E&OE..................
QUESTION:
Mr Howard, Lyndal Curtis from ABC Radio. You've always said your intention is to go to an election at the end of the year. Given there's only a short window of opportunity for you to go earlier than that, once that window closes, why not order the Finance Department to release the charter of budget honesty figures say in the beginning of October so you and Mr Beazley can begin to detail your policies and their cost and commend the phoney war and let people have longer than three weeks to look at what's being offered before they vote?
PRIME MINISTER:
My life is full of windows opening and closing. Look, I think what we'll do is just follow the normal rules. When the election's called there are certain things that have got to be done by the secretaries of the Treasury and the Department of Finance and that's what happened last time and that's what will happen this time.
QUESTION:
Fran Kelly from the 7:30 report. Prime Minister you say, you said today, you've said repeatedly that it's impossible for Kim Beazley to roll back the GST, spend more on health and education and stay in surplus unless he puts up income taxes. If you can promise tax cuts out of future surpluses, why can't Kim Beazley promise rollback and spending without putting up taxes. Isn't the same pot of money potentially available to you both?
PRIME MINISTER:
But Fran, look, it's all an order of magnitude. I mean what he's doing is he's promising rollback and to be serious, rollback's got to be several billion dollars. I mean he can't go to the people after all the song and dance he's made about rollback and say oh rollback is just this and this and you know, that's rollback. I mean that would be a great fraud, I mean, he's campaigned for two and a half years, three years - so he's really serious about rollback, he's got to have a substantial rollback and then on top of that he is promising to increase spending in a very significant way. I mean I have quite a modest list of costed things. I mean he's promised a Medicare alliance, the announcement of country hospitals, that's $104 million over four years. Establish a national health commission, that's $68 million over four years. Extra professional development of teachers, $80 million over four years. Regional University research training places, 68 million. New research fellowships, 126 million. University online, 850 million. Some additional funding in aged care and he's promising a lot more in relation to a new coastguard service. When you add all of that up you get to about 3.5 billion. I mean my point is this, that's he's not only promising, if he weren't promising any additional spending at all, then there might be some validity in your argument. But he's promising rollback plus additional spending and he sort of tried to promise, eventually at some stage, a return of bracket creep yesterday but I mean the really difficult question he's got to answer is how can you simultaneously roll back the GST in any meaningful way, maintain the surplus, not take it away from the states, finance additional spending without putting up income tax. And nothing has happened over the last few weeks and I don't see how anything can happen unless he goes back on one of those commitments over the next few months, is going to alter that equation.
QUESTION:
Laurie Oakes from the Nine Network, Prime Minister. I'd like to ask you about the first of the choices you said Australians face at the election. You called it the choice of competence. I have here a report from the Australian National Audit Office, tabled today. It's a report on the divestment of a billion dollars worth of Commonwealth Government property and divestment and leased back. And if I can quote bits of it, it says; 'The Government was advised that the sale of the properties would increase the budget outlays in the longer term as future rental payments to the private sector grew'. On the next page; 'Finance (The Department of Finance) advised ANAO in April 2001 that it's role was to implement a property divestment programme endorsed by Ministers, but it was not charged with the role of protecting the overall interests of the Commonwealth'. Can I put it to you, Prime Minister, is this what you regard as competent Government? And how much better off might the budget be if we had some real competence in this sort of thing?
PRIME MINISTER:
Well Laurie, I haven't read that report. I will, and obviously I will see that the Government's mind is directed to it. The competence of which I have spoken is the competence that has enabled us to repay all of the debt we have repaid. I mean we have a debt servicing burden as a nation now. Ratio of Government debt to GDP of 6.4%. In Japan it's over 100%, in the United States it's 45 and the OECD average is about the same. We do have lower interest rates, we have implemented our - be it with some frictional difficulties, a massive new taxation system. We've undertaken a extraordinarily successful privatisation process, of course there will have been, like any other Government, there will have been some errors along the way, without commenting on that because I haven't read it and I'm not in a position to give any kind of response. But, the competency of which I've spoken is the competency that enables this country to compare itself very favourably in a time of international economic difficulty with the economies of most of the industrialised world and enables a magazine with the prestige of the London Economist to predict that on current trends, Australia will have by far the highest rate of economic growth next calendar year of 16 industrialised nations.
