But do you believe pensioners really understood when they got that 4% compensation that some of it was effectively going to be taken back?
PRIME MINISTER:
Neil it wasn't taken back it's just ..
MITCHELL:
Well the increase was adjusted?
PRIME MINISTER:
Well it wasn't paid twice. And I repeat if I owe you $100 in July and I pay it now do you expect me to pay you again in July?
MITCHELL:
Do you think that was understood by people?
PRIME MINISTER:
Well it was published very widely in pensioner magazines and publications that came out from the Government.
MITCHELL:
The Monetary Fund also says you should step up the pace of reform. Earlier in the week you told me you were concerned that people didn't understand the pace of reform. Are we, are we suffering reform fatigue or will you follow the IMF advice and step up?
PRIME MINISTER:
Well I will you know, set the right pace for Australia. We can't avoid reform because reform and we shouldn't try and avoid reform because reform delivers in time higher living standards and more jobs but we have to make certain we explain it properly and we have to make certain we cushion people who are affected by reform against the adverse affects of reform. And that has been the policy, that is the approach irrespective of what the IMF or the OECD or the World Bank or anybody says, that is the approach that I am going to adopt and the Government is going to adopt because it's the right balance for Australia. Most Australians accept that we do have to change in order to continue to progress but they want it explained and they want the people who are particularly hurt by the change looked after, and that's fair and that's the Australian way.
MITCHELL:
Do you, Mr Howard, do you stand by your statement that no person other than the tax cheat will be worse off under the GST?
PRIME MINISTER:
Well that remains our belief. I mean some people may think they're worse off.
MITCHELL:
Small business does, so do the pensioners.
PRIME MINISTER:
Well some do and some don't. I mean I've talked to a lot of small business people, they're, they were unhappy about the original form of the BAS and we made some changes to that. You've got to remember that when you have a big change like this and things don't go so well some people blame it rather than other circumstances for their adversity and their downturn.
MITCHELL:
Well that's true but you, it was a continued promise that nobody would be worse off under the GST and do you stand by it?
PRIME MINISTER:
Yes well that was based upon all of the modelling that we did in relation to people's individual circumstances in terms of taxation and in terms of benefits and I certainly stand by that.
MITCHELL:
So was it right?
PRIME MINISTER:
Well on the information available to us in relation to individual tax benefits and individual compensation for the impact of the GST, yes. In the broader sense of whether every single business in Australia will be either the same or better off after the 1st of July last year, nothing I've said could guarantee that because I can't control the circumstances that affect businesses but .
MITCHELL:
What do you think when you look around today, is there nobody worse off because of a result of the GST when some people are?
PRIME MINISTER:
Well Neil all I can do is to repeat that on all the calculations we made .
MITCHELL:
Yes but I am talking about now, they were predictions, what about now when you go around the country? Are there people .
PRIME MINISTER:
Well I believe, I believe that the compensation arrangements have held. I don't believe that the taxation and compensation arrangements have left people worse off so I do stand by that. As to whether every single business in the country is as well off now as it was on the 1st of July last year, of course I can't assert that, I don't know.
MITCHELL:
We'll take a break and come back with more from the Prime Minister.
[ad break]
MITCHELL:
Okay, calls for the Prime Minister.
MITCHELL:
Janet go ahead.
CALLER:
Good morning Neil, good morning Mr Howard. You're saying that nobody, in your calculations nobody's worse off under the GST. Can I give you an example - my sister, she's not 55. She was forced out of a job after 27 years. She's too proud to go on unemployment, she's living off her own money. She's received nothing and with low interest rates she's really struggling.
PRIME MINISTER:
Well when you say she's receiving nothing, she could be. You say she's too proud to go on unemployment benefits, well I respect that enormously, I really do. But that is her decisoin and if she chooses not to take a benefit that might be available you can't really blame me and the government for that.
CALLER:
But is it..
