MITCHELL:
In our Canberra studio, the Prime Minister. Mr Howard, good morning.
PRIME MINISTER:
Good morning, congratulations on your ratings.
MITCHELL:
Yeah, thank you, we are very pleased.
PRIME MINISTER:
Peter Costello says he rang you in Texas to tell you about the tax cuts. Is this all Peter Costello's doing? Is this the Budget to elect him as Prime Minister?
PRIME MINISTER:
Look, we didn't talk about tax cuts in Texas.
MITCHELL:
Didn't you? When did you talk about them?
PRIME MINISTER:
We talked about them at the appropriate time and I think it's fair to say they're the Government's tax cuts.
MITCHELL:
When did you decide to introduce them?
PRIME MINISTER:
Well I'm not saying. Look, there's no particularly mystery about this.
MITCHELL:
Well Mr Costello said something else.
PRIME MINISTER:
Well...
MITCHELL:
Did you see it?
PRIME MINISTER:
No I haven't seen that, I think he must have been misunderstood. But the tax cuts were talked about at an appropriate time. You only decide on tax cuts fairly late in the Budget process when you know that you've got the capacity to deliver them and I think it's fair to say that it became ... as we talked it became the logical and sensible thing, it occurred to both of us to be the logical and sensible thing to do.
MITCHELL:
Before you left the country?
PRIME MINISTER:
Well I'm not saying exactly when, well in fact I will say that, it was decided before I left the country yes.
MITCHELL:
Is there a bit of tension here with Mr Costello?
PRIME MINISTER:
No. Why?
MITCHELL:
Well I thought it was a very pointed comment of his on the 7.30 Report.
PRIME MINISTER:
I didn't see it, I didn't see the 7.30 Report I'm sorry.
MITCHELL:
Okay, well...
PRIME MINISTER:
So therefore I don't know what he exactly said, I just didn't see.
PRIME MINISTER:
Will there be an election before the next Budget?
PRIME MINISTER:
I would think very unlikely, unless something very significant happens.
MITCHELL:
You're going to have the triggers if you want...
PRIME MINISTER:
We've got those now but Neil I see no merit in having an early election. Neither does the public. The public elects a government for three years and they expect it to do its job, they expect it to look after the national security and the economic security of the nation, provide a decent environment and then if there's any left over give it back to them because they're better able to spend the money and decide how it should be spent than is the Government, no matter how good Neil a government might be.
MITCHELL:
So what's negotiable in this Budget because the Senate is going to cause trouble, what would you negotiate in this Budget?
PRIME MINISTER:
Well I don't like talking about negotiating things, I mean we did win the last election and the public did say they wanted us to govern the country for three years and I think the minor parties and the Labor Party in the Senate should bear that in mind and we're going to try as hard as we can to, as hard as we can to get this legislation through.
MITCHELL:
And as far as as possible you're promising no early election?
PRIME MINISTER:
That's right. Yes, that is a very good way of putting it. I mean no Prime Minister can categorically put his hand on his heart and say there are no circumstances in which we might have an early election but I do not plan to do that, I have a very strong view that the public reacts very cynically if governments go to early elections without a good public policy reason and I can think of some examples over the years in which governments have paid very dearly for doing that, the Hawke Government in 1984 had an early election and instead of winning a lot of seats it actually lost seats and surprised everybody by doing it. I don't think there are very good examples at a state level of governments going early and getting rewarded. The public is awake, the Australian public is very clever, the Australian public has a very shrewd idea of what you're on about and if they think you are going to an early election purely to secure a political advantage and there's no good public policy reason for it they will mark you down and deservedly so.
MITCHELL:
Are you expecting frustration in the Senate? It looks inevitable.
PRIME MINISTER:
Well I hope not. The public wants the business of government to go on, I mean how can you oppose a Medicare package for example that puts another billion dollars a year, over four years rather, into health care. How can you...
MITCHELL:
Well if you link the tax cuts to this, do you say the tax cuts are only there if everything else goes through?
PRIME MINISTER:
No, we will deliver the tax cuts.
MITCHELL:
Regardless...
PRIME MINISTER:
I mean well, but gee isn't opposition great, I mean we won't vote against the tax cuts but anything else that involves taking a responsible long term decision, we'll frustrate it and block it. I mean when were in Opposition many of the economic reforms for which the Hawke and Keating Governments now receive praise were only made possible because we passed them.