QUESTION:
Good afternoon Mr Howard, unconfirmed wire reports from Japan this morning says that Mitsubishi Boss Rolf Eckrodt will tell you on Friday in Tokyo that they're pulling out their manufacturing from Australia. Are you aware of the veracity or otherwise of that report? And secondly have you got anything else that you're planning to offer Mitsubishi on Friday in a bid to keep them to stay above and beyond what's already been offered by the State and Federal Governments?
PRIME MINISTER:
Well I have no way of knowing whether there's any veracity in that report or not, I understand the indication coming out of the local Mitsubishi people is they have absolutely no knowledge of that. Those reports do appear from time to time. I happen to have the opportunity amongst other things of speaking to the Mitsubishi people in Tokyo. The main purpose of my visit is of course to talk to Mr Koizumi, the new Japanese Prime Minister and Mrs Tanaka and other senior Ministers in the Government, but if the opportunity presents itself I will naturally be pushing the case for Mitsubishi to maintain its operations in Australia. We already have massive inducements, there was no more passionate advocate of tax reform than the removal of the wholesale sales tax on cars, and there was no more eloquent advocate of the overflowing benefits of a broad base indirect tax in Australia than the motor manufacturing industry. And when you add to that the industrial relations reforms and many of the other incentives and the additional and specific benefits, we have already provided very significant benefits to the motor manufacturing industry, we want it to stay in Australia. We think we have a better economic and, of course a much better lifestyle climate as well and I will be putting all of those propositions to the company. In the end they have to make decisions but I would certainly be advocating very strongly that what the Government has provided, both at a Federal and State level has been extremely generous and contains many incentives and assurances for a continued heavy investment by Mitsubishi in Australia. But I repeat you should not assume that there's any particular relevance in that report. I don't know anything more than what I've indicated and these reports tend to come out with considerable regularity.
QUESTION:
Louise Dodson of The Age, you were talking about superannuation needing to operate efficiently, Mr Howard. Are you saying that you'll reform it for review it or overhaul it in the next term? And I also wanted to ask you about who you support, Bradman or Chappell over their differences?
PRIME MINISTER:
Well I have immense regard for both of those last mentioned gentlemen and won't be getting into that at all, except to say that in my all time Australian team as far as batsman are concerned after Don Bradman I think I next put Greg in the team. So I think he's a class act.
As to the first on, what I indicated in my speech was the centrality of superannuation to the retirement plans of many Australians. Look I think superannuation is one of those things that a government a must always keep under review. There's a lot of debate about it, there's a lot of controversy about it. I heard somebody this morning from another country suggesting that the taxes on superannuation in Australia were significantly higher than those in other comparable countries. That's not my advice, in fact I got some advice on that from a very reliable source this morning and I'm told that that's not the case at all, that the level is in fact lower than the average of the OECD in Australia. What I'm saying to you at the moment is that we don't have a specific plan to lay out at present regarding reform in that area, we do as the Treasurer said on a number of occasions want greater simplicity and it will obviously be something that we'll need to continue to address in our next term.
QUESTION:
Prime Minister there are two court cases in Queensland this week involving senior Liberals fighting each other affected the federal seats of Ryan and Moncrieff. And at the same time Liberal nominations for the seats of Oxley and Rankin closed without any response. Could I ask two questions, one do you stand by your statement that Bob Tucker is the best candidate for Ryan and are you concerned at all about the ability of the Queensland Liberals to fight the forthcoming election?
