Subjects:
E&OE.................................
CLARKE:
Mr Howard good morning.
PRIME MINISTER:
Good morning Phillip, nice to be with you and your listeners.
CLARKE:
Yes well nice to have you on the program as well. Tax looks set to be the battleground for this years forthcoming poll whenever that may be, (inaudible) - the level of tax and so on. We saw in New South Wales last night Mr Egan the State Treasurer bring down the budget which got rid of one tax, the bank accounts deposits tax, was that a step in the right direction and what did you make of that budget?
PRIME MINISTER:
Well of course it's a step in the right direction. I hope the other states follow. That of course has been made possible by the new tax system. Without a GST delivering rising revenues to the States in the years ahead, they wouldn't have the resources to abolish things like the bank account debits tax. Remember, it was part of the agreement between the States and the Commonwealth as a result of the introduction of the GST and tax reform that the financial institutions duty should be abolished on the first of July this year, which it will in every State where it operates. And the bank account debits tax a few years later. Now New South Wales has brought that forward, that's good, I welcome that, but both of these taxes, the abolition of them was put on the table as a result of tax reform. It's another illustration of how, over the years ahead, having a GST which is a broadly based indirect tax we guarantee a revenue source for the States. The States are the great beneficiaries and as a result of that the people of the States and the services they receive from the introduction of the GST.
CLARKE:
Ok, I note your comments yesterday that you say we rely too heavily on personal income tax as a source of revenue. Are you pointing to a point in the future where we could look at income tax cuts of a substantial nature?
PRIME MINISTER:
Well what I was saying yesterday, Phillip, was very important. And that is that the fundamental reason for the introduction of a GST was to shift the burden of tax from income to consumption. And the reason we do that is that we have an aging population and if we hadn't introduce a broad based indirect tax as the years went by a greater burden would have fallen on those in work. And they would have paid increasingly higher levels of personal income tax and can I just say to your listeners that Mr Beazley who wants to rollback the GST, in other words reduce the incidence of the GST is really advocating a further rise in the personal income tax burden.
CLARKE:
I do want to get to that in a moment but.
PRIME MINISTER:
But that was the point I was making, look we are a Government that would always want to take opportunities to reduce tax.
CLARKE:
Ok.
PRIME MINISTER:
We're not making any promises, we've already reduced personal income tax by $12 billion, that was part of tax reform. But I do believe that the fundamental justification for tax reform has been forgotten in so much of this debate and the fundamental reason for tax reform was to shift some of the burden onto consumption so as to guarantee that we would have a revenue base in the future that didn't rely excessively on ever rising levels of income tax.
CLARKE:
Ok, the budget yesterday and last week the Federal budget. For those in work, those people in the middle of their lives, working away,might have felt ,well look I don't mind helping self funded retirees. I certainly don't mind helping old aged pensioners and so on and that's great, but if you look at the budget there's not that much in it for me. My, at the end of the year, those sort of people receive some relief by way of personal income taxation.
PRIME MINISTER:
Well people who are in work have already received $12 billion of personal income tax cuts.
CLARKE:
It's not the end of it is it?
PRIME MINISTER:
Well, as far as I'm concerned and as far as Peter Costello are concerned, the Government is concerned. We never regard the task of cutting taxes as being finished. You always take opportunities to cut tax but I am not saying that we have any opportunity at present. We've already delivered very large personal income tax cuts. But we are tax cutters rather than spending increasers. I mean that, you are seeing a different approach opening up. I mean Mr Beazley said he's going to wind back the GST, now where's the money coming from? I understand Mr Crean today is going to announce the formation of a committee by the Labor Party to give the Labor Party advice on how the GST should be wound back and where it should be wound back. Well I mean after three years of huffing and puffing about rollback they have laboured mightily and produced what - a committee. A committee is no substitute for policy and I hope that that committee faces up to the reality of what Senator Conroy identified. You cannot rollback the GST without either cutting into necessary spending or increasing income tax, you just can't do it.
CLARKE:
Alright tax, I mean I raise this point because I noticed some comments of Treasury Secretary Ken Henry, yesterday who was saying look you know look we're looking at a growth rate of 4% now if we achieve that the surplus we'll be more than 1.5 billion. I mean you'd have some fat there you'd have something there to offer by way of tax cuts.