MITCHELL:
On the tax cuts do you accept that really just giving back a little of what you've taken? I mean the predicted... has gone up $10 billion since...
PRIME MINISTER:
Well incomes rise and there are more people working and you collect more tax.
MITCHELL:
True, but you wouldn't say that's all of it, $10 billion in a few years.
PRIME MINISTER:
But Neil we are providing a tax cut, I wish it were more, as Peter Costello said earlier today if there had been more, if there had been fewer demands on us we'd have more to give back.
MITCHELL:
Do you deny you're a high taxing government? $10,000 for every man, woman and child.
PRIME MINISTER:
Well I suppose any government by definition is a high taxing government because with incomes rising and the population rising you always collect more tax in nominal dollars. But if you look at these measurements of what is the highest taxing and so forth I don't accept that we are and certainly we're a government that is returning what it can, after it has made proper provision for financial security and necessary spending.
MITCHELL:
The figures today argue 25 per cent increase in real terms over eight years in taxation, over the eight budgets. Now surely that's an argument that you're high taxing. But that's not all an increase...
PRIME MINISTER:
No but you've got to look at it as a proportion of GDP and actually the tax burden on individuals have fallen in the time that we have been in government. You've got to have as a measurement of GDP.
MITCHELL:
Okay. GST and income tax next year will rise five per cent, inflation will be 2.5 per cent. Is that fair?
PRIME MINISTER:
Well when you say, what I can say about the future in relation to tax is this Neil is that our philosophy will be that after you have provided the necessary expenditures and provided you have a balanced budget you should return the surplus to the public because it's their money. And that was our philosophy this year, it's the philosophy that guided the Treasurer and I in the decision we took, and it's the philosophy that's going to guide us next year.
MITCHELL:
Will you look taxation indexation in the future, indexation of tax rates?
PRIME MINISTER:
I prefer to have the discretion to look at the tax scales and tax rates each year and if you've got a capacity to hand something back to do what we did last night.
MITCHELL:
See even your new figures, they're 42 cent rate cuts in at $52,000 which is hardly a wealthy wage is it?
PRIME MINISTER:
No well, we've made sure that, you've got to remember Neil that those rates were mucked around with by the Senate. I mean we wanted to have the top rate of 47 applying at 75,000 and the Senate forced it down to 60. And inserted some new rates. So I mean just remember that part of the problem, not all of it, but part of the matter you're referring to is a product of the Senate mangling the original tax cuts, for which the Australian public voted in 1998.
MITCHELL:
Prime Minister, we need to take a break, our breakfast team has done a poll here, 55 per cent of people believe that you and Peter Costello have done a deal on the leadership. Is that right?
PRIME MINISTER:
No.
MITCHELL:
Definitely no deal done.
PRIME MINISTER:
Look we don't do deals on things like that. And the reason we don't do deals on things that like is that the leadership does not belong to me, it is not my possession to hand to whoever I want it. I am the leader, I'm the Prime Minister of Australia because I'm the Leader of the Liberal Party which won the last election and the leadership of the party belongs to my colleagues, it's for them to decide those matters, not anybody else.
MITCHELL:
Have you had a discussion about your future with Peter Costello?
PRIME MINISTER:
Oh look I talk about a whole lot of things with Peter, a whole lot of things and we've been down this track before and I can see the amber lights flashing.
MITCHELL:
What, are they warning you? Don't talk about it?
PRIME MINISTER:
Good try Neil.
MITCHELL:
Thank you. We'll take a break...
PRIME MINISTER:
You're charmingly provocative.
MITCHELL:
Well that's a change. We'll take a break and come back with more charm and provocation for the Prime Minister.
[commercial break]
MITCHELL:
The budget discussion continues. The Prime Minister's in our Canberra studio, there's a number of other issues I want to raise as well. Prime Minister, specifically, what about the $420 million for Victoria on the Scoresby Freeway, will we not get that?
PRIME MINISTER:
We want to spend it on Scoresby. We want the Victorian Government to match the deal.
MITCHELL:
And if they won't, what happens?
