Subjects: World financial markets; trade; Middle East; Democrats; Telstra; paid maternity leave; overtime; stem cell research.
E&OE...........
CORDEAUX:
The first thing I was going to ask you about was the world financial markets and the gyrations that are going on and how seriously you think perhaps further down the track they may affect Australia?
PRIME MINISTER:
Jeremy I think it';s fair to say that what';s occurring in world markets is of concern and nobody can guarantee that it won';t, as Peter Costello said yesterday, have an effect on the real economy and therefore have an effect on Australia. But so far our financial markets have not reacted proportionately to what has occurred in the United States and in Europe. One of the reasons for that is that our markets never reached the dizzy heights that Wall Street did, therefore there was less artificiality about our stock market, there was less of a bubble. As a result, when the decline came in the United States it wasn';t automatically reflected in Australia. And that is of some reassurance and I believe that it';s of some further evidence of the fundamental strength and resilience of the Australian economy.
CORDEAUX:
Peter Costello seems to be sending a message to the Reserve Bank to go easy on interest rates. Would you second that call?
PRIME MINISTER:
Well that';s an interpretation that one newspaper put on his comments. I will pass up any opportunity to talk about future movement in interest rates except to observe that I';m sure the Reserve Bank is taking every factor into account.
CORDEAUX:
Let me ask you about this window of opportunity which seems to be fast closing in America where President Bush wants the right to negotiate a Free Trade Agreement, that you indeed want to negotiate as well. It seems that if something can';t be done quickly, there';s going to be a lengthy delay in getting this to come about – free trade between Australia and America. What chance do you think?
PRIME MINISTER:
Well it';s a question really of timing when the negotiations start. Under American law the Administration can';t negotiate a trade agreement with any country or group of countries without the prior permission or legislative authority of Congress. And that';s called trade promotion authority. At the moment the Administration does not have that authority and until it gets it, it can';t start talking to us formally. There';s a real possibility that Congress won';t give that authority before the Congressional elections, which means that it won';t come about until some time in the first half of next year. This would not entirely surprise me and I, you may remember, was cautious when I came back from the United States, certainly about the timing of any free trade negotiations. I believe that we will at some point begin those negotiations. It really is a matter of time. It';s not a question of if the President gets trade promotion authority, it';s a question of when. And the when may be early next year rather than this year. But that';s not because the Congress is against giving it. They';re probably fairly particular about the conditions on which it will be given. But there are a number of other issues. There';s the new homeland security legislation, there';s the corporate law changes the President has been promoting. So it';s a question of legislative blockage rather than malicious intent on the part of the Congress to deny the President the authority. So it wouldn';t surprise me if the authority is not given until early next year. That affects the timing of a free trade negotiation. It doesn';t really affect the fact that I believe at some time in the not too distant future we will start to negotiate. Whether we get a successful outcome in that negotiation remains to be seen and I think we have to have realistic expectations and I';ve always argued that and I'll continue to do so.
CORDEAUX:
When you were in America and then later when you were in Europe and talking about the subsidies given to farmers and such like, I mean it really does… compared to what happens here, we are a paragon of virtue aren';t we?
PRIME MINISTER:
Well we are. When it comes to agricultural protection, the simple measurement – 4% of the value of farm production is the level of the subsidy in Australia. It';s 21% in the United States and it';s 35% in the European Union. It is also very high in Japan. So the description you use is accurate. We are a very open economy. We can';t really afford to be otherwise because we';re a small nation. We can';t possibly compete with the financial clout of the Americans in exporting subsidies and so forth. Our future lies in a more open world trading system because we are a small country. And that is why we argue very strongly and continue to do so.
CORDEAUX:
Just on the subject of trade, I think it';s amazing that Iraq is making these threats against Australia. Maybe it';s even more amazing that we are trading with them anyway, knowing really in our hearts what we think of them.
PRIME MINISTER:
Well I understand that. But on the other hand, if we don';t sell wheat to Iraq other countries will. And in any event in foreign affairs, even if you disagree with the domestic policies of a nation and disagree with its foreign policy, you';ve got to remember that something like wheat has the humanitarian connotation, it is food, it';s also export dollars for Australian farmers. I think you can balance those two. Our position is that we can';t allow any country to tell us what our foreign policy must be as a condition of taking our exports and that applies whether it';s Iraq or any country for that matter. And Iraq is a country that has introduced the foreign policy for wheat equation into our relationship, it's not Australia. So we can';t really allow ourselves to be told what our foreign policy might be in the future as a condition of people taking our exports. Iraq should bear in mind that we have very high quality wheat and we';re optimistic that if our market to Iraqi is reduced then we';ll find a replacement market elsewhere fairly readily.
CORDEAUX:
The world wide condemnation of Israel for this Israeli air strike on a Hamas leader, do you think maybe this time the Israeli';s have gone a little too far? World leaders have spoken out this morning as I've not heard them speak out against Israel before.