PRIME MINISTER:
Well political litigation is not confined to one party in Queensland. I mean there's been a few pieces of, there's been a few court proceedings involving members of another party, I don't mean One Nation, I am thinking of another party earlier this year. Look, I'm not going to comment on, for obvious reasons, those two cases. Do I have any doubts about the capacity of the Queensland division to fight the campaign? No I don't. the Queensland division has gone through some difficult times but we have established an administrative committee and we've got a president in John Herron who brings a great deal of experience and great conciliation skills. And I mean just remember in case you're losing a sense of proportion if my memory serves me correctly the whole of the administrative structure of the Queensland ALP was sort of set aside wasn't it before the state election and they didn't sort of end up doing too badly if I remember correctly in that election. I think you got to get a sense of proportion, I mean people feel strongly inside political parties and that applies to all parties and we just work our way through. Look I'm not going, I thought Tucker fought a good by-election campaign, I've not ever said there shouldn't be some pre-selection process and how that works out is entirely a matter for the division.
QUESTION:
James Grubel from AAP Mr Howard. Just taking you back to your trip to Japan, I wonder what is it that you'll be telling, or saying to the new Prime Minister Koizumi about his economic reforms in Japan. And if as is reported it's going to take three years for Japan's economy to bounce back, what kind of impact is that going to have on economic activity and growth in Australia?
PRIME MINISTER:
Well I won't be presuming to give any, to Mr Koizumi any lectures. I'll be interested to hear what he has in mind. I hope that he does persue a very strong reformist programme because it's very important to Japan because Japan is the second great economy of the world. As an individual country it's important that it strengthen its economy so you know I think we all have an interest in that. And look that will be of help to Australia, although it is fair to say that Australia has suffered rather less because of the character of our trade with Japan and that so much of it is you know long term resource contracts but actually suffered rather less than many people feared might be the case. Particularly through the Asian economic downturn.
But there's a lot of hope invested in the new Prime Minister. He won office in a way that was atypical for Japanese Prime Ministers, he enjoys very high popularity, he's just had a very successful Upper House election and he is committed very strongly to reform. And I will bevery interested to hear his plans, I will naturally encourage him but in the end these are decisions of course for him to make and I know that that's the same view that's been expressed to him by the United States administration. But it does open up possibilities and obviously if the Japanese economy recovers over time that will be good for the region, it will be good for the world and it will be good for Australia. But we are I repeat in the fortunate position of not having suffered over much from the decline that Japan has experienced over such a long time.
QUESTION:
Prime Minister, Sue Dunlevy from the Daily Telegraph. The same access economics that you quoted today has estimated that we would need to triple the GST in the next 30 years to cover the cost of our ageing population. And most experts say that Australians should be saving up to 12 to 15 per cent of their income if they are to expect a comfortable retirement. How will a Howard Government ensure that people do save more of their retirement as current policy only requires them to save 9 per cent. And if you don't require them to save more how would you fund the welfare burden that will ensue without increasing the GST?
PRIME MINISTER:
Well if I can take you back to what I said in my speech that the great strength of the GST is it has given to this country a tax that will grow with the economy and most particularly it will grow with the areas of the economy that are growing fastest. I mean the weakness of the wholesale tax system and it was identified by Access was that you had, effectively you had a wasting tax base because the goods component was being overtaken by the services component, the services component was untaxed and you had a dwindling base but an increasing need. My first proposition, one that holds completely is that we have with a GST a better chance of funding the needs of an ageing population because although the GST goes in its entirety to the states, the states have important responsibilities particularly in the areas of hospitals and community services that bear upon things are required by the aged. And of course to the extent that the states have a growth tax in the years ahead their demands for additional resources to the Commonwealth, from the Commonwealth would be significantly reduced. So I think that was the thrust that I was saying.
On the question of retirement, incomes and the needs that people have, we essentially the moment we have a system in this country of where you've really got the pension system, you've got super guarantee charge, the SGC, and of course you have the various inducements to private savings. And you've got to bear in mind that even though super has grown enormously because of the use of the levy there's a lot of evidence that a great deal of substitution has taken place and that superannuation is not the only vehicle whereby people make provision for their savings. And people do tend to react according to where the incentives are.