PRIME MINISTER:
Well, I'm going to continue to pressure on them to match it. Once you start talking about what might happen if they don't, then the pressure goes off them. We had a memorandum of understanding with the Victorian Government on this and they are welshing on that understanding, they're welshing on the Victorian people, they're welshing on us and I'm not going to take the pressure off the Bracks Government. I mean, they have the gall to take out paid advertisements in newspapers saying Victorians are being penalised. I mean, who's penalising the Victorians to be serviced by the Scoresby Freeway? Not the Federal Government, but the Victorian Government by welshing on that deal.
MITCHELL:
What about the Commonwealth Games, will you help Victorian financially with the Commonwealth Games?
PRIME MINISTER:
Look, we would have given them $90 million if they'd been willing to stand up to the unions, but they apparently had so much money to throw around then that they walked away, rather than stand up to the unions, they were prepared to lumber the Victorian taxpayer with another $90 million.
MITCHELL:
So, is there any money there for the Commonwealth Games, or not?
PRIME MINISTER:
Well Neil, they could have had that money.
MITCHELL:
What about the future?
PRIME MINISTER:
Well, let the future look after itself. We've treated... we treat the states fairly. This silly game they play of - oh Canberra's, you know, short changed us. I mean, it's a pathetic game and I've got to say state governments of both political persuasions played it. I'm sorry to say that the former Victorian Liberal Government often played that game as well.
MITCHELL:
What Jeff Kennett?
PRIME MINISTER:
I think it's a silly game.
MITCHELL:
Okay, but they're saying unequivocally the tolls are on, the Premier was in the studio yesterday saying...
PRIME MINISTER:
Well, he ought to be reminded of what he promised the... well, I'm going to keep the pressure on him. I'm not going to start talking about alternatives, all that does is take the heat off him and relieve him of the obligation of delivering on the commitment he made to the Victorian public.
MITCHELL:
University fees...
PRIME MINISTER:
Yes.
MITCHELL:
A generation of debt, is it... we're being told. And some fees could go up 30 per cent.
PRIME MINISTER:
Mmm.
MITCHELL:
Why, and how do we expect people to cope with them?
PRIME MINISTER:
Well Neil, even after these changes are made for the HECS funded places, something in the order of 70 to 75 per cent of the cost is being borne by the public. We're asking people who take university degrees and who get HECS funded places to make a contribution. In some cases it could be a slightly higher contribution, but they get an enormous benefit. People who get university degrees earn more money in later life, isn't it reasonable, therefore that the general body of taxpayers who contribute the bulk of the cost of their education, ask them to put something back in return. And you only have to begin paying back your HECS debt, under the new arrangements, if your income is more than $30,000 a year. Now what is unreasonable about that? I think it's a perfectly reasonable thing. 70 per cent of Australian boys and girls when they leave school do not go to university, yet they continue to pay taxes to fund the cost of educating those who do. I went to university, I benefited from that university education, because I went to university at a time when you still had full fees and Commonwealth scholarships. And my degree, in the first year, I paid full fees, the other three years I had a Commonwealth scholarship. Now there was a whole mixture of arrangements then. Then, we had this unreal Whitlam period where everything you could have for nothing, now that lasted three years and the country went broke in the process. I think we now have a HECS system, which incidentally the Labor Party introduced and we supported its introduction.
MITCHELL:
Okay, can I ask you about a couple of other issues. It's reported the Governor General is getting public relations advice at $4,000 a day from a company your office recommended. Is that fair? Is that acceptable?
PRIME MINISTER:
Well, I don't know what the cost of his advice is... but once the formal arrangements for the appointment of the administrator come into play, which I think will be tomorrow, well there'll clearly be a very significant change in relation to any staff arrangements. But whatever has been... I don't know the full details of that and as to... I mean, I was out of the country when this particular person was appointed, as to who recommended him, I don't know. But once the administrator takes over, well there are radically different staff arrangements.
MITCHELL:
Well, I wouldn't of thought you'd pay $4,000 a day in public relations advice.
PRIME MINISTER:
Well, I'm, you know, try and provide my own advice on some things but you get advice on others. But I don't know whether that is true or not, but let us, let us not suggest that over the past few weeks it's been completely unreasonable, given the ferocious attacks made on him by all sections of the Australian media that the man should have some kind of professional advice. I mean he can't defend himself in the way that I can defend myself, or you can, because of the strictly antiseptic nature and way of the office. To say but you know that's right and that's a problem and into the bargain he can't possibly get any professional advice because in some way that would wrong.