PRIME MINISTER:
The criticism is not against the strike on the Hamas leader but the women
and children, the civilians, particularly the children who';ve died
as a result. The Israeli defence forces themselves have apologised for
that. It was an over-reaction. It was heavy-handed and it doesn';t
help Israel';s cause. There';s a lot of sympathy for Israel
in dealing with the suicide bombers. Some of that sympathy is understandably
lost when children and innocent civilians are killed in retaliatory action
and I hope that Israel bears that in mind. I hope also the world in condemning
Israel bears in mind the terror that';s struck into the hearts of
Israelis through the suicide bombers. Sadly when things deteriorate to
the extent that they have in the Middle East, innocent people, including
children do get killed. I mean that';s appalling. And there does
have to be restraint shown by everybody, including by the Israelis.
CORDEAUX:
Now back home you';ve got renewed interest obviously in selling the remainder of Telstra. I heard on the ABC this morning what sounded very much to me like the Democrats were about to implode. Now what would the ramifications be in the Senate if you go ahead and push for the sale of what is left of Telstra, with the Democrats in such disarray?
PRIME MINISTER:
Well Jeremy, I';ve always learnt with past experience that when another political party is having difficulty it';s very wise not to sound too clever or smug. I don';t know that gratutitous comments from me about the difficulty of the Democrats at the moment is appropriate. I do know however in relation to Telstra that things are getting better in the bush and we';ll have another examination quite soon of how much better they';ve got. And if we';re satisfied that conditions in the bush is up to scratch then we';ll look at selling some further shares in Telstra and we';ll be negotiating with the minor parties and the independents in the Senate to try and secure their support. I hope that we will be able to get support. It';s a question of whether individual members of the Democrats supporters is a matter for them and the matter for the negotiations to take place. But I';m always ready to listen to the Democrats. I found in dealing with Meg Lees and Andrew Murray in negotiating the GST that they were both people of honour. I found them very reasonable, but tough and pragmatic to deal with. They kept their word, they didn';t give away things they didn';t believe should be given away. We have very different views on a lot of issues, but I certainly found that they were people who you could talk to and reach a few sensible outcomes in the national interest. Now whether they or other people are willing to talk to us, we won';t know until we actually introduce the legislation to provide for the sale of further shares in Telstra. And we won';t be doing that unless and until we are satisfied that conditions in the bush are up to scratch. But there has been a real improvement. There are guarantees that those improvements will remain because people in country areas should understand that there will be no indecent haste by the Government on this issue. I';m in no crazy hurry to get done by a particular week or a particular month. I want to be satisfied that things have improved enough to warrant the sale of further shares.
CORDEAUX:
But the Democrats in disarray won';t change your timing?
PRIME MINISTER:
No it won';t change our timing. I don';t think it';s the sort of thing that should be governed by political expediency. It should be governed by a fulfilment of the promise I made at the last election. I went to the last election saying that we would only sell further shares in Telstra when we were satisfied that conditions in the bush were as I said then up to scratch. In other words that the service level was adequate and there were guarantees that the improvements were going to remain. Now we'll need some kind of examination of that in order to be satisfied that it's happened and unless and until that examination says yes it has happened we're not going to sell further shares in Telstra.
CORDEAUX:
Pru Goward put paid maternity leave on the table and you indicated that you had an open mind and would listen to the debate and then Tony Abbott said no way on his watch…
PRIME MINISTER:
No Tony didn't say no way on his watch in relation to maternity leave broadly defined. What he said was that he was against compulsory paid maternity leave. In other words we're not going to force particularly small business to pick up the bill. That's what he was saying. He perhaps said it differently from others but that's what he was really saying and that was really what the Government has said that if it is to be introduced. And I do have an open mind. It is one of a number of things that should be considered if you are looking at improving the policies that help Australian families balance their work and family responsibilities. It's not the answer to every problem in this area. It's silly for people to see it in that context but it's part of the mix. What you have at the moment are people who have different goals. Some people see their priority as their career. Others see their priority as being home-makers for young children. In other words only being in the workforce if it's absolutely economically essential and if they can be out of the workforce full-time or part-time to care for their children they want to. And then there's the big group in the middle who are really a bit of both. They mix a desire to look after their families, their young children, with an economic need to work and also a personal satisfaction. There's a range of families and there's a range of financial and particularly female aspirations in this area and we should have policies that fit the range, not say you will accept paid maternity leave or you will accept something else because that is our view as to how you should organise your life. We don't do that. We exist as a government to facilitate and support choice, not tell people how to mould the nature of their family life.
CORDEAUX:
You've said it 's about more babies, people having babies and population and that kind of thing. My mind goes back to that idea that you had, that you put forward, I don't know what happened to it but you suggested income splitting.