PRIME MINISTER:
I mean fair go. I mean I accept, I'm tremendously admiring of her for taking the view that she's too proud to take a benefit. But if she by her own decision doesn't receive the benefit you can't really turn around then and say well that's my fault.
MITCHELL:
Thanks Janet. Dennis, hello.
CALLER:
Good morning Neil, good morning Prime Minister. My name's Dennis. I'm from Epworth hospital. You will remember...
PRIME MINISTER:
Yes I do.
CALLER:
..some eleven months ago.
PRIME MINISTER:
I do and I've got some information for you.
CALLER:
Very good.
PRIME MINISTER:
The information I have is that you should get your cheque within the next few weeks. But there was a delay..
MITCHELL:
The cheque's in the mail.
PRIME MINISTER:
No no I didn't say that. I did not say that. It's not yet in the mail. I know.you're pulling out that marvellous statement. But I'm told by my department that it soon will be. There was a delay on the part of the Victorian government in submitting information to us in relation to hospitals and nursing homes in Victoria.
MITCHELL:
Can I ask what the cheque is.
PRIME MINISTER:
This is the compensation in relation to the arrangements for the 17,000 fringe benefit tax caps, and we negotiated with the gentlemen. I think the gentlemen is Mr Hogg isn't it, Epworth private hospital.
CALLER:
That's right.
PRIME MINISTER:
Yeah. And I got a letter from you the other day and I read it and I got some advice on it and that is the advice. So just be a little bit more patient.
MITCHELL:
All right Dennis.
CALLER:
Okay. Thanks a lot.
PRIME MINISTER:
The system works sometimes Neil.
MITCHELL:
Well that's right. Marilyn hello. Go ahead.
CALLER:
Hello Neil. Hello Mr Prime Minister.
PRIME MINISTER:
Hello Marilyn.
CALLER:
I'm a pensioner, I'm on the sole parent pension. I also live in public housing. Now July last year we were told that the GST compensation would not be included in our rental.
PRIME MINISTER:
That's the 2%?
CALLER:
Yep.
PRIME MINISTER:
Yeah that's right, that remains the case.
CALLER:
I've received a letter from Centrelink stating that as from the 20th of March compensation will be included in our rental.
PRIME MINISTER:
Are you talking about..could I just...are you talking about an advice that's headed Special Message for Recipients of Centrelink allowances and benefits?
CALLER:
Yep.
PRIME MINISTER:
Yeah I'm told by my department that that didn't come from Centrelink.
MITCHELL:
What?
PRIME MINISTER:
That in fact came from the.I'm told by my department that that came..that was attached to a letter sent out by the Victorian department of housing.
MITCHELL:
So does it happen or not?
PRIME MINISTER:
Well my advice is this - a person in Marilyn's position got a 4% increase in July. Marilyn can correct me as I go along if I've got it wrong, and I'm relying on advice. I of course don't directly know the situation. She also would have got a CPI increase in September and she would have got another CPI increase of 2% in March just recently.
CALLER:
No I haven't got it yet.
PRIME MINISTER:
No but it's coming. And that your rent has been adjusted twice. Your rent was adjusted when the CPI was put up in September, when the allowance was put up in September and then it was adjusted again, or will be adjusted again to the tune of 4% in March. Now that means that according to my calculations that you are 2% ahead because your allowance has gone up three times, your rent's gone up twice, and that you've kept the 2% real gain. I think, once again I'm relying on advice and that could turn out to have been misplaced, but I think what's happened is that the advice you're referring to says this - Centrelink has advised that the GST compensation for people receiving allowances and benefits is reduced from the 20th of March 2000. Now that's not right. It's very unfortunate wording. My advice is that that wording was provided by the Victorian department of housing. I'm going to further investigate this because I heard about your call last night when I got back from Queensland and the information I've just given you is all that I've been able to get.
MITCHELL:
Do you think the Victorian government has deliberately used that wording?
PRIME MINISTER:
Well look Neil I'm going to investigate it further. I don't at this stage want to make that allegation. I want to further investigate it. If it has been used I will have something to say to the Victorian Premier about it. I mean it's one thing for people like Beazley and Crean to get on the radio and have a got at us. It's another thing for people..