PRIME MINISTER:
He's talking about not the year immediately ahead of us but the following year. I mean we took a bit of a dip with our growth in December we hope it will come back in the March quarter we'll know next week. I don't know whether it has or it hasn't, we'll wait and see. But all the indications are that we will return to very strong growth. Now, you don't in a responsible way start committing resources you don't have. We are in balance, we've paid off almost $60 billion of the Labor Parties $96 billion debt that we inherited five years ago. That will be the situation in July of next year. We've got interest rates down from the levels of 17% they reached under Labor and we've got much lower unemployment. And we believe we'll have a strongly growing economy next year. Now if we had the capacity to do other things in the tax area we would, but I can't promise that and I don't want these remarks to be construed as hinting or suggesting that we can. All I can say to you is that our priority is always to reduce tax, particularly income tax rather than to increase spending.
CLARKE:
Alright can we move onto some other areas that have been raised by listeners. And these are questions that have been put to me by listeners who want to put them to you in turn.
PRIME MINISTER:
Sure.
CLARKE:
Firstly on the $300 which is due by the end of June, what's the difference between an old aged pensioner and a disability and invalid pensioner they cost the same, they are still struggling. Why does one get the $300 and the other doesn't?
PRIME MINISTER:
Well I guess there are a couple of reasons for that. There are some other programmes that are designed to help people with disabilities. If you provide that payment to people on the disability pension then the argument would quite likely be well why can't it be extended to people on unemployment benefits. This payment was designed for people who are of aged pension age and over and that was the rationale behind it and that is why we drew the line between those people and everybody else.
CLARK:
So it was targeted as an age issue rather than a pension issue in that sense?
PRIME MINISTER:
Yes, people of aged pension age, yes. That was the logic of it.
CLARK:
All right the .
PRIME MINISTER:
I mean whenever you draw a line there's always some people who are on the wrong side of it. I am sorry about that but it is always difficult.
CLARK:
Mr Costello, the Treasurer this morning has told The Times newspaper that he is prepared to consider a revised bid from Shell for Australia's Woodside. You'd look at it again in other words. Allow Woodside to be sold to Shell?
PRIME MINISTER:
No he said that before. I mean what he's signalling from that quite properly is that if people want to put applications to the Government, to the Treasurer, they'll always be considered. He's not saying anything more or less than that.
CLARK:
All right. But as long as the deal is good for Australia it might be allowed to go ahead?
PRIME MINISTER:
Well we administer foreign investment policy on the basis of national interest and the Treasurer quite correctly knocked back Shell's bid because it was not in the national interest. Now the question of whether any future bid would be in the national interest would depend on the composition of that bid if and when it arises. And that is what the Treasurer was saying, he wasn't encouraging or soliciting a bid, he was simply stating the obvious that if the company or indeed any company wants to put forward a bid it will be considered on its merits. We don't have a prejudice. We look at things on the merits.
CLARK:
Okay .. Mr Howard, the HIH debacle, it's been a mess from almost every point of view. There's to be a Royal Commission. Any news on the terms of reference yet?
PRIME MINISTER:
I am still discussing those with the Attorney-General and we're still discussing the personnel who might be on the Commission. I expect to make an announcement about that within the next ten days or a fortnight.
CLARK:
All right, any news yet of the Royal Commissioner?
PRIME MINISTER:
We are discussing a number of names, the Attorney-General and I are talking about that on a regular basis. We need to get the right person or people and it's taking a few days. It's a very important thing. It will be, the Royal Commission will go on for a while.
CLARK:
Is it fair to say the terms of reference will be wide?
PRIME MINISTER:
Yes. We don't have anything at all to hide. Nothing at all. We want to get to the bottom of this, we want to know how it happened. We want anybody who's committed any wrongdoing to be prosecuted if that is appropriate. We want to find out whether the regulatory system worked properly. We want to find out whether any changes in the future will make it work better. In other words we are in the business of finding out what happened, finding out who did the wrongdoing, who's responsible and if necessary they should cop the full force of the law.
CLARK:
Are you concerned about what's happening in Indonesia with the moves against President Wahid?