PRIME MINISTER:
Well I'll tell you what did happen to that. A lot of the economic affect of income splitting has already been achieved for people whose incomes are below about $50,000 or $60,000 a year through the introduction of the family tax benefits which we brought in progressively after we were elected. When you put together that very cumbersomely named family tax benefit B with family tax benefit A and you have a child under five years up to a certain level of income you really have the value of income splitting through the introduction of that measure. So we've had a form of limited income splitting under another name through the policies we've already introduced. Can I just make one point about fertility rates. Government policies will only effect the number of children people have at the margin. It's not credible for somebody to argue that if you bring in say paid maternity leave that will have a dramatic effect on the fertility rate. That is just not going to happen. There are a whole lot of society and personal reasons why people determine that the size of their family will be a particular number. It can have an effect on the margin. I think that's very important. But the main goal of these policies should be to support and facilitate Australian families in the choices they make about their work and family responsibilities and we should see it principally in that way. There will be a marginal impact on fertility rates but we shouldn't run away with the idea that if you for example introduce paid maternity leave you're going to see a dramatic turnaround in the fertility rate, it's really not going to happen.
CORDEAUX:
On this program anyway it's been a hot potato over the last few days where people say well why should the government pay me to have babies or pay me to stay at home.
PRIME MINISTER:
Well there are mixed views. I mean I happen to hold the view that there is an important social good in recognising that when you have children there are extra costs involved and therefore the community should recognise that through the tax system or the other support mechanisms. It is expensive to have children. It is in the national good that we have as strong a fertility rate as possible and we ought to recognise that. And we also ought to recognise that different people want to look after their children in different ways. Some really want a situation where mum or dad is at home full-time or part-time while children are young. Others prefer the childcare option from a very early point. Others want a mix of the two. The point I';m making again is that we shouldn't say which model is right. We should support the choices that men and women make and that is why paid maternity leave's an important part of the debate but it's clearly not the only part.
CORDEAUX:
How long will you let the debate run?
PRIME MINISTER:
I'll let the debate run for a while because it's an important issue and I'd also remind your listeners that we have already introduced a lot of policies that do support choice - family tax benefits, the baby bonus that came into effect on the 1st of July this year which will provide a lot of help to families that go from two to one incomes when their first child comes along and that's a very critical moment of cost and expense. I mean the timing of when you have your first child has quite an influence on the number of children you end up having. I mean clearly if you have your first child well into your thirties the likelihood of having three of four is a lot less than if it's earlier. I mean the likelihood of people having four children now is a lot less than it used to be but the difference between having two and three children is really the thing I understand that has had the most marked affect on the declining of fertility rates. So these things are important, the point at which you have your first child, and that has a lot to do with whether people can cope particularly with the cost of housing with that drop from two to one income even for a limited period of time.
CORDEAUX:
You've given us a lot of your valuable time. Let me ask you a couple of quick questions. The ACTU has come out and they've said workers' rights to refuse excessive overtime is a good thing. I would have thought that people have always had the right to refuse overtime if they wanted to.
PRIME MINISTER:
Yes I don't think the decision of the IRC, which incidentally I';m quite comfortable with, I don't think that decision alters much. Clearly if people are asked to work unreasonable amounts of overtime they ought to have the right to say hang on that's not fair. On the other hand it's part of your responsibility to an employer and part of life to work a reasonable amount of overtime and many people I've talked to about overtime they welcome it because it can mean more money and greater opportunity to get ahead. So I don't think the decision alters very much. To the extent that it prevents people being unfairly treated in relation to overtime then I think it's quite a good decision but I don't really think it affects anything very much and I don't think it, interestingly enough doesn't alter the question of what is a reasonable level of a standard working week. So I think we would be making a mistake in reading too much into this decision.
CORDEAUX:
And finally Prime Minister the debate on stem cell research. Where are we with that at the moment?
PRIME MINISTER:
The debate will start when Parliament comes back in August. I introduced the bill just before Parliament got up. There will be a free vote. All members of the Liberal and National parties can vote according to their personal conscientious beliefs and that includes members of the Cabinet. I don't know what the outcome will be,….
CORDEAUX:
Do you have a feeling?
PRIME MINISTER:
….I'll be supporting the legislation, I've given it a lot of thought. I'll vote for it because I believe that we've got the right balance. We've outlawed human cloning and there's widespread support for that. My view is that the excess embryos, and we're talking here about those that were in existence on the 5th of April, that they can be used for research purposes within strict limits. But after hearing the views of many people I respect I couldn't find personally a very significant moral difference, a significant moral difference at all between allowing those embryos to succumb when being exposed to room temperature, in other words to be destroyed in that fashion, or to be destroyed in the course of research for relief of suffering or perhaps the prolongation of life.
CORDEAUX:
I agree with you.
PRIME MINISTER:
That was the basis of which I made my decision.
CORDEAUX:
I agree with you. Prime Minister, again thank you so much for your time and I';m sorry about the technical problems at the beginning.
PRIME MINISTER:
That's okay.
CORDEAUX:
All the best to you sir. [