MITCHELL:
Why can't he do an interview? Why can't he defend himself in an interview?
PRIME MINISTER:
Well it's very hard for a Governor General to do that...
MITCHELL:
He did it on Australian Story which got him into trouble.
PRIME MINISTER:
Well those interviews can stray into a whole lot of areas which might compromise the independence of the office. I think the suggestion that he shouldn't get some kind of public relations advice is a bit unreasonable.
MITCHELL:
Mr Beattie, the Queensland Premier, says there are five other cases.
PRIME MINISTER:
Well Mr Beattie is just running a campaign on this under parliamentary privilege. That's what he's doing. I mean Peter Beattie has been running a political campaign against Peter Hollingworth for a very long time and he's using parliamentary privilege to continue and I think the quality of what he said should be discounted accordingly.
MITCHELL:
One thing which does baffle me a little, when you decided on Sunday you decided the Governor General would step down pending the resolution on these rape allegations. When you were told in December why wasn't it reasonable for him to stand down then?
PRIME MINISTER:
Well because they were bare allegations.
MITCHELL:
Well they still are.
PRIME MINISTER:
No, no there has in fact since then, there's been an application launched with the Victorian Supreme Court for leave to commence civil proceedings.
MITCHELL:
That happened in February. Why didn't...
PRIME MINISTER:
Well because there were suppression orders granted in February.
MITCHELL:
So what the Governor General couldn't stand down because of the suppression orders?
PRIME MINISTER:
No, if you had, it was proper that you have a suppression order back in February...
MITCHELL:
That wouldn't affect...
PRIME MINISTER:
But why should you, well back in February the suppression order was (inaudible), I mean my view all along is that when something is in the status of a bare allegation to get him to stand down is quite unreasonable.
MITCHELL:
The terrorist attack, is this an indication that there's a long way to go in the war against terror?
PRIME MINISTER:
Yes, I think it is.
MITCHELL:
I think there was information that Al Qaeda's involved.
PRIME MINISTER:
We don't have hard information yet but the attack bears all of the hallmarks of Al Qaeda. But certainly the war against terror still has a long way to go, a long way to go and nobody should be complacent, although we have made a lot of progress in arresting people and breaking down some of the areas of influence of terrorists, we still have a very long way to go.
MITCHELL:
Just a diversion, if you like, but a sporting matter, I thought people have been terribly rough on Glenn McGrath who reacted to a bit of sledging about his wife on the cricket field and now he's been hung out to dry by a lot of old cricketers who were probably exactly the same on the field. What was your feeling? Did you...
PRIME MINISTER:
Well I've read, I mean if somebody did say something about his wife then I would understand fully his reaction. There seems to be some debate as to who started and who said what but anybody who says something about somebody's wife who's had cancer, that's pretty bad and I can understand a man defending his wife. I would, I'm sure you would and it's a very natural Australian thing to do. But I just don't know the exact sequence of events. And I think you do make a valid point that in the pre-television era there were a lot of things said on sporting fields that were never heard.
MITCHELL:
Now I know you're welcoming back the troops and the pilots over the next few days.
PRIME MINISTER:
I'm going to Tindal on Thursday to welcome home the Hornets and then on Saturday the HMAS Anzac and Darwin and on Sunday the SAS. So I'll be in Perth for the weekend.
MITCHELL:
Well give them our regards and there's an F/A-18 pilot called Matt who we interviewed on the programme from Iraq, he's a Melbourne supporter and we're taking him to a footy game, you make sure...
PRIME MINISTER:
Do you know what his surname...
MITCHELL:
Oh no, we weren't allowed to use that.
PRIME MINISTER:
Oh I'm sorry mate.
MITCHELL:
Matt, the F/A-18 pilot.
PRIME MINISTER:
Matt the F/A-18 and he barracks for Melbourne?
MITCHELL:
He's a good man.
PRIME MINISTER:
Good. Okay then.
MITCHELL:
Thank you for your time.
PRIME MINISTER:
Thanks Neil.
[ends]