PRIME MINISTER:
Well I'm very, very concerned about the instability. Indonesia's very important to Australia. We are watching anxiously what's occurring. We welcome the fact that Indonesia has embraced a democratic form of government. It is not for me to make judgements about who the next leader of Indonesia should be or whatever future arrangements should be. That is a matter for the democratic processes of Indonesia. I would express the very strong hope that the matter is resolved in accordance with the Indonesian constitution and not resolved by, in some way, bypassing, suspending or overriding the operation of due process under the Indonesian constitution because I admire the attempts being made by Indonesia to convert to a more democratic, open system of government. It is not easy when you've gone through a long period of fairly authoritarian rule to transfer to a different, more open, more liberated system. And I feel for the people of Indonesia and I feel for the people who are trying hard to make it work and we follow anxiously, respecting of course that this is a matter for the people of Indonesia and the institutions of Indonesia to resolve.
CLARK:
Twelve to nine. This is 2GB873 and the prime minister of Australia, Mr Howard with me this morning. One poll Mr Howard gave you a bounce out of the Budget, the other poll didn't and . I am sure that ..
PRIME MINISTER:
Do you know the answer?
CLARK:
I don't know what .blood cholesterol, blood pressure reading was at that point.It must have been, it must have gone haywire reading . I mean look out one window and you see one thing and look out the other and you see another.
PRIME MINISTER:
My instinct .
CLARK:
Can you win at the end of the year?
PRIME MINISTER:
Yes we can, but it will be very hard. My instinct is that we're still behind but we've picked up a bit and people are beginning to see that there's no alternative. As soon as you can get a focus on the Labor Party there is an improvement in our position because even the people who are cranky with us about something don't think the Labor Party has an alternative approach. I mean they still haven't after three years told us how they're going to fund rollback. I mean this is Mr Crean's big opportunity . last Thursday night was the night for Mr Beazley ..
CLARK:
Some ..
PRIME MINISTER:
.today's the day for Simon Crean.
CLARK:
He might say look Mr Howard was fond of making headland speeches when he was in Opposition and only gave the detail later and .
PRIME MINISTER:
Well I tell you what, the last election was fought on our tax plan which was the most detailed exposition of a policy from any government since Federation. The last thing even our fiercest critics can accuse this Government of is unwillingness to provide details at election time. I mean, look, we made it all out in detail. We were a sitting duck for a fear campaign, and one was waged, but I think the Australian public, in the end, are waking up to the fact that what we actually did with tax reform was something for the long-term. It's the point I made earlier, if we hadn't have shifted then we would just face a future of ever-increasing income tax burdens.
CLARKE:
All right. Mr Howard, win, lose or draw at the end of the year - this is a question that was put to me by a listener this morning - win, lose or draw, will you stay on for the full parliamentary term?
PRIME MINISTER:
Are you asked me this.I think you and I.
CLARKE:
No, not as leader, I'm just saying as a full parliamentary term so we avoid a by-election, win, lose or draw.
PRIME MINISTER:
Well, I will always do the right thing by the people of my electorate.
CLARKE:
So win, lose or draw, we're not going to have a by-election.
PRIME MINISTER:
Well, I said I will always do the right thing by the people of my electorate.
CLARKE:
That could mean a number of things.
PRIME MINISTER:
No, well in the end I will do the right thing by the people of my electorate. But look, can I tell you that I'm not really thinking about losing.
CLARKE:
Do you feel confident?
PRIME MINISTER:
Well, I'm very positive. I make no arrogant assumptions about what, you know, might.
CLARKE:
I mean, it was looking grim a few months back.
PRIME MINISTER:
Well, it was and we are still behind but I believe our position has got a little better but we are still behind but people increasingly are starting to compare us with the alternative. They're starting to say, well hang on, Beazley and Crean are very good on criticism but what's the alternative.what are they offering, what are they going to do. And all they offer is run a negative rollback and they don't explain where the money's coming from and people are now starting to see through that. And look, it's going to be tough. I think we have a fighting chance of winning and as for my future, I'm just focussed on winning. I haven't really thought about that. Can I tell you, I don't want to think about it.
CLARKE:
Still got the energy level.
PRIME MINISTER:
Very, very, so. anybody who's seen me campaigning around and visiting electorates in Queensland over the past couple of days would not think for a moment that I have either lost interest, enthusiasm or commitment. I am very committed to winning the next election. I want to do more things. I want the opportunity to implement some further policies and reforms and changes and I want to make sure that what we have achieved over the last five years is not squandered. I would hate to see our industrial relations reforms wound back and I would hate to see the GST wound back and then an ever-increasing personal tax burden put in its place.
CLARKE:
Mr Howard, we'll have to leave it there but it's been a great pleasure to talk with you and thanks for joining us on the programme.
PRIME MINISTER:
Thank you.
[Ends]