MITCHELL:
I did talk to VCOSS about it yesterday and I'd say their interpretation agrees with yours. That's my understanding of it.
PRIME MINISTER:
Their interpretation agrees with me?
MITCHELL:
Yep I think so. Very unusual.
PRIME MINISTER:
Well this is very..if my belief is true than it is very badly worded and I will have something to say to the Victorian Premier about it.
MITCHELL:
It just scares people.
PRIME MINISTER:
Well I mean, look Marilyn you're in a very difficult position. I mean I sincerely believe that your 2% increase has been protected and I don't pretend for a moment that you're living on clover, it's pretty tough. What you've got, you're a single mum and you've not got a lot to live on. But I don't think it's fair game for you to be scared.
MITCHELL:
Thanks Marilyn. Can I ask you Prime Minister, I don't know whether you followed it closely but there was a joint sitting of the Victorian Parliament here on the drugs issue.
PRIME MINISTER:
Yes I did follow it.
MITCHELL:
Did it achieve anything.
PRIME MINISTER:
I think those things always do achieve a bit. Can I enter a plea for all of us involved in politics on both sides in relation to this drug issue. I listened to what Neil Comrie had to say and I like him. I think he was a good Police Commissioner. But the suggestion is that as far as drugs are concerned the political parties and leaders are always fighting each other and can I tell you that's not right. When I was in Queensland earlier this week I had a joint release of an announcement of a diversion programme with the Queensland Premier, I've done the same thing with Steve Bracks, I've done the same things with Bob Carr. And they're all Labor Premiers. And as to 95% of everything we do we work together and we don't argue. There is a preoccupation, particularly I've got to say Neil in sections in the media, about things like heroin injecting rooms. Now there are differences on that, but that's only a fraction of the drug issue. And most of us agree on everything in relation to fighting drugs. I'm going to be announcing a huge media campaign directed at parents encouraging them to talk to their children about drugs.
MITCHELL:
Is this the mail out?
PRIME MINISTER:
Yes the mail out on Sunday and I mean this will be to a very, some of the ads will be quite confronting and they should be. I believe in confronting ads on these issues.
MITCHELL:
The message to the parents saying be aware. Was that.
PRIME MINISTER:
Well be aware, talk to your children, understand it can happen to you. And it can. And everybody agrees that the best cure is for people not to start taking drugs in the first instance. And people have been saying to me you've got to put more resources into education, well this is an example of us putting more resources into education. And I am sure that all the Labor Premiers of Australia would agree with me in this type of campaign. And I would simply say to the critics of all Governments that we do agree on this issue a lot more than we're given credit for.
MITCHELL:
A couple of other issues. The sale of 2UE and 4BC to Southern Cross Broadcasting. Do you have a reaction on that?
PRIME MINISTER:
It sounds like a commercial decision that everybody's happy with. I mean I'll be pleased to continue to appear on 3AW and 2UE and also 4BC. And I certainly hope that I'll continue to have the opportunity to talking to you on a regular basis.
MITCHELL:
Well I hope so.
PRIME MINISTER:
I'm sure I will.
MITCHELL:
And Ryan. Is it lost?
PRIME MINISTER:
It doesn't look good, no.
MITCHELL:
But does it makes a difference lost or won? I mean you've had the belt round the ears haven't you?
PRIME MINISTER:
We've had a big swing and I would have liked to have hung on to it because Bob Tucker would be a good member. But he'll come again in the general election at the end of the year.
MITCHELL:
Thank you for your time. Did you watch the end of the cricket?
PRIME MINISTER:
I did. Every last ball of it. I'm sorry, they fought gallantly but I congratulate the Indians. It was a wonderful series and to use that old cliche that is none the less right, cricket was the real winner.
MITCHELL:
Thank you very much for your time.
PRIME MINISTER:
Thanks.
[ends]