We are not attracted to, at all, to an increase in the levy. We think that would just represent another impost on small business. And I know the Labor Party is going to put the levy up but having reduced company tax for many small businesses we're not in the business of putting the levy up.
I think you should focus a little on the remarks I had in my speech concerning ways of making it easier for people to remain in the workforce longer. I do believe very strongly that this is a neglected area of change. I think we do have to face the need as a community as we age to make it easier and more attractive for people to remain in the workforce longer. Now that I won't obviate the need for adequate retirement incomes, I'm not suggesting that for a moment. But I do think that it is an element of the way in which we respond to the challenge.
QUESTION:
Mr Howard, Dennis Shanahan of the Australian. In your speech you mentioned two issues which required a whole of government approach, you named a third which required the cooperation of all governments in Australia, yet for the issue which you nominated as the matter of highest national priority, Australia's ageing population you still do not have a whole of Government approach with a population policy. Why are you reluctant to adopt a population policy?
PRIME MINISTER:
I don't think that the answer to the challenge of the aging population is necessarily to have, well let me put it another way, you could have a population policy but that wouldn't solve the problem of the aging population because there's a common misunderstanding about what can be achieved. I mean when people talk about population policy they are essentially talking about the size of the migrant intake. They may also be talking at the margins of ways in which you may slightly alter fertility rates. And I'm not saying that there aren't policies that can have some impact on the age, particularly the age at which people have their first child and therefore perhaps the pressures that are on couples as to whether they have two rather than one child. I mean policies can have some effect on that.
But when people talk about population policy they are really talking most of all I think about the size of the migrant intake. Now we have I believe restored the integrity of the immigration program. We have dramatically altered the balance, we have a lot more skilled migrants now and they are making a big contribution and I would see that process going on, and you will be aware that over the last several years we have modestly increased the intake each year and I'm certainly fully in support of that. But there is a mistaken view in many quarters that you simply solve the problem by a dramatic doubling, trebling, quadrupling of the migrant intake over a few years. That won't solve the problem. I mean this has been the subject of some very very serious analysis and it simply doesn't of itself solve the problem.
And we're going to have, you know, we're going to have this challenge of an aging population in a way irrespective of what kind of migrant intake we have and what other policies that we follow. They will have some impact at the margin and I'm all for them having a beneficial impact at the margin. But you have to find other ways of coping with the problem. Fortunately it's not as big a difficulty for Australia as it is for some others but we are till generically speaking in the same category as most other western countries.
You do very seriously need a more secure revenue base. I mean we would have been facing a hopeless position on this issue if we had not changed our tax system and provided for a growth tax going to the states, and provided a more secure revenue base. How anybody imagined in their right mind you could have faced this issue with the old indirect tax system we had is ridiculous and I explained in my speech my reasons for that. But I think there's a danger in this debate of people saying well you solve the problem by issuing a document called population policy.
This issue's been debated a lot and I'm sure it will be debated a lot more in the future and it should be debated a lot more in the future and I hope it is. But there are many immovables about it. I mean the immoveable is our fertility rate has fallen and continues to fall, our population is aging, people are living longer and healthier lives and that process is likely to continue. Now you won't reverse that in short order or even in long order no matter what you do with the immigration program. You may have some impact on it at the margin. You may be able to alter birth rates a little with policies and indeed there's always a case for providing people who are contemplating having families with greater choices than perhaps they have now although we have tried very hard in our tax policies to provide them with greater choices.
But in the end we have to find what I might call internal ways and I think one of the things that we have to focus on a lot more heavily is providing people who want to do so and feel they have the capacity to make a contribution to remain in the workforce much longer. And there's no reason why they can't given improving health standards. There are many people who don't want to and I'm not suggesting that this should be compulsory. I'm simply saying that there is a vast and growing reservoir of extraordinarily experienced and talented people who if given the right encouragement over time would stay in the workforce longer, would make a contribution and would slow down the impact of this aging process on the Australian community. You're not going to slow down the aging, you're going to slow down the impact of it, no I haven't found a solution to that. You slow down the impact of it on the economy.
QUESTION:
Paul Kelly from the Australian Prime Minister. You've told us today that income tax cuts must come onto the political agenda. I wonder therefore if I could draw you in relation to income tax? First to demonstrate your bona fides would you be prepared to consider a return of bracket creek on an annual basis? Secondly are you prepared to consider the revenue haemorrhage involved in the gap between the corporate rate and the top marginal rate? And thirdly can you give us some indication as to what your priorities are, will you look at the 30 cents rate or the top rate?
PRIME MINISTER:
Paul I'm going to disappoint you and say that today, today I'm not going to indicate the priorities I might have. I obviously have and am giving this issue some thought. And so there's no misunderstanding and somebody doesn't later on come at me and say you said this and you said that. What I'm stating today no more no less is that our priority is that as surpluses are available we give them back through lower income tax. I can't at this stage be more specific than that and I'm not being more specific than that. That is stating a very clear priority and it's obvious today is not the time to start getting any more specific than that. You've mentioned three areas. Obviously bracket creep is an option, it's an option. I can't say any more and I won't say any more than that. I think the gap between the company rate and the top rate is unfortunate. I think it's been exacerbated by the short sightedness of the Labor Party and the Democrats in the Senate. I mean we tried.....had a modest proposal that the top rate come in at $75,000. I mean you've got a Labor government in Britain where the top marginal rate is what 40% and coming in I think at a higher equivalent rate. I mean the top rate in this country does come in at a very low level. There's no doubt about that and it does aggravate the problem of which you speak. But we had a go at that and the Senate said that was outrageously generous to the wealthy and they therefore cut it back to come in at $60,000. So it's obviously an area. And the other one you mentioned, you asked me would I do something about this or that rate. Well that really invites me to sort of tell you what, precisely what we're going to end up doing. I can't do that, not because I'm trying to be secretive. It's just that at this stage we are committed to returning, and I'm obviously aware that as we get closer to the event, I will have to be a little more specific about that and I accept that responsibility and I will be. But today's not really the right time to be speculating further about that other than to reiterate that our commitment is that as surpluses become available we return them through income tax cuts rather than a whole lot of additional spending.
QUESTION:
Prime Minister, Catherine McGrath from the AM and PM Programmes, ABC Radio. Could I turn your attention to One Nation preferences and Western Australia. Will you be able to guarantee that the State Executive in Western Australia will in consultation with candidates, be able to deliver One Nation last and if you can't will that be an unravelling of your policy to put One Nation last?
PRIME MINISTER:
Well my position on this is well known, I went to Perth last week and I spoke to the State Conference and I explained to them why I believed they should take the decision I hope they do. Look, it's a matter for the State Executive. One of the things we must all understand is that all of our parties have their own constitutional processes. One of the interesting things about the two major political parties in this country is that in relation to the power of the Prime Minister or the Party Leader in the Parliamentary Party, the leader of the party has, on our side has more formal power than the Leader of the Labor Party has because he has a right and power to choose the Cabinet whereas the Leader of the Labor Party only allocates the portfolios, although everybody says each of those powers is in some way qualified and that's true. When it comes to the organisation, the Labor Party's organisation is more centrally held and the National Executive of the Labor Party has more power than our Federal Council has. Now people can say that's good for the Labor Party and bad for the Liberal Party, or some people who believe in a more participatory process think that's good for the Liberal Party and bad for the Labor Party, and you can take your pick. And I'm not asking you to make a choice I'm simply making the point that we all have our constitutional processes and in the Liberal Party the allocation of preferences is the constitutional responsibility of the State Executives of each state division.
Now it's always been like this, I mean I can remember one of the very first State Executive meetings I attended in 1963, we were in the process of being asked by the then Prime Minister, Sir Robert Menzies, as a State Executive, to reverse a decision we'd taken two weeks earlier to run a Liberal candidate in the normally Country Party held seat of Cowper, which the Labor Party had won in the credit squeeze election of 1961. It was pretty likely we were going to win it back and the Liberal Party at that time thought it was a good idea to run a candidate and Jack McEwen and Bob Menzies didn't think it was a good idea to run a candidate. They didn't sort of issue a statement saying 'you're not running a candidate', they got in touch with us and they said we'd be graciously pleased if you would reconsider. And we did and you know we kept being told it is your decision. We got this, you know, I had this report from the State President, the late Brigadier Jock Pagan said you know, Bob has said it's your decision ladies and gentlemen. We sat around for an hour and we talked about it, we knew it was our decision and we reversed it. Now that is how, I mean, I don't know whether that's, you know I hope that that might be the case, I hope it is. But you've got to, I mean it's very important if you want people to belong to a political party, no matter what the issue is, you've got to, even if you are the Prime Minister, you've got to extend to them the courtesy of their role in the processes of the party. Now, I believe in the end the Western Australian division will do the right thing.
QUESTION:
Michelle Grattan, Sydney Morning Herald. Mr Howard your Government has put aside its proposed legislation on entity taxation. What are your plans for bringing it forward and how extensively would that be changed? And secondly also on taxation, how significant do you think the tax minimisation problem still is in particular through artificial schemes and what more can be done in this regard?
PRIME MINISTER:
Well as far as the entity taxation is concerned we are always keen to find ways of eliminating the abuse of the trust structure but I want to make it very clear we are not going to revisit any kind of legislation which interferes with the normal commercial use of trusts by many small businesses and farmers. I mean we're just not going to do that. There's nothing to be achieved by it in my view and we certainly won't be revisiting that. But there are some exotic uses to which trusts are put and particularly those that have trust upon trust upon trust upon trust. And there are some ways in which you can curb the improper use of those. But in the process we are simply not going to go down areas that are going to catch up situations where farms and small businesses and trading trusts associated with them which can't be put in the category I first described are going to be caught up. I mean I've made that very clear and that remains our position.
Now It's impossible to get a proper steer on the minimisation thing. I mean there's obviously tax minimisation does go on and we have this eternal argument where's the boundary between tax minimisation and tax avoidance and tax evasion. And I know the theoretical dispute and I understand all of that and I think you'll always have this sort of constant battle. I do believe over time that if you have marginal tax rates that came in at higher levels, more realistic levels, top marginal tax rates, I think that would remove some of the incentive. I mean it is, you know, it is a fact of life that if you have a rate of tax coming in at $60,000 and people are earning hundreds and hundreds of thousands of dollars a year there is a temptation for minimisation arrangements. Now I don't approve of that. I've paid the top marginal rate of tax on the appropriate share of my dollars all of my working life and I know hundreds and hundreds of thousands of Australians who have. But I'm just recognising the predilections of people. I do believe that over time, despite some of the contrary articles, I do believe over time the GST will reduce the black economy. I mean it's had some, apparently had a few spectacular well publicised successes in obliging people to indicate they haven't filed tax returns for a very long period of time and that's not so much the GST but rather the operation of the Australian Business Number which is a very very effective way of bringing people out of the woodwork and I'm all for that. I mean I believe very strongly in lower tax and with everybody paying their fair share. I think we all do. But it's very very difficult to sort of put a handle on tax minimisation and what is minimisation in the eyes of some is abuse in the eyes of others. Now the Tax Office has had a lot of strains put on it with the new tax system and I appreciate that. I think it's also important to recognise that we are an economy that's undergoing a great deal of change and whenever you provide people with incentives to do things you provoke other people to imitate those activities in order to get the benefit of the incentive. I think that sort of thing is unavoidable in a capitalist society. If I can go back again and say I have long believed in a broad-based indirect tax. One of the reasons I've believed in it is the advantage it brings in because it is harder to evade than income tax and I think that's one of its great strengths and that's why I can't understand why anybody who believes in fairness in the tax system wants to wind it back.
QUESTION:
Michael Harvey from the Herald Sun Prime Minister. Over the last nine months